To diversify, or not to diversify? That is the question.

Diversifying - in the context of business and investments - means hedging your bets, instead of putting all your eggs in one basket.

What is the main benefit of diversifying? Reduction of risk. Say, you are supplying large plastic containers to domestic paint manufacturers and have built up a reasonably good clientele.

Out of the blue, demonetisation of bank notes is announced by the government. The real estate sector goes for a toss and paint manufacturers curtail production. A big supply order of containers that you were negotiating gets cancelled.

What will you do? Shout from the rooftops about what an ill-planned disaster demonetisation has been? Or, realise the need of ridding the financial system of large amounts of untaxed cash and look for alternatives?

One alternative is to look for opportunities at other organisations in the domestic market with a need for large plastic containers - like Edible oil manufacturers. That would be a diversification.

Another alternative is to look for opportunities in the export market. A third alternative may be to make small plastic containers - used by shampoo and hair-oil makers.

Without making too many changes to your expertise and production capabilities, you now have more opportunities of growing your business and reducing risk by operating in different markets and product categories.

Peter Lynch coined the term "di'worse'ification" for companies that diversify into unrelated businesses that destroy rather than create shareholder value. A classic example?  Reliance entering the telecom services business. 

As if one brother's disastrous foray into telecom services was not enough. Now, big brother is throwing more money into the same business. The result is likely to be equally disastrous.

What about diversifying in the investment arena? Should you, or shouldn't you? Most financial experts will recommend diversification for reducing risk. That doesn't mean you buy 20 equity funds or 50 stocks.

Real diversification means investing in different asset classes after making a financial plan and an asset allocation plan depending on your goals and risk profile. 

Investing partly in equity, partly in fixed income, partly in gold, partly in a liquid fund will provide a well-rounded portfolio across different market and interest cycles.

When the stock market is booming, stocks will provide huge returns. What if the market crashes - as it often does? Fixed income instruments will continue to provide lower but steady returns, and liquid funds can be transferred to buy equity funds at lower NAVs.

Is there a downside to a planned and well-diversified portfolio? Unfortunately, yes. You will generate steady, average returns, but are unlikely to get filthy rich.

How can you get filthy rich? By becoming the next Bill Gates. Gates stuck to a single line of business, and made sure the whole world will use his company's software through shrewd negotiations with computer makers. (His di'worse'ification efforts into electronic products haven't borne fruit.)

Moral of the story? For mere mortals - like you and me - a planned and well-diversified portfolio that reduces risk and provides steady returns over many years is the route to financial freedom.

Learn more: 
What Does Investment Diversification Really Mean?

Related Post

How to reallocate your assets

Is OnMobile Global for sale?

A few weeks back, there was a rumour in the market that TCS was looking at the possibility of buying OnMobile Global. That remained a rumour and did not become news. Those who may have bought the stock on the basis of the rumour may be waiting for an opportunity to sell.

That opportunity may not be far away. As per a recent article in Business India magazine, OnMobile Global is on the block and the latest suitor is Idea Cellular (of the Aditya Birla group). Apparently, Idea is ready to buy a 60% stake in the company at a price of Rs 100 – which is 33% higher than today’s closing price of Rs 74.40.

If this rumour turns out to be true, then investors may be able to pocket a neat gain if they enter at the current market price. Acquisition of a 60% stake – or even a lower stake - will trigger an open offer to existing shareholders.

In a post on the telecom sector a couple of months back, it was observed that the OnMobile stock was trying to form a bottom by consolidating within a rectangular band between 54 and 73. It was suggested that the stock could be a contrarian bet, but with a strict stop-loss at 52.

In Jan ‘12, the stock crossed above the rectangular consolidation zone, rose to an intra-day top of 84 on Feb 15 ‘12 and briefly breached its falling 200 day EMA. It has now pulled back to the top of the rectangular band. An upward bounce can be used to add/enter.

What if the rumour about Idea‘s stake buy remains a rumour – like it happened in the case of TCS? The company is fundamentally strong, and its overseas businesses, which contribute nearly half of its total revenues, are supposedly doing well. Domestic business is under pressure. Q3 results showed 12% top line growth but a 11% dip in the bottom line.

With smart phones becoming cheaper by the day and 3G service roll-outs in progress, OnMobile’s expertise in value-added software services should see growing demand. Even if the stake sale doesn’t go through, it may be worth holding on to the stock. A buy-back by the management, with a ceiling at Rs 85, is currently in progress.

10 Questions about Supreme Court's cancellation of 122 2G telecom licences

In a historic judgement today, the Supreme Court has cancelled 122 2G telecom licences issued irregularly during the tenure of the former Telecom minister, A Raja (currently cooling his heels in a government hospitality center). The judgement was hailed by all concerned. After an initial dip, even the stock market celebrated by closing higher.

The judgement raises several questions. Here are 10 of them. Knowledgeable or enlightened readers are welcome to provide some answers.

1. By cancelling the licences, is the Supreme Court pointing the finger of blame towards the UPA government?

2. Isn't the business community equally to blame for trying to get something for nothing (well, not exactly nothing)? What happens to the not-exactly-nothing passed on to the badminton-playing government guest at Tihar jail?

3. Many of the 2G licences were acquired with no intention of providing any services, but merely to sell them off to others at huge profits - defrauding the government exchequer. Who will recover the immoral profits, and how?

4. A new licencing process will be formulated over the next 4 months and the licences will be reissued. Who will ensure that the new process will not turn out to be 'A Raja - Part 2'?

5. What happens to the licence fees already paid by the cancelled licence holders? Will those fees be forfeited?

6. What if some of the cancelled licence holders do not bid in the new process? Will the existing licence holders (whose licences have not been cancelled) be allocated extra spectrum?

7. Most of the licence holders borrowed money from the banks to launch their services. Will those loans become NPAs? Is that the reason why the Bank Nifty took a dive?

8. The Supreme Court judgement must have sent shivers through the spines of foreign investors in the telecom sector. Will FDI flows into India - badly needed to get our economic engine revving again - get affected by this judgement?

9. The charges against P Chidambaram brought by Subramaniam Swamy will be judged by a lower court later this week. If the judgement is adverse, can it bring down the UPA government? If yes, will the stock market crash?

10. Will the Supreme Court judgement open up a proverbial Pandora's box? Will all scams - whether in mining, CWG, Adarsh Housing, fodder - come under the Court's scanner? Will that be good or bad for the country?

Some of these questions may get answered over the next few days, as the government assesses the detailed judgement and formulates its plan of action. Till then, it will be good to hear what readers think.

Notes from the USA (Nov 2010) – a guest post

In this month’s guest post from the USA, KKP lucidly explains the current state of the US economy. The unemployment situation, consumer spending, real estate market and the state of mobile technology have been covered in his inimitable style. He is a very busy person, and I am grateful to him for sparing time from his tight schedule to write these posts every month. If you enjoy reading the contents – as I am sure you will – please let him know by leaving a comment.

-----------------------------------------------------------------------------------------------------------

State of US Economy from Ground Zero

Just returned from a 10 day vacation during which we visited three different cities and was able to poll a lot of family, friends and strangers about the state of the US economy.

In a nutshell, the economy is faltering, but moving forward at a slow pace, with a small ray of light visible in Oct. and Nov. People with jobs are living their same old life, and those without are struggling pretty badly. Unemployment pay from the government is kicking in for those unemployed for over 52 weeks to let them survive. Also, there is no end in sight for those unemployed, or for those looking for a greener pasture for new/better jobs. Pay increases are rare, while the cost of living is increasing in certain sectors, especially healthcare, insurance, automobiles, and labour.

