Pragmatic Investments

Date: 11 June 2009

Thought for the day

“He who fears being conquered is sure of defeat.”

–Napolean Bonaparte

GENERAL

1)United States Under Secretary of State William Burns said in New Delhi on Wednesday that India is a major foreign policy priority for his country and New Delhi will be a crucial global partner of Washington in the 21st century.

Hindu

ECONOMY

2)FINANCE minister Pranab Mukherjee told the public sector banks they must cut their interest rates within the next three weeks to spur investment, ignoring the banks’ plea for some more time to take a call. “You have your constraints, I have my compulsions”, the minister said in his summing up notes to chiefs of the public sector banks on Wednesday, according to a source who attended the meeting.

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CORPORATE / INDUSTRY

3)Empirical evidence gathered from auto component manufacturers in the country shows the industry is on the path of recovery, growing faster than expected. Leading players say that the outlook for the auto component industry is good on the domestic front, but discouraging on the export front.

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4)Drug manufacturer Dr Reddy’s Laboratories on Wednesday said it has received US regulatory approval for anti-heatburn capsules. The company has received US Food and Drug Administration approval for its Abbreviated New Drug Application for Omeprazole Mg OTC, Dr Reddy’s Laboratories said in a filing to the Bombay Stock Exchange.

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MONEY & BANKING

5)The rupee gained around 24 paise against the dollar on Wednesday, as other international currencies rallied against the greenback in the overseas markets. The domestic currency opened at 47.31 and gained to touch an intra-day high of 47.24, which was also the day’s close as against the previous close of 47.48.

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6)THE government plans to split the process of merging the six associate banks with the State Bank of India, based on their status as listed or unlisted entities. The finance ministry is working on a plan to merge unlisted State Bank of Hyderabad, State Bank of Indore and State Bank of Patiala in the first phase.

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INSURANCE

7)THE Insurance Regulatory & Development Authority will ask life insurance companies to comply with more conservative accounting norms as a prelude to their eventual listing in the stock markets. J Hari Narayan, chairman of Irda said in Kolkata that the accounting methods could be in place by August.

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8)FEARING a loss of management control to their foreign partners, promoters of some insurance companies are lobbying the government to restrict the increase in foreign direct investment limit to only portfolio investors and NRIs. This fresh lobbying has gained ground even as private life companies look forward to a policy announcement easing the FDI limit to 49% from 26%.

ET

MARKETS

9)The benchmark indices made strong gains for the second consecutive day on Wednesday. At its day’s high of 15,580, the Sensex touched a 10-month record, after an intraday gain of 412 points through a volatile trading session. It closed 340 points or 2.25 per cent higher from Tuesday, at 15,466.81. The broader Nifty was up by 2.29 per cent. The markets rose in line with the global markets; there was also positive sentiment ahead of the budget, said Mr Dharmesh Mehta, Head of Broking, Enam Securities Ltd. Both foreign and domestic investors were net buyers, for Rs 738 crore and Rs 590 crore respectively.

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10)Large-stocks were back in action today, after moving sideways in the last couple of days, pusing the Nifty past the crucial resistance level of 4,650. The index closed at 4,655 on strong buying in heavy weights, such as Reliance Industries, ICICI Bank and Larsen & Toubro. HDFC Bank, Reliance Communications, Reliance Infrastructure and Tata Power surged over 5 per cent on fresh long positions.

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11)THE smart comeback of the Sensex has bloated valuations of many stocks to levels where they are quoting at abnormally high price-to-earnings(P/E) ratio now. And despite the low traded volumes, some of these stocks have even crossed their previous peaks scaled when the Sensex touched the historic 21,000 mark. Every bull market has elements of irrational exuberance. It’s no different this time, say brokers. “When the market is booming, some unscruplous elements, including operators become active to take the advantage of the situation by manipulating select shares,” said Satco Securities and Financial Services CEO ST Gerela. The broader market, he feels has driven by excess liquidity and fundamentals which haven’t changed. “It’s time to exercise caution as valuations look at bit stretched at current levels,” said Mr Gerela.

