StanChart plans $3 bln rights issue - source

SINGAPORE (Reuters) - Asia-focussed bank Standard Chartered is likely to announce later on Monday it plans to offer a $3 billion rights issue, a source familiar with the plan told Reuters.

"The announcement will be likely made later today about the rights issue," said the source, who asked not to be identified because the deal is not public.

Temasek declined comment.

Singapore state investor Temasek Holdings, which owns a 19 percent stake in the UK-based lender, is considering whether it should participate in the rights issue, the source said.

It was unclear if Temasek will raise its stake or buy shares in order to avoid a dilution.

BSE Sensex eases in choppy trade, Citi plan helps

MUMBAI (Reuters) – The BSE Sensex shed 0.14 percent on Monday in choppy trade, with the U.S. government's rescue package for the troubled Citigroup bolstering the market after it fell sharply at the start.

Traders said the $306 billion deal to help Citigroup tackle some of its toxic debt calmed worries the U.S. bank may come under pressure to liquidate some of its large holdings in Indian companies.

However, investors were unwilling to build positions just yet with the outlook marred by concerns of an economic slowdown and as the central bank dragged its feet on an expected easing of monetary policy to support growth.

Financial stocks such as State Bank of India , ICICI Bank and HDFC Bank led the fall as traders had been expecting an interest rate cut over the weekend but it failed to materialise.

"Despite the rescue of Citi by the U.S. government, there is no respite for markets. It is the broader crisis that is engulfing the global economy," said Hitesh Agrawal, head of research at Angel Broking.

"Only time can solve the situation," he said.

Finance Minister Palaniappan Chidambaram said on Monday India's monetary policy was now biased towards stimulating growth in the face of the global financial crisis and the Reserve Bank of India (RBI) would lower rates once inflation starts slowing.

Addressing economic editors in New Delhi, he said the government may have to revisit and revive pending reforms and hoped credit flows to improve by the end of November or December.

The 30-share BSE index ended down 12.09 points at 8,903.12. It fell more than 2 percent early and rebounded to be up over 1 percent after the Citigroup rescue plan was announced, only to backtrack later.

Jigar Shah, senior vice president at Kim Eng Securities, said Citigroup held stake in mortgage firm Housing Development Finance Corp and was a key client for outsourcer Tata Consultancy Services.

"So if Citi had a problem, these companies could also have been affected," he said.

The U.S. government agreed to prop up Citigroup, with more than $300 billion to avoid a collapse that could have wrought financial havoc around the globe.

HDFC fell 1.84 percent to 1,373.60 rupees.

Software exporters added small gains after the bailout of Citigroup. Banks are key clients of Indian outsourcing firms.

Tata Consultancy Services rose 2.8 percent to 520.70 rupees and Infosys Technologies gained 1 percent to 1,196.20 rupees.

The BSE index, which has fallen for eight of the last nine sessions, has lost 56.1 percent so far this year, making it among the worst performers in Asia.

Seventeen of its components fell, while in the broader market losers led gainers 1,386 to 1,065 on moderate volume of 223 million shares.

The 50-share NSE index ended 0.55 percent up at 2,708.25 points.

State Bank of India, the country's largest lender, fell 3 percent to 1,147.30 rupees, while smaller rivals ICICI Bank shed 3.9 percent to 322.55 rupees and HDFC Bank fell 2.9 perccent to 831.55 rupees.

India's RBI has cut its main lending rate by 150 basis points to 7.5 percent in the past two months, and slashed banks' cash reserve requirement by 350 basis points to 5.5 percent, but consumer spending has remained sluggish.

Annual inflation was at 8.90 percent in early November, sharply down from a peak of 12.91 percent in August, helped by falling prices of commodities and crude oil.

Metal producer Sterlite Industries dropped 1.9 percent to 214.60 rupees after a company official said it expected a month-long shutdown at a copper smelter in south India, after a breakdown.