Real estate is slowing down due to the winter-season. Government homes are being sold with a bit more vigour, and new rules will allow faster processing of the same. The shopping season from Nov 15^th through Jan 5^th is a huge measure of the economy, and my feeling is that we are going to see electronics sector show marked improvement, while rest of the sectors (home, furnishings, clothing, high-end elements, décor etc) will show a pull back.

U.S Labour shows the following pictures to us, and I fully agree with it based on the recent trip:

Looking Forward

Based on a poll done with white and blue collar workers, an upswing in electronics spending is expected. Better than one-in-four respondents (26%) say they’ll spend more on consumer electronics over the next 90 days and only 29% say less – a big 8-pt jump from last month and a net 3-pt improvement over a year ago (Nov 2009).

A Jump in Laptop Buying Among Consumers is the reason for this fuel being added. The survey also found a big jump in planned laptop purchasing, with 10% saying they’ll buy a laptop in the next 90 days – 2-pts better than last month and matching the highest level in this survey in three years. Planned desktop buying is down 1-pt from previously.

The introduction of Tablets, iPads, Samsung Galaxy and other ‘Smart Phones’ is really fueling a lot of employment and the spending amongst the middle income earners. The generation of kids moving upward from the ‘dumb’ phones to ‘smart’ phones is also helping. As Microsoft, Motorola, Samsung, LG, Kyocera and others launch the ‘pad’ craze, there will be more of it. Of course, only selective buyers can afford the upfront fee, and the monthly service fee associated with it.

But, there is a place for these devices in the consumer marketplace, as well as in small businesses. Imagine waiting in a Doctors’ office and getting an iPad to check your email/voice-mail and other web-sites. You will never complain about the ‘delay’ in the doctor getting to you. This allows the doctors to book ‘more’ appointments. Just know that ‘this idea is coined by yours truly’, but people are going to start thinking about this.

All in all, unemployment is holding steady, with people being laid off on one side, and over-time being paid to currently employed, while certain electronics industries are selectively hiring.

The up move in the US stock market is breathing life into individual investors, and allowing trading firms to continue to pump money into automation, more programming for automated-trading (called High Frequency-Trading) and giving a feeling of relief to the retirement accounts that have taken a beating for the last 3 years.

Real estate is still in the doldrums, and more so now since we have zero degree centigrade weather in the Northern part of the US (normal). This slows down searching, buying and selling, which means that inventory shows a bump up. This is when investors like me put on two coats and cruise the city for ‘deals’. On the other side, as I prepare apartments for rent and put out a sign, they get rented within a week or two. This is a record time showing that more and more people are not getting loans, and/or are walking away from their homes since their mortgages are upside-down (loan is greater than value of home, by a margin).

Finally, technology is turning from ‘wired’ to ‘wireless’ with the introduction of ‘true 4G’ technology to individuals and businesses. This will ‘truly’ revolutionize the way we live, think, do, download/upload, entertain, get updates and control our own individual world. We are talking about 10mbps up and down speeds allowing HD movies to be watched while we are walking around, and controlling home devices from miles away.

This may be the ‘catalyst’ that will fuel fire into the US economy in 2012-2015 with embedded devices/chips inserted in anything/everything, making the movie with Will Smith (iRobot and Enemy of the State) a full reality. Lets see how this pans out…

------------------------------------------------------------------------------------------------------------

KKP (Kiran Patel) is a long time investor in the US, investing in US, Indian and Chinese markets for the last 25 years. Investing is a passion, and most recently he has ventured into real estate in the US and also a bit in India. Running user groups, teaching kids at local high school, moderating a group in the US and running Investment Clubs are his current hobbies. He also works full time for a Fortune 100 corporation.

The bullish case for Bharti Airtel - a guest post

Readers of this blog may know that I am not very hopeful about a rosy future for the telecom services industry in India, and aired my bearish views in a post back in Oct '09.

My friend Nishit was one of the first to write back with his counter arguments. I continue to remain sceptical about telecom services sector stocks, while Nishit is much more optimistic. He has written a guest post with his well-argued bullish views.

Please be generous with your comments, so that Nishit may get motivated to present his views every month - and readers will get the benefit of a different outlook and experience. Without further ado, here is Nishit's post.

---------------------------------------------------------------------------------------

What does one look for while buying a stock? Let me begin this post by asking the question which most of us grapple with every time we think of buying a stock.

A company with ethical Management, a business model which is scalable, a sector which offers immense growth potential, and right valuations. If our stock has all these four attributes then we have a winner on our hands.

Let us start by talking about the Sector. The Indian Telecom story is a strong and vibrant example of our progress in the world. This is due to the enabling policies of the government in liberalizing the sector and an example of private sector entrepreneurship.

We have 654 million mobile phone subscribers (as of May 2010) - second largest after China, and one of the fastest growing markets in the World. It’s not the numbers that excite me, or the number of subscribers being added. It’s the potential for exploiting the 3G and Wireless Broadband services.

Mobile Number Portability (MNP) has been further delayed to October 2010. Implementation of this will only benefit the big players. This is because the heavy spenders want good quality networks that the big players offer. The people who will switch from Bharti or Vodafone will be the low-end folks who will want to save the extra penny.

India is a country where Broadband penetration has been poor. This is due to the lack of infrastructure and laying out of cables across the country. Wireless Broadband wipes out the problem in one sweep. The existing cell phone towers can be used to relay the transmission.

Data Services would be the key going forward. Today, Corporates use the Photo Data card for access of its employees to their networks after office hours. The minimum amount of rent paid is Rs 500 and upward. This is just a precursor of things to come with 3G rollout. As we move forward towards 4G and 5G, broadband capacities would permit us to watch Television on mobile phones using the bandwidth.

Rural India suffers from acute shortage of infrastructure. Using Wireless, the government can leapfrog this bottleneck and offer various services like Mobile Banking, Weather Updates, and Health-care, using Tele-medicine. The key as usual lies in the execution.

Bharti is India’s largest pan-India operator with almost 30% market share in terms of revenue. It is better to look at the revenue than the number of subscribers. More importantly, Bharti has a large number of corporate subscribers who use the entire gamut of services offered by Bharti in terms of mobile connections, and bandwidth for Internet connectivity. Bharti also has landing stations for Internet gateways from abroad.

Another business stream, which is currently loss making for Bharti, is DTH, or Direct to Home Services. This I believe is the future for satellite TV viewing in India. The cable operators do not offer High Definition (HD) broadcasts, there is no transparency and no control over what one can watch. Many times I end up missing Formula One racing because the cable guy has only 3 channels available for sports and is showing Cricket on two of them and Football on the third. No cable operator offers recording of live television or pay-per-watch movies.

Bharti has 2.5 Million subscribers now and about 25% market share in incremental subscriptions. The Indian Telecom story would get saturated in new subscriber acquisitions sooner or later. Bharti has taken over the Zain operations in 15 countries in the African continent. This would catapult Bharti to Number 5 in the World in terms of subscribers.

Bharti has a very strong Management led by Sunil Bharti Mittal. It also has a very good second line that takes care of operations (like Manoj Kohli and Akhil Gupta). The investors in Bharti Airtel include Singtel, which owns about 32% of Bharti.

The Downside Risk comes from further price wars in this sector. We believe that eventually there would be a shakeout with only 3-4 operators other than BSNL and MTNL existing per circle.

Bharti is currently trading just under Rs 300, with EPS of Rs 24.39 and P/E of about 12. One could add on declines closer to its 52 week low of Rs 255 and hold it for 5 years.

---------------------------------------------------------------------------------------

(Nishit Vadhavkar is a Quality Manager working at an IT MNC. Deciphering economics, equity markets and piercing the jargon to make it understandable to all is his passion. "We work hard for our money, our money should work even harder for us" is his motto. Nishit blogs at Money Manthan.)

Some practical examples of Behavioural Finance

Some practical examples of Behavioural Finance will show a different aspect - more from the psychological point of view - at how and why investors buy and sell stocks. It goes against the grain of Efficient Market theory that is built upon rational decision making taking into account all available information.

One of the interesting advantages of writing a blog is that readers get an opportunity to react almost immediately and let the writer know what they think about his opinions. Thereby opening a direct window to the workings of their minds.

In a recent post, I had suggested that investors should bail out of the telecom sector stocks, instead of jumping in after the price correction. In another post, I suggested investors should sell the Punj Lloyd stock at every rise, after it posted awful Q2 '09 results.

The reactions were swift. While some agreed with my views, many did not. The arguments were strong and apparently 'rational'. But what about investment behaviour?

"Bharti Airtel is the best in customer service, has a pan-Indian network, is a leader with a stash of cash, will be less affected by the price war and number portability. So, the stock was a 'steal' at 350 and more should be bought if it slipped below."

Why 350? Because it was 30% lower than its recent high of 500? Possibly. The human mind likes to work with nice round numbers. A classic example of 'recency bias' in Behavioural Finance. The price of 500 had remained in the investor's mind as a 'recent high'.

A few more readers thought 350 was a good price to enter. An example of 'confirmation bias' - investors looking for confirmation of a 'buy' decision. What happened when the stock dropped to 340?

"I sold at 340 so that I can buy it back at 325", was one comment. An example of 'loss aversion'. This is one of the most insidious biases for long-term investment success. Instead of admitting a mistake and booking the small loss, an investor tries to take on additional risk to avert the loss.

I'm not sure what this particular investor did when the Bharti Airtel stock first fell to 325 and then went below 300.

A comment about Punj Lloyd was:

"I sold the stock at 290 and was happy to buy it back at 240. Will buy more if it goes further down. The company has a huge order book, has global operations and is a Larsen and Toubro in the making."

Now that the stock has dropped below 200, 'Regret theory' in Behavioural Finance suggests that the investor has probably avoided selling the stock and is holding on to it to avoid the regret of making a bad decision.

'Prospect theory' in Behavioural Finance postulates that investors behave differently in situations depending on whether they are faced with a loss or a gain. They feel more pain at the prospect of losses than they feel elated by an equivalent gain. In other words, a 10 point loss in a stock costing 100 may cause more distress, than a 10 point gain causes happiness.

In actual experiments with different groups of investors, when evaluating the prospect of a sure gain, most investors become risk-averse; but faced with sure loss, they become risk-takers.

No wonder, Benjamin Graham has written: "The investor's chief problem - and even his worst enemy - is likely to be himself."

Are you an irrational investor?

Otherwise perfectly logical and rational people tend to become irrational when they become investors. Why does it happen? An entire field of academic study has grown around this riddle - called Behavioral Finance.

One of the questions I often face goes like this: 'I bought XYZ Co. at 450 and was thrilled to see it go to almost 550 but didn't sell. Now its at 100. Should I buy more to bring down my average cost? When can I expect to get back my original price?'

A rational investor should have sold when the price rose 100 points in a short period, or when it came down from 550 to 450. At worst, he should have sold when the price dropped to 400.

Instead, he hung on till the price dropped to 25, but didn't buy then. Now that the price is up past 100 he wants to buy again. If I'm brutally honest, my answer to the two questions would be 'No' and 'Never'. He would be better off getting out now. Unfortunately, loss-aversion - another irrational trait - may keep him from doing just that.

That may be an extreme example, but it isn't that far fetched. Here is another one. Say you've bought a stock at 250, following which the stock drops to 175. You decide to hold on because you've done your homework and the fundamentals are strong.

Eventually, the stock starts rising again and reaches 225. What would you do? Sell and book a small loss? Or, hold on at least till you get back your cost price of 250? Chances are, you'll opt for the latter - only to see the stock hit 230 and start falling like a brick. You eventually book a loss at 200.

Let's look at another situation. You buy a stock at 50, and within a week it starts to soar, and soon reaches 80. You decide to ride the wave. Within 6 months, the stock hits 110. More than double your original investment! You are elated, and book profits.

The stock consolidates for a while, and then takes off again. You watch in horror as it scales 150, 200, 250, 300 within the next few months. The person who bought from you at 110 made more money, though you had entered at a much lower cost.

Holding on too long when a stock is falling, or getting out too soon when a stock is rising, or expecting to get back the cost price are common mistakes that tend to get repeated. But such irrational investor behavior can be corrected through awareness and experience.

A little more complicated behavior pattern but equally disastrous for your wealth is not knowing that you don't know something. An example of that happened after a recent post on the telecom sector. I had suggested that the best of the telecom sector may be behind us and investors should switch to other sectors.

I received several arguments about Bharti Airtel being a great company that looks after its customers, plenty of growth is still left in the sector, buying Bharti after the recent correction would be a smart move, and so on.

Did the telecom sector suddenly turn bad? No. But the signs of saturation were clearly visible. Introduction of even lower call rates and delay in 3G spectrum auction were the last straws. Poor subscriber additions for the leading players confirmed that the tide is turning.

Most investors, particularly those who had entered the sector early and made huge gains, may find it difficult to accept that a major shift is happening in the telecom sector. It is gradually becoming a slow-growth stalwart sector from being a fast-growth sunrise sector.

Accepting and learning from your mistakes and acknowledging that you may not know as much as you think you know are the steps towards becoming a rational investor rather than remaining an irrational investor.

Should Indian investors switch out of Telecom Sector stocks?

Indian investors have several choices about investing in the Telecom Sector. But should they use the correction in the telecom sector stocks to jump in or bail out? Let us have a look at the players.

There is the behemoth of fixed line services - MTNL, whose stock has promised much and delivered little. BSNL is yet to be listed, but its performance leaves a lot to be desired. Both had misused their earlier monopoly by taking customers for granted and providing atrocious services.

Now they are trying to hang on to reducing market shares in a shrinking market. Both joined the wireless services bandwagon late. Efforts to provide new-age services like broadband (mostly ADSL) and IPTV have been marred by poor technology, slow implementation and lack of a service orientation.

Then there are the myriad wireless service providers, of whom Bharti Airtel has been the clear leader and Reliance Communications (RCom) the follower. This is one area where the Tatas have not done well at all. The other players are fighting to reach critical mass.

The 'hockey-stick' style growth in mobile telephony is showing signs of maturity. While subscriber growth continues to be good, ARPUs (Average Revenues per User) have been steadily falling. Strict government regulations on spectrum allocations, geographical operations, equipment purchase, and high licence fees leave very little room for flexibility in operations.

The service has become commoditised - with every one offering similar call plans and rates. The industry is very capital intensive with low sales to asset ratio. A Rupee needs to be spent for every Rupee earned. Ongoing maintenance and upgradation of technology is a constant drain on resources. Trying to generate new revenue sources through satellite TV services have further added to costs.

The last straw seems to be the entry of new overseas competitors like Virgin and DoCoMo. With per-second billing rates likely to become the industry standard, ARPUs will drop faster. This will benefit consumers but not the service providers. EPS will take an immediate hit, and the stocks are already being derated.