STOCKS THAT MOVED

* Steel billet maker Godawari Power & Ispat fell more than 8 percent to 59.9 rupees, its lowest since June 2006, after the firm said it withdrew a proposal to buy back shares to conserve cash. The firm has also cut production of steel billets

and ferro alloys until further review.

* Fem Care Pharma Ltd closed 5 percent higher at 692 rupees after Dabur India said it had bought a 72.15 percent stake and would make an open offer for another 20 percent in line with takeover rules.


MAIN TOP 3 BY VOLUME

* Unitech at 16.6 million shares

* GVK Power at 12.0 million shares

* Suzlon Energy at 10.9 million shares

President-elect Obama moves to reassure mkts

WASHINGTON/LIMA (Reuters) - U.S. President-elect Barack Obama moved to reassure an anxious world over the weekend even before he takes office, picking two respected policymakers to lead the fight against the global financial crisis and setting out his battle plan.

Obama, who will inherit the worst economic mess since the Great Depression when he takes over from President George W. Bush on Jan. 20, plans to nominate Timothy Geithner, president of the New York Federal Reserve Bank, as Treasury secretary, a transition official said.

Geithner, 47, will lead the United States' $700 billion bailout plan for the financial industry.

Lawrence Summers, 53, who was Treasury secretary in the Clinton administration, will help shape policy as director of the White House National Economic Council, the official said.

The appointments should bring some cheer to the furrowed brows in world markets. U.S. stock prices, pummelled for most of last week, rallied more than 6 percent on Friday after word first leaked out that Geithner might take the helm at Treasury.

On Saturday, Obama laid out plans for a two-year economic stimulus package involving the creation of 2.5 million jobs.

He may also consider delaying a roll back in tax cuts on high-income Americans -- an election promise -- as part of his economic recovery strategy, aides said on Sunday.

"The main thing right now is to get this economic recovery package on the road, to get money in the pockets of the middle class, to get these projects going, to get America working again, and that's where we're going to be focused in January," senior Obama adviser David Axelrod told Fox news channel.

In the latest international huddle to tackle the crisis, Asian and American leaders meeting in Lima, Peru pledged to push for a so-far elusive global free trade deal which they said would help keep the world from sliding into a deep recession.

Bush, Chinese President Hu Jintao, Japanese Prime Minister Taro Aso and other members of the Asia-Pacific Economic Cooperation group, or APEC, said they would refrain from raising trade barriers over the next 12 months.

They also supported overhauls of the International Monetary Fund (IMF) and the World Bank at a time when more countries need emergency bailouts to avert economic devastation.

"The current situation highlights the importance of ongoing financial sector reforms in our economies," the leaders said in a statement.

They committed to try to reach a breakthrough in the stalled Doha round of trade talks before the end of this year.

China's Hu said leaders must pay attention to the impact of the crisis on the developing world and provide it with support.

Japan was expected to reiterate an offer to give $100 billion to the IMF to prod other countries to chip in funds.


BLAME IT ON THE U.S.

Canadian Prime Minister Stephen Harper and Mexican President Felipe Calderon blamed the United States for starting the crisis and called for better banking regulations.

In other developments, Britain prepared plans to inject billions of pounds into the economy to stave off recession amid slumping house prices, rising unemployment, and shrinking manufacturing output.

Finance Minister Alistair Darling will unveil the package of tax cuts and extra public spending expected to total up to 20 billion pounds ($30 billion) on Monday, newspapers said.

A cut in the so-called value added tax or VAT, is aimed at giving a pre-Christmas boost to consumers' spending power.

"Doing nothing is not an option," Prime Minister Gordon Brown said in a speech he will give to businessmen on Monday. "We need timely action now to prevent permanent damage."


ASIA LEARNS TO FLINCH

China also planned more ways to support its economy, now showing signs of being infected by the crisis after years of extraordinary growth.