Lastly, there are the fringe players. Handset, network and switching equipment manufacturers are mostly MNCs, unlisted in India. The odd MRO-Tek has been around for years without the stock doing anything remarkable.

The value-added software providers space looks interesting, but has small players. Subex is making losses. OnMobile has good pedigree but the stock is expensive. Geodesic and Tanla seem to be doing well, but it is difficult to assess if their business models are sustainable and scalable.

So, the short answer to the question is: Yes. Why not invest in sectors where growth is visible and the future is less ambiguous?

(Many readers may not agree with my bearish views about the Telecom sector. I would like to hear your counter arguments.)

Stock Chart Pattern - Bharti Airtel

The stock chart pattern of Bharti Airtel will reveal why it is one of the favourite stocks of institutional and retail investors. Not only has the company provided innovative products and services, its rapid growth has provided huge capital appreciation to investors.

Today it has announced a maiden dividend and a 2:1 stock split. That should further consolidate its leadership position as the stock-to-own in the telecom services sector.

The 6 months closing chart pattern of Bharti Airtel shows that it has been outperforming the Sensex during the recent rally:-

(Please right-click on the image above and open it in a new tab or window for a better view.)

Bharti had six straight closes above its 200 day EMA, while the Sensex continued to play hide-and-seek with its long-term average. The rise from the Mar '09 low has also been much sharper than that of the Sensex.

The 20 day EMA has moved well above the 50 day EMA and is likely to pierce the 200 day EMA from below. That will be the first confirmation that Bharti Airtel has entered a bull phase.

The slow stochastics is comfortably ensconced in the overbought zone and not showing any signs of moving out. The MACD and its signal line are both rising.  The RSI is about to enter the overbought zone. All good signs for the up move to continue.

But there are a few contra-indications. The ROC has turned down. Bharti's rise during the rally has been a bit too steep. Steep rallies tend to correct sharply as well. The biggest concern is the volume - or the lack of it. Such a rally should have been supported by a rapid rise in volumes. That hasn't happened - and is a negative sign.

Bottomline? An existing holder can keep riding the rally or book partial profits. Potential investors in Bharti Airtel should keep observing the chart pattern for a decent correction and then enter.

Stock Market News, Financial News - Mar 23, 2009

Tata Nano to hit roads in July

By Janaki Krishnan

MUMBAI (Reuters) - The Nano, the world's cheapest car, will hit Indian roads in July, four months after its formal launch on Monday, and demand is expected to far outstrip supply as the price tag of around $2,000 draws legions of new buyers.

Hundreds of thousands are expected to put their name down for Tata Motors' Nano, including many previously limited to motorbikes or public transport.  (More ...)

U.S. lays out plan to attract buyers for toxic debt

By David Lawder and Glenn Somerville

WASHINGTON (Reuters) - The U.S. Treasury Department on Monday rolled out detailed plans for persuading private investors to help rid banks of up to $1 trillion in toxic assets that are seen as a roadblock to economic recovery.

Generous government financing will underpin the so-called Public-Private Investment Program, which Treasury will kick off with $75-$100 billion that comes from its existing $700-billion bailout fund approved by Congress last fall.  (More ...)

Vodafone, Telefonica to share Europe networks

Financial Express

Vodafone and Telefonica have agreed to share network infrastructure in four European countries to meet a surge in demand for mobile broadband while saving hundreds of millions of pounds in costs.

The agreement announced on Monday, the biggest of its kind to cover multiple countries, is a sign of the urgency to save money and also of the success of flat-rate data packages in stimulating demand for Internet access on the go.  (More ...)

IMF says clean banks before crisis can be solved

GENEVA (Reuters) - The economic crisis cannot be resolved until the banking sector is cleaned up, the head of the International Monetary Fund said on Monday.  (More ...)

-----------------------------------------------------------------------------------

ADVFN World Daily Markets Bulletin (excerpts)

US Stocks at a Glance

Major Averages Rally To New Highs For The Session

Stocks are showing significant strength during mid-morning trading on Monday, as investors cheer the new plan for fixing the downtrodden banking sector. Some strong earnings in the retail sector and existing home sales figures are also helping to drive stocks higher.

Earlier in the day, Treasury Secretary Geithner announced his plan to help the troubled banking industry. The plan will involve setting up an investment fund to buy mortgage-related securities and other assets that are driving down the balance sheets at the banks.

The new Public Private Investment Program would combine taxpayer money with private funds, aiming to buy loans and free up banks to renew lending.

On the economic front, existing home sales for the month of February came in considerably better than analysts had anticipated, rising to a rate of 4.72 million from a pace of 4.49 million units in January. Economists had expected sales to slip to a 4.45 million unit rate.

The major averages have seen some further upside in recent trading, rising to new highs for the session. The Dow is currently up 276.22 at 7,554.60, the Nasdaq is up 51.03 at 1,508.30 and the S&P 500 is up 28.73 at 797.27.

European Shares

Barclays boosted by iShares talk

Financials and miners are leading London’s advance as the market awaits an announcement later today by US Treasury Secretary Timothy Geithner in which he is expected to give more details of the US government's stimulus plans.

With further help for the banking system expected to be announced by Geithner, banks are understandably in demand. Barclays is higher on talk that it could conclude a sale of iShares business for £5bn as early as this week. Barclays bear Sandy Chen at Panmure Gordon is unimpressed, and said his 40p price target for Barclays could be cut if the bank offloads iShares.

Asia Markets

Asian markets advance on stimulus expectations; resource, financials gain

The major markets across the Asia-Pacific region advanced on Monday, led by resources and financial stocks, on higher commodity prices. Hopes of a stimulus package from Japan to revive the economy, announcement from China that it would meet its growth target and expectations of initiatives from U.S to unclog the credit markets and remove the toxic assets from the banks' balance sheets, more than offset the weaker closing in Wall Street on Friday.

In Asian trading, crude oil futures for May delivery, in their first day as a front-month contract, are currently at $52.67 a barrel, up $0.60. On Friday, the April futures expired at $51.06 a barrel, up $0.55 from their previous close.

Commodities

Gold Prices Edge Lower Again

Gold prices inched lower again in early trading on Monday, giving back a little more of last Thursday's massive rally. Trading took place amid the release of details of a new government plan to subsidize private investors' purchase of toxic assets on the books of troubled banks.

April-dated gold fell to $947.50, down $8.70 for the session. Prices dipped as low as $947.20 after earlier trading at $958.10.

Stock Market News, Financial News - Mar 19, 2009

India adds 13.45 m mobile users in Feb - TRAI

NEW DELHI (Reuters) - Indian mobile firms added 13.45 million subscribers in February, a performance bettered only by January's record signings of 15.41 million, data from the telecoms regulator showed on Thursday.

The country's mobile subscriber base rose to 375.74 million at end-February, the Telecom Regulatory Authority of India said, rising 3.7 percent from January.  (More ...)

India, China agree to remove irritants in trade

Financial Express

China, concerned over recent six-month ban by India on its toy exports on health and safety grounds, has called for boosting and diversifying the bilateral trade between the two countries. It has agreed to give India more market access. 

India-China bilateral trade during 2007-08 was to the tune of $37.9 billion with the balance tilted in favour of China. India's exports amounted to $10.8 billion while its imports were $27.1 billion.  (More ...)

Tata Motors ties up with Indian Bank for retail finance

India's largest auto maker, Tata Motors, on Thursday said it has tied up with public sector lender Indian Bank for providing financing facilities to its passenger vehicle customers.

"In order to provide an added facility of car finance to its customers, Tata Motors has entered into an understanding with Indian bank for financing its range of passenger vehicles," the company said in a statement.  (More ...)

----------------------------------------------------------------------------------

ADVFN World Daily Markets Bulletin (excerpts)

US Stocks at a Glance

Major Averages Turning In A Mixed Performance

Stocks have come off their highs in mid-morning trading on Thursday and are showing significant uncertainty as investors respond to mixed news from the economic and corporate fronts. The major averages are currently turning in a mixed performance.

The uncertainty follows a late day rally in the previous session, when investors benefited from a positive reaction to the Federal Reserve's plan to buy treasury notes and mortgage-related assets, driving a sharp upward move in late day trading.

European Shares

London’s advance is growing in strength, despite expectations of a weak opening on Wall Street. Financials lead the advance, supported by miners, on hopes that the US programme of quantitative easing will boost the world’s major economy.

In a move mirroring recent actions by the Bank of England, the US central bank said it would move to buy treasury notes with maturity dates of between two to 10 years to “help improve conditions in private credit markets.”

Asia Markets

Asian markets end mixed; Financials advance on U.S initiative to unclog credit markets

Mixed trading was witnessed among the major markets in Asia-Pacific region on Thursday, with markets in Japan, Taiwan and South Korea drifting lower while markets in Australia, China, Singapore, Hong Kong, Malaysia and Indonesia ended higher.

In Asian trading, crude oil advanced $0.87 a barrel to $49.01 in electronic trading, after closed down $1.02 at $48.14 a barrel on the New York Mercantile Exchange on Wednesday.

Commodities

Gold Surges More Than $50 An Ounce

Gold soared in early trading Thursday amid recession fears on Federal Reserve's plan to buy as much as $1.15 trillion in bonds. The metal surged in electronic trading following the announcement Wednesday afternoon.

April-dated gold moved to $948.00, up $58.90 for the session. The metal hit as high as $951.90 in electronic transactions.

Stock Market News, Financial News - Mar 18, 2009

Investment drought spells fresh energy crisis

By Barbara Lewis and Simon Webb

VIENNA (Reuters) - No sooner has the world recovered from a deep economic downturn than it could face a set-back from surging oil prices, energy leaders warned on Wednesday, citing a sharp drop in investment in the sector.

Representatives of consumers, producers, national and international oil companies agreed at an OPEC seminar that a weaker oil price had meant delayed or cancelled projects. (More ...)

Maxis commits $10 billion to Aircel

NEW DELHI (Reuters) - Malaysia's Maxis Communications Bhd is investing $10 billion in its Indian unit Aircel to accelerate its expansion in the world's fastest-growing mobile market, and is interested in bidding for 3G spectrum.

Half of that has already been spent expanding Aircel's network, Maxis chief executive Sandip Das said at the launch of services in the lucrative Delhi zone on Wednesday, adding he hoped to nearly double the number of subscribers this year.  (More ...)

IBM in talks to buy Sun Microsystems

By Ritsuko Ando and Anupreeta Das

NEW YORK (Reuters) - IBM is in talks to buy Sun Microsystems Inc, sources with knowledge of the matter said, a move that could bolster the technology giant against rivals in the high-end computer server market.

International Business Machines Corp is offering to pay at least $6.5 billion, or double Sun's Tuesday closing price of $4.97, The Wall Street Journal reported online earlier. Shares of Sun jumped 64 percent in pre-market trading to $8.16, while IBM shares fell 2 percent to $90.89.  (More ...)

-----------------------------------------------------------------------------------

ADVFN World Daily Markets Bulletin (excerpts)

US Stocks at a Glance

Dow And S&P 500 Falling To New Lows For The Session

Stocks are seeing considerable weakness in mid-morning trading on Wednesday, as traders cash in on the market's recent gains. The major averages are giving back some ground after ending the previous session at their best closing levels in almost a month.

The weakness in the markets is largely due to profit taking, with traders cashing in on the strong gains seen in recent sessions. However, selling pressure has remained relatively subdued, helping the major averages to hold onto the bulk of their recent gains.

Some traders may be staying on the sidelines ahead of the Federal Reserve's announcement of its latest decision on interest rates.

European Shares - Back to square one

Leading shares are mixed after a poor set of UK unemployment figures put the kibosh on an early attempt to continue yesterday’s rally.

The number of people out of work rose to 2.03m in the November - January quarter from 1.97m in the October to December period. A record 138,400 people signed on for job seeker’s allowance in February. This was well in excess of the 90,000 new claimants that had been expected and brings the total number of claimants to 1.39m.

Asia Markets - Markets advance on Wall Street's gains

The major markets across the Asia-Pacific region advanced for the fourth day in succession, led by financials. However, the rally seems to be losing steam, with profit taking in select stocks and a slump in metals generating some selling pressure. Except Australia, all the other markets in the region ended in the green.

Crude oil ended $0.71 down in Asian trading at $48.45 a barrel in electronic trading, after having closed at $49.16 a barrel on the New York Mercantile Exchange on Tuesday. In the New York session, the commodity gained, $1.81 after hitting an intra-day low of $46.53 and a high of $49.82.

About Stock Market News and Insider Trading - the Bharti case

In a blog post on Feb 1, '09, some guidelines about how to disseminate stock market news and financial news into 'good', 'great', 'bad' and 'worse' categories were provided. I had also given suggestions about how to form buy or sell strategies using such categorisation.

One of the notable stock market news items last week (on Thursday, Feb 12, '09) was the announcement that Manoj Kohli, CEO and Joint MD of Bharti Airtel had disposed off his entire stock holding in the company, comprising some 123,000 shares worth more than Rs 7 Crores.

53,000 shares were sold on Mar 6, '09 and 70,000 shares were sold on Mar 9, '09. By stock market standards, these are not huge numbers. Kohli's holdings represented less than 0.01% of Bharti Airtel's equity capital, and he isn't a founder-promoter of the company.

But the stock market took the news badly and the stock tanked by more than 6% on Thursday when the Sensex rose by more than 2%. The stock remained under pressure even on Friday and gained only 1.5% whereas the Sensex gained nearly 5%.

There were rumours of the CEO's imminent exit from Bharti, which Kohli denied. He also claimed that he held 180,000 stock options, some of which had already vested. But the near simultaneous announcement of the promotion of Sanjay Kapoor, from President - Mobile Services to a newly created post of Deputy CEO, only strengthened the rumour-mongers.

Chairman Sunil Mittal later wrote to the company's institutional investors clarifying that Kohli was very much an integral part of the Bharti top management; had taken Mittal's permission to sell his holdings; that ESOPs were meant to enrich employees; and top level reshuffles are routine affairs at Bharti.

Some analysts also pointed out that the reason for the stock's fall had less to do with Kohli's resignation and was more due to the announcement by TRAI about reduction in termination charges that telecom providers pay each other for local calls to 20 paisa (from 30 paisa earlier).

With a user base of 90 million plus, Bharti's top line may get affected by about 4% and EPS by 1% if they do not reduce their tariffs proportionately. If Bharti reduces tariffs proportionately, top line may go down by 8% and EPS by 11% (as per estimates of Macquarie Securities).

So what should investors and potential investors do? To answer that question, we must first analyse the issues in 'insider trading'.

Insider trading means buying or selling of a company's shares or debentures or bonds by individuals who may have privileged information about the company before such information is made public. In many countries, including India, it is perfectly legal for company insiders like executives and directors to buy or sell  company securities as long as it isn't done based on non-public information.