State television said provincial governments have made plans to invest a total of more than 10 trillion yuan ($1.5 trillion) over the next several years. It was unclear whether that would be on top of a 4 trillion yuan stimulus package announced by the central government earlier this month.

South Korean officials said they had further policy options to combat the global downturn, putting pressure on the central bank to cut interest rates in Asia's fourth-largest economy.

"We need financial support for small companies and exporters," Prime Minister Han Seung-soo said.

In the Gulf, also feeling the crisis despite its oil riches, Saudi Arabia's central bank slashed its benchmark lending rate from 4 percent to 3 percent, the second reduction in a month to keep credit markets moving and boost liquidity.

In Cairo, President Hosni Mubarak said Egypt's already-wide budget deficit would increase as it spends more to avert economic slowdown. He called for cheaper credit to boost the economy.

WASHINGTON/LONDON (Reuters) - The United States agreed to inject $20 billion of new capital to rescue one of the world's top banks and European leaders said on Monday they would stand by European industry, especially the automobile sector.

Washington, also under pressure to rescue its own ailing motor industry, effectively guaranteed most of Citigroup Inc's, potential $306 billion losses on high-risk assets. It was the biggest bank bailout yet and a measure of the crisis sweeping the world.

The Gulf emirate of Dubai, home to a new luxury mega-resort built on a manmade palm-shaped island visible from space, announced it was reining in a building spree symbolic of extravagant boom years leading up to the current crisis.

The United Arab Emirates began to bail out Dubai's lenders and consolidate its financial sector.

Concerns Europe has entered a deep recession that could last well into next year were reinforced when a key survey of German corporate sentiment hit its lowest level in nearly 16 years in November.

French President Nicolas Sarkozy said after talks with German Chancellor Angela Merkel their "determination to help European industry and notably the automobile industry is total".

The Citigroup intervention had been widely expected in some form, but Asian markets trimmed losses, while European stocks rose 4 percent on news the U.S. Treasury would not allow the number two U.S. bank to fail in the way of rival Lehman Brothers.

U.S. stock index futures pointed to a higher opening on Wall Street. S&P 500 futures were up one percent.

"The move will help the markets not implode today," said Rory Robertson, interest rate strategist at Macquarie in Sydney.

"It's all good stuff but the fact that the Fed has to bail out one of the biggest banks in the world is not exactly a vote of confidence."

Citigroup has the farthest international reach of any U.S. bank, with operations in more than 100 countries. The bank was widely felt to be too big to be allowed to fail.

The plan calls for Citigroup, America's second-biggest bank, to issue $27 billion in preferred shares to the U.S. Treasury and the Federal Deposit Insurance Corp.

The Fed, Treasury and FDIC in return will shoulder most of the potential losses on Citigroup's $306 billion portfolio of debt assets, beyond an initial $29 billion in losses which Citigroup would be responsible for.

"The U.S. government is taking the actions necessary to strengthen the financial system and protect U.S. taxpayers and the U.S. economy," the Federal Reserve, the Treasury Department and FDIC said in a joint statement.


WIDESPREAD RESPONSE

Citigroup, whose shares slumped 60 percent last week, was not the only bank having to raise more funds.

Asian-focused UK bank Standard Chartered said it planned a $2.7 billion rights issue to boost its capital reserves, while other banks were also expected to raise money.

Government sources said Turkey was still talking with the International Monetary Fund on the scale of a new loan accord. Turkey is not under the same strains that have forced other emerging markets countries to seek IMF aid, but has begun to see a sharp slowdown in its $700 billion economy and its currency has lost a third of its value in two months.

The global financial crisis has torn through the Arab Peninsula, until recently thought immune due to massive sovereign savings and earnings from energy exports, with almost the same violence as in Europe and North America.

In a major policy shift, the United Arab Emirates federal government will inject capital into its Emirates Development Bank, a newly created rescue vehicle preparing to absorb merging Islamic lenders Amlak and Tamweel, a leading official said.