How can investors find out if any insider trading is above board or not?  A simple thumb rule is to look at the quantum of sale. (We will only discuss about insider selling. Insider buying is usually a positive, particularly in a bear market, because it demonstrates faith in the future of the company.)

National Stock Exchange records reveal that Bharti Airtel director Akhil Gupta has sold more than 90,000 shares over the past three months. Company Secretary Vijaya Sampat sold 16000 shares in Dec '08. But such information didn't affect Bharti's stock price in a major way.

Why so? Because 16000 shares is considered 'normal' profit booking. What about 90,000 shares - which is not much less than Kohli's 123,000? This is where it gets interesting.

After selling 90,000 shares, Akhil Gupta's balance holding is nearly 11 lakh shares! That means he sold less than 10% of his holdings. Whereas, after selling 123,000 shares, Kohli's remaining balance holding is zero (well, 180,000 of mostly unvested stock options).

There was also a rumour that Kohli wants to move out of Gurgaon and buy property in New Delhi. In which case, he could have sold a smaller amount that would have been enough for a down payment.

Inspite of Kohli's and Mittal's denials, there seems to be more here than meets the eye. So is this bad news or worse news? Only time will reveal that.

Bear markets have this ability of inducing reticence among promoters who are otherwise ready to blab away about their company's brilliant outlook. Bad news gets revealed in dribs and drabs.

My hunch is that there may be worse news to follow. Kohli may have done what Satyam top executives did in Dec '08. Bail out before the really bad news hits the market. I don't expect that Bharti Airtel is involved in any Satyam-like fraud. But isn't it better to be safe than sorry?

My advice to potential investors is to wait for the Bharti Airtel stock to get derated. Alternatively, if every thing turns out hunky-dory, enter when the market shows signs of turning around.

Existing investors can hold on with a stop loss at 480. If 480 doesn't hold, Bharti can go to 420.

Stock Market News, Financial News - Mar 12, 2009

Factory output drops in Jan, more falls seen

By Surojit Gupta and Rajkumar Ray

NEW DELHI (Reuters) - India's factory output fell for the third time in four months in January, and with government and Reserve Bank steps to lift a sagging economy likely to take months to kick in further falls are expected.

Industrial production fell 0.5 percent in January from a year earlier, a marginally better performance than the previous month's upwardly revised contraction of 0.6 percent.

(More ...)

------------------------------------------------------------------------------------------

Tata Comm sees capex up to $500 mln next FY

NEW DELHI (Reuters) - Tata Communications has resources to fund ongoing capital expenditure and plans to spend about $400-$500 million during the fiscal year that begins April 1, a senior official said on Thursday.

Srinivasa Addepalli, senior vice president for corporate strategy, told reporters that did not include funds for a pending Wimax auction due later this year. (More ...)

------------------------------------------------------------------------------------------

Bharti Airtel CEO says to continue as CEO, joint MD

NEW DELHI (Reuters) - Bharti Airtel chief executive Manoj Kohli said on Thursday he had sold his shares in the firm for personal reasons, but still had 180,000 options and would remain as CEO and joint managing director of India's top mobile operator.

-----------------------------------------------------------------------------------

Nagarjuna Construction gets orders worth 2.63 billion rupees

MUMBAI (Reuters) - Nagarjuna Construction Co Ltd said on Thursday it received three new orders worth a total 2.63 billion rupees each of which has to be completed over a period of 24 months, it said in a statement to the exchange.

-----------------------------------------------------------------------------------

Global economy to shrink 1-2 pct: World Bank

Financial Express

The global economy is on track for its worst recession since the 1930s with output likely to shrink by 1-2 per cent this year, World Bank President Robert Zoellick told the 'Daily Mail' newspaper.

Central and eastern European countries were particularly vulnerable, he said, urging rich nations to do more to fill the financing gap left by an exodus of capital from the developing world.

"My guess is that growth will probably fall about 1 to 2 per cent," he told the paper in its Thursday edition. (More ...)

----------------------------------------------------------------------------------

More private life insurers freeze branches

Hindustan Times

The list of private insurance firms freezing branch expansion is getting longer.
After ICICI Prudential and Bajaj Allianz, others such as Max New York Life, Kotak Life and Reliance Life are following suit, while Aviva Life Insurance has said that it will be selective in opening branches, depending on the market conditions.

Private life insurers are saying that their focus has now turned to managing rising expenses, and increasing the productivity of employees and agents, as capital runs scarce. (More ...)

Stock Market News, Financial News - Mar 11, 2009

Citigroup cheers markets but economies still bleak

By Jonathan Stempel and Sachi Izumi

NEW YORK/TOKYO (Reuters) - Citigroup said it was profitable in the first two months of 2009 and Toshiba was reported to be set for an operating profit of $1 billion next year, two rare shards of corporate news to lift markets.

Asian stocks rose on Wednesday, following a strong rally on Wall Street, but economic news remained gloomy.  (More ...)

-----------------------------------------------------------------------------------

'US protectionism not to impact Indian IT'

By ENS Economic Bureau

At a time when US President Barack Obama's statements on curbing tax breaks for outsourcing companies in the US rang alarm bells in the Indian IT sector, Indian IT representative body National Association of Software and Service Companies (Nasscom) today said it does not expect the recent protectionist measures taken by the US government to impact the Indian IT-BPO industry.  (More ...)

-----------------------------------------------------------------------------------

NHAI plans funding to road developers

By Gunjan Pradhan Sinha, Indian Express Finance

In a bid to prevent work on road projects from coming to a halt, the government is considering a proposal to allow the National Highways Authority of India (NHAI) to extend working capital loans to developers. In a meeting held on March 7, the roads secretary and NHAI officials discussed the possibility of such a move with road developers. According to developers present at the meeting, the move may help them tide over the tight credit situation they face for projects undertaken by them under the National Highways Development Programme (NHDP).  (More ...)

-----------------------------------------------------------------------------------

LandT, 8 others in race for Chennai mega container terminal

By Financial Express Bureau

Nine companies have submitted their requests for qualification for the development of India's first mega container terminal at the Chennai port. Estimated to cost Rs 3,686 crore, the terminal, with a rated annual capacity of 4 million TEUs, is likely to become operational by 2012-2013.

The last date for submitting the request was on March 9, 2009. The applicants are: LandT Transco Pvt Development Project Ltd, Chennai; Navayuga Engineering Co Ltd, Chennai; DP World Pvt Ltd, Mumbai; IL andFS Maritime Infra Co Ltd, Mumbai; Vadinar Oil Terminal Ltd, Mumbai; Mundra Port and SEZ Ltd, Ahmedabad; Lanco Infratech Ltd, Hyderabad; FGI Group of companies, Malaysia and GVK-Leighton Consortium, Mumbai.  (More ...)

-----------------------------------------------------------------------------------

Nine million GSM users added in Feb, tally rises to 277 million

By Financial Express Bureau

The country added a total of 9 million GSM subscribers in February, taking the total tally to 277 million at the end of the month. This marks an increase of 3.43% in the total number of subscribers, compared to the month of January.

The country's largest telecom operator, Bharti Airtel, added the highest number of GSM subscribers during the month, at 2.5 million. With this, the total number of mobile subscribers for the company went up to about 91million. Bharti continues to have the largest market share in the GSM segment with 32.88%. Bihar once again added the largest number of subscribers for the company, with 4 lakh additions. Karnataka added the second highest number of subscribers with around 3 lakh, with Rajasthan close behind with 2.9 lakh additions in the month.  (More ...)