A cash injection would represent the first big step by the federal government, dominated by the conservative oil-exporting emirate of Abu Dhabi, to bail out high-flying banks in neighbouring Dubai, suffering under the global crisis.

The Munich-based Ifo economic research institute said its German business climate index, based on a monthly poll of around 7,000 firms, declined to 85.8 in November from 90.2 in October, the biggest month-on-month drop since Sept. 11, 2001.

"It seems as if a wildfire is running through the German economy at enormous speed," said Carsten Brzeski, an economist at ING Financial Markets. "If you think the third quarter was bad, just wait for the fourth quarter. It might be a disaster."


UK STIMULUS PACKAGE

Aides said U.S. President-elect Barack Obama was considering delaying a campaign promise to rescind tax cuts on high-income Americans, while the British government was set to announce a stimulus package including temporary tax cuts. Obama, who takes over from President George W. Bush on Jan. 20, is ready to announce his top economic team on Monday, holding a news conference at 11 a.m. in Chicago (1700 GMT).

He plans to nominate Timothy Geithner, president of the New York Federal Reserve Bank, as Treasury secretary, a transition official said. Lawrence Summers, 53, Treasury secretary in the Clinton administration, will help shape policy as director of the White House National Economic Council.

The potential size of the latest U.S. stimulus plan appears to be growing from the $100 billion to $300 billion previously suggested by congressional leaders. One influential Democrat, Sen. Charles Schumer of New York, said on Sunday a package of up to $700 billion was needed to support the American economy.

Britain is expected to announce a 20 billion pounds ($30 billion) package, which will cut sales tax and offer help for businesses, low earners and struggling home owners.

"I don't see this as a gamble. I see this as necessary, responsible action," Prime Minister Gordon Brown told the BBC.

India realty sector set for correction - report

MUMBAI (Reuters) - India's property market is poised for a correction and residential property rates will have to drop by up to 30 percent in some geographies for affordability to catch up, a report on said on Monday.

However, such a fall could trigger significant negative effects on the economy with construction, consumption and investment taking a hit, a Goldman Sachs Economic Research report said.

Related industries such as steel and cement on the backend, and hotels, trade and transport on the front-end will be impacted, it said.

Income growth will fall, reducing demand for housing as the economy continues to slow due to the knock-on effects of the global financial crisis, lowering demand for real estate.

Besides income growth, demographics, interest rates, inflation and expectations of future projects affect demand. Commercial real estate demand will also take a beating due to the slowdown in IT and business process outsourcing sectors, it said.

A fall in collateral will hurt firms' balance sheets, increase funding costs, hurt confidence and reduce investment demand, it added.

However, India's favourable demographics, low mortgage penetration, falling interest rates and ongoing infrastructure demand will keep the property downturn from being protracted, it said.

Day Trading Guide - November 24, 2008

Source: TheHinduBusinessLine

Aries Agro (Rs 45.30): Buy

We recommend a buy in Aries Agro from a short-term perspective. It is apparent from the charts of Aries Agro that it was on a medium-term down trend from September high of Rs 162 to its 52-week low of Rs 35 recorded in late October.

The stock found support at its 52-week low and began to consolidate sideways in the price range between Rs 35 and Rs 44 for almost four weeks. On November 21, the stock conclusively penetrated its 21-day moving average by gaining Rs 5.50 or 13.8 per cent accompanied with above 2-week average volume.

With this, the daily relative strength index has entered in to the neutral region from the bearish zone and weekly RSI is recovering from the ‘oversold’ territory. The moving average convergence and divergence is steadily rising towards the positive territory.

We are bulling on the stock from a short-term perspective. We anticipate the stock’s up move to prolong further until it hits our price target of Rs 51 in the approaching trading sessions. Traders with short-term perspective can buy the stock, while maintaining a stop-loss at Rs 42.

Source: TheHinduBusinessLine