Stock Market News, Financial News - Mar 10, 2009

IOC to raise Haldia refinery capacity by Dec '09

NEW DELHI (Reuters) - Indian Oil Corp will shut a crude unit at its 120,000 barrels per day (bpd) Haldia refinery for about two months from mid-October to raise the refinery's capacity by 25 percent, a company official said on Tuesday.

"We are raising the annual capacity of Haldia refinery to 7.5 million tonnes (150,000 bpd). Our target is to increase the capacity by the end of this year," director of refineries B.N. Bankapur told Reuters.  (More ...)

-----------------------------------------------------------------------------------

Global economy to contract in "Great Recession" - IMF

DAR ES SALAAM (Reuters) - The world economy is likely to shrink to "below zero" this year, in what many are now referring to as the "Great Recession", the head of the International Monetary Fund said on Tuesday.

"The IMF expects global growth to slow below zero this year, the worst performance in most of our lifetimes," IMF Managing Director Dominique Strauss-Kahn told African political and financial leaders in the Tanzanian capital.  (More ...)

-----------------------------------------------------------------------------------

'US economy set for 2nd half rebound'

Financial Express

The recession-hit US economy is proving weaker than economists expected just a month ago, but forecasters still think a recovery is in the cards for later this year, a survey released on Tuesday showed.

"Consumer spending and residential investment are expected to turn positive and begin boosting GDP growth in the third quarter of this year," the newsletter Blue Chip Economic Indicators said, summarizing its survey of private economists.  (More ...)

-----------------------------------------------------------------------------------

Job market seen weak in June '09 quarter

Financial Express

The Indian job market will remain weak in the June '09 quarter with a record number of companies undecided on hiring due to economic concerns, but it will be better than in the March quarter, a survey showed.

Sixty-four per cent of employers were uncertain about their hiring plans for the coming quarter, the survey of 3,600 companies across seven industries by staffing services firm Manpower showed on Tuesday.

The net employment outlook was at a seasonally adjusted 25 per cent for April to June, above a 3- year low of 19 per cent in the March quarter but 17 percentage points below the figure in the year earlier period.  (More ...)

-----------------------------------------------------------------------------------

Tower erection plans could dip 40%, valuations to take a hit

By Rachana Khanzode, Indian Express Finance

Valuations of tower companies are expected to take a hit, with almost a 40% cut in the projected tower erection plans of telecom companies. As many as 2,00,000 towers of the total 4,96,000 planned by 2011 are expected to be dropped, according to industry analysts. The projections for towers include those by independent tower operators, operators with tower companies and telecom operators.  (More ...)

-----------------------------------------------------------------------------------

Two-wheeler market not hard-hit by slowdown

Indian Express Finance

Defying the downtrend blues, the two-wheeler market is still witnessing a positive growth in the consumer market, said S Srinivas, general manager, marketing, TVS Motor Company, at the launch of the latest edition of the Scooty series, 'Scooty Streak'. Speaking about TVS, he said since April 2008 up to February 2009, the company has maintained an average growth of 5%, coinciding with year-on-year growth of the same. Performance indicators like inventory cycle also remain healthy, at a span of seven to eight days, he noted.  (More ...)

Stock Market News, Financial News - Mar 9, 2009

L&T says to go ahead with bid for Satyam

MUMBAI (Reuters) - Larsen & Toubro Ltd will go ahead with a bid for beleagured software firm Satyam Computer Services Ltd, a Larsen spokesman said on Monday.

"We expect to go ahead with the bid," spokesman D. Morada told Reuters.  "The bid price has no relation to the market price," he said, when asked about the basis for valuation of the bid.  (More ...)

-----------------------------------------------------------------------------------

GLOBAL MARKETS - Asia stocks spooked by U.S. woes, dollar dips

By Eric Burroughs

HONG KONG (Reuters) - Asian stocks dipped on Monday on worries about the fate of U.S. automakers and banks, while the dollar retreated as market players booked profits on the rise to a three-year peak last week.

Markets sent mixed signals at the start of the week, with the safe-haven dollar and government bonds losing ground even as financial shares dragged down most stock indexes. Oil prices jumped for a second day on hopes for more OPEC supply cuts. (More ...)

----------------------------------------------------------------------------------

Global economy will shrink in 2009: WB

Financial Express

The World Bank said that the global economy will shrink this year for the first time since World War II and that the global financial crisis will make it tougher for poor and developing nations to access needed financing.

Trade is forecast to fall to its lowest point in 80 years in 2009, as economic hardship ripples across the globe, the bank said. The most drastic trade slowdowns are expected in East Asia, where growth had been robust, the bank said in a paper prepared for a meeting of finance ministers and central bank officials next week. (More ...)

-----------------------------------------------------------------------------------

DoT asks BSNL, MTNL to stop 3G services

Financial Express

Acting upon the directions of the Intelligence Bureau (IB) the department of telecommunications (DoT) has asked the two state-owned telecom service providers, BSNL and MTNL to stop providing 3G services till call monitoring services are made available to the intelligence agencies.

The 3G services provide for high speed data and video streaming and are distinct from the plain voice-based 2G services.  (More ...)

-----------------------------------------------------------------------------------

'India-China mutual investment to boost economy'

Indian Express Finance

Facing a slide in economic growth due to the global financial crisis, China has favoured an increased two-way investment with India to check the impact of the downturn.

Chinese ambassador Zhang Yan said the two economic powers should "go hand in hand" and enhance bilateral cooperation in economic field to send out a positive message and help the world economy also to a great extent. Seeking mutual investment in key sectors like infrastructure, Yan said both India and China have huge foreign exchange reserves which need to be utilised properly.  (More ...)

Stock Market News, Financial News - Mar 5, 2009

India Inc looks at easier loans now

Financial Express

India Inc on Wednesday welcomed the Reserve Bank of India's move on rate cuts as it believed that it will contribute to the positive sentiments in the current downturn scenario. After market hours, the Reserve Bank of India said it was lowering the repo rate, at which it lends to banks, to 5% from 5.5%, effective immediately. It also cut the reverse repo rate, at which absorbs excess cash from the banking system, to 3.5% from 4.0%, effective immediately, it said in statement. (More ... )

-----------------------------------------------------------------------------------

India's lower sugar output to hit global consumers

Indian Express Finance

A sharp decline in sugar output in India, the world's second biggest sugar producer, in 2008-09 crop year is likely to result in global shortfall and then may lead to higher prices, says a report.

According to a report by the Netherlands-based Rabobank, there would be a deficit of over five million tonne of sugar this year globally, which would eventually lead to higher prices. (More ... )

-----------------------------------------------------------------------------------

Fuelling demand and deficit

By Viveat Susan Pinto, Indian Express Finance

The third stimulus package came quietly. This is unlike the two that preceded it, which were announced with much fanfare. But the government had to act, that too fast, given that the third wave of the global meltdown is expected to hit home shortly. Signs of it are already visible.

Experts say that default issues in East European countries, which borrowed heavily over the years to finance their economic activity, are likely to put further strain on an already weak global banking system. This could trigger a further loss of confidence among banks to lend, leading to a general squeeze in liquidity. (More ...)

-----------------------------------------------------------------------------------

RComm, new telcos for lower termination fee

Indian Express Finance

New telecom operators such as Swan, Unitech, Datacom and Loop, and Reliance Communications have asked regulator Trai to reduce the termination charges, while existing GSM players, led by Bharti, want the 30 paise per minute charge to continue.

Deciding on the new mobile termination charge is going to be a tough call for Trai given these extreme positions and the fact that a lower termination fee in the overall review of interconnection charge will impact the retail tariff. (More ...)

---------------------------------------------------------------------------------

29 FDI proposals worth Rs 616 crore cleared

Indian Express Finance

The Centre has cleared 29 FDI proposals worth Rs 616 crore, more than half of which will be brought in by AAPC of Singapore in the hotel business in India.

AAPC Singapore Pte Ltd will invest Rs 365.78 crore in an Indian company for constructing and managing low-budget hotels as per the proposals cleared on the recommendation of the Foreign Investment Promotion Board (FIPB).

However, the government has deferred as many as 19 proposals including those of Hiranandani Realtors, Yamaha Motor India, BNP Paribas Securities Services and Quippo Telecom. It also rejected a proposal by ICP Investments (Mauritius) Ltd. Besides, AAPC, a proposal by cargo-handling company ABG Bulk Handling was approved, involving FDI of Rs 90 crore for making downstream investment. India's first regulated entertainment venture fund Cinema Capital Ventures Fund will bring in Rs 50 crore for investment in the fund.

Global telecom leader Telcordia Technologies of USA will invest Rs 45 crore in buying equity in Indian companies to carry out mobile number portability solutions. (More ...)

Stock Market News, Financial News - Mar 3, 2009

Govt brings blue chip PSU subsidiaries under performance scanner

By Gunjan Pradhan Sinha, Indian Express Finance

The performance of subsidiaries of blue chip public sector companies may now come directly under the government's scanner. This will especially pin down high-profile arms of oil PSUs such as ONGC Videsh, Mangalore Refineries & Petrochemicals, Numaligarh Refineries and Chennai Petroleum Corporation to numerical financial and operational targets set by them in consultation with the government.

The department of public enterprises (DPE) has recently decided to include all subsidiaries in addition to parent companies while entering into a MoU at the beginning of the financial year. In the MoUs, firms agree to certain targets - operational and financial - agreed voluntarily in consultation with the ministry. (More ... )

-----------------------------------------------------------------------------------

Auto sales grow in Feb but industry outlook still bleak

By ENS Economic Bureau

Automobile sales in February have shown that launching new vehicles even in tough economic times pays off. Market leaders Maruti Suzuki, Hyundai Motors India Limited (HMIL) and for the first time in 7 months even Tata Motors have managed to record positive sales growth.

Arvind Saxena, senior vice-president, marketing and sales, HMIL, said in a cautionary mood, "February 2009 sales saw a slight upturn with double digit growth for the industry but the overall market situation continues to be challenging and not much should be read into the February growth as last year in February the budget was to be announced and a substantial amount of sales were deferred till March. We expect a fairly flat sales growth curve for the industry for the first quarter ending March, 2009."  (More ... )

-----------------------------------------------------------------------------------

Jubilant gets Canada regulatory approval for heart drug

By Financial Express Bureau

The domestic integrated pharma player Jubilant Organosys Ltd, now stands poised to grab a significant market share of the injectible drug, Sestamibi, meant for heart disease and coronary artery disease in Canada. The current market size of the drug stands at around $25 million in Canada. Jubilant announced on Monday that Draxis (the company's subsidiary in Canada), has received approval for the generic Sestamibi from the drug regulator Health Canada'.  (More ... )

----------------------------------------------------------------------------------

Spectrum fee relief to save top telcos Rs 4,000 cr each

By Anandita Singh Mankotia, Indian Express Finance

The country's top three GSM operators Bharti Airtel , Vodafone Essar and Idea Cellular will save around Rs 4,000 crore each in the current financial year, as the department of telecommunications (DoT), has left it to the new government to take a decision on charging a one-time spectrum acquisition fee from these companies for holding spectrum beyond 6.2 mhz.

All the above companies have spectrum in excess of 6.2 mhz in some circles. In view of this, communications and IT minister A Raja had earlier said the government is working on a formula to charge these firms for the excess spectrum held by them. (More ... )

Stock Market News, Financial News - Feb 24, 2009

Wall Street plunges to 1997 levels

Financial Express

Wall Street indexes plunged to their lowest close in nearly 12 years on investor disappointment with the latest plan from Washington to prop up the ailing US banking system.

The Dow Jones Industrial Average sank 250.89 points (3.41 per cent) to 7,114.78, crashing below its November 2008 bear market low and hitting its lowest close since May 1997.

The broad-market Standard and Poor's 500 index shed 26.72 points (3.47 per cent) to 743.33, its lowest finish since April 1997.

The tech-heavy Nasdaq composite slid 53.51 points (3.71 per cent) to 1,387.72, its lowest level since November 2008.

-----------------------------------------------------------------------------------

Hindustan Oil Exp ties up $125 mln term loan from Eni

MUMBAI (Reuters) - Hindustan Oil Exploration Company Ltd said Tuesday it has entered into a loan agreement with Eni Coordination Centre, S.A., Brussels (ECC) for a $125 million term loan.

A loan by way of external commercial borrowing (ECB) will be utilised to part-finance various development activities of the company, it said in a statement.

On Friday, the company had said a consortium of banks had refused to disburse $87 million out of an earlier-negotiated $100 million term loan due to turbulent market conditions and added it is in advanced stages of making alternative arrangements.

At 11:05 a.m., shares in the company rose 2.53 percent to 58.70 rupees in a weak Mumbai market.

-----------------------------------------------------------------------------------

BGR Energy says wins $8.57 mln order from Iraq

MUMBAI (Reuters) - BGR Energy Systems Ltd said it won a contract worth $8.57 million to design, manufacture and supply steel storage tanks from a state-run Iraqi company.

The order for supply of floating and fixed-roof steel storage tanks will be completed in 12 months, it said in a statement on Monday.

-----------------------------------------------------------------------------------

Authorities to crack whip on pharma cos to recover Rs 110 cr

By Soma Das, Indian Express Finance

District collectors will soon start knocking on the doors of the country's top listed pharma companies including, Wyeth Ltd, GlaxoSmithKline Pharmaceuticals and Dr Reddy's Labs for recovery of Rs 110 crore dues payable to National Pharma Pricing Authority (NPPA).

Of this, Wyeth Ltd owes NPPA around Rs 4.4 crore, while GSK Pharma owes Rs 7.5 crore.

The sum has been levied by the drug price regulator for overcharging on the prices of regulated drugs. The NPPA has initiated action against 31 pharma companies through 39 cases in Maharashtra, Andhra Pradesh, Uttar Pradesh, Haryana, Himachal Pradesh, Tamil Nadu, Madhya Pradesh and Gujarat.

An NPPA official said the companies have not only defaulted by selling medicines regulated by it at more than the permitted prices but also failed to act on follow up payment obligations. (More ...)

-----------------------------------------------------------------------------------

NTT DoCoMo twin proposals get nod

Indian Express Finance

The cabinet committee on economic affairs (CCEA) on Monday approved Japanese telecom firm NTT DoCoMo's twin proposal to acquire 27.3% stake in Tata Teleservices Ltd and an open offer for 20.25% equity in Tata Teleservices (Maharashtra) Ltd. NTT DoCoMo will acquire 27.3% stake in TTSL for Rs 12,924 crore and for an open offer in TTML the Japaense firm would shell out Rs 949.07 crore, home minister P Chidambaram said.

The CCEA approval comes after the Foreign Investment Promotion Board (FIPB) had earlier approved the proposal. Subsequently CCEA's approval was needed as is required in cases of investment by foreign companies above Rs 600 crore.