ET

12)THE prospect of fresh money flowing into Satyam Computer has further livened up interest in the stock. Already boosted by the company’s better-than-expected revenues and profits, which were revealed for the first time since its accounting scam on Tuesday, the Satyam stock has hit the 10% upper circuit for the second straight session to close at Rs 73.50 on Wednesday.

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IPO

13)RETAIL investors may get discounts in the range of 5-10% on cut-off prices for initial public offerings and follow-on-public offers for stakes in PSUs. The proposed which is expected to be part of the disinvestment policy that will be announced in the Union Budget in the first week of July, a finance ministry official told ET.

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MUTUAL FUNDS

14)EVEN as asset under management(AUM) of fund houses for May was above Rs 6 lakh crore, huge redemption was seen in the income and liquid schemes, while good amount of inflows were seen in the equity schemes. This came in the backdrop of improved market condition in the past few months.

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15)Mutual Funds will now be allowed to invest in Indian Depository Receipts(IDRs), the Securities Exchange Board of India(SEBI) said in a circular on Tuesday. The regulator clarified that mutual funds can invest in IDRs offered by companies under Indian Depository Receipts Rules 2004. IDRs enable foreign companies to raise money from India by listing themselves here.

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COMMODITIES

16)Copper rallied to an eight-month high on Wednesday, supported by dollar weakness and improving economic sentiment, while aluminium was boosted by a fall in inventories. Copper, used extensively in power and construction, traded at $5,207 a tonne from a close of $5,170 on Tuesday. It hit a day’s high of $5,264, its highest since October 15.

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17)Both gold and silver recovered on the bullion market in Mumbai on fresh local buying interest coupled with higher global advices. Standard gold(99.5 purity) moved up by Rs 25 per ten grams to Rs 14,630 from Tuesday’s closing level of Rs 14,605. Silver ready (.999 fineness) rose by Rs 60 per kilo to Rs 23,285 from Rs 23,225 previously.

ET

REAL ESTATE

18)Real estate major Unitech is launching a new home brand ‘Uni Homes’ for affordable housing projects. These projects will offer efficiently-planned and designed affordable homes with target prices ranging between Rs 10-30 lakh, in various cities. The first project under this brand will be launched in June this year, in Chennai.

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COMMUNICATIONS

19)TRIGGERING a fresh round of tariff war, the country’s sixth largest mobile operator, Tata Teleservices Ltd and Japan’s NTT DoCoMo, will launch GSM handsets for less than Rs 1,000 in the rural markets. The move will mark the company’s entry later this month into the GSM segment, for which an investment of $2 billion has been earmarked.

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BUSINESS PROCESS OUTSOURCING

20)In the tough economic climate prevalent currently, clients are increasingly expecting higher value from providers of BPO services, which go beyond mere transaction-based services. BPOs, on their part, are seeing the more sophisticated clients moving from usage based and FTE-(Full-Time Equivalent) based pricing to outcome-based pricing models, top industry executives participating in the Nasscom Strategy Summit 2009 in Bangalore on Wednesday. At a seminar on BPOs making the shift from traditional transaction-based services to tranformational services, senior BPO industry executives agreed that strong domain skills, platform expertise and alignment of the BPO’s strategies to the clients vision is necessary to gain competitive advantage in a tough market place.

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21)EXPLORING new terrains, Indian BPO companies are now shifting their focus to Continental Europe for a change. Although Europe accounted for just 11% of India’s BPO revenue in 2008, Eastern Europe has gained favour with Indian companies that are looking to tap the specialised skills available there and address the growing outsourcing needs in Continental Europe.

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INFORMATION TECHNOLOGY

22)JAIPUR is fast becoming a rival for outsourcing hub Gurgaon, with large IT and BPO firms setting up offices in the pink city. More than 100 IT and ITES companies have set up operations in Jaipur in the past three years, growing the total exports from the city by 40%, to about $100 million in the current fiscal year, according to senior state officials.

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INTERNATIONAL

23)OIL prices soared above $71 a barrel on Wednesday to reach a 2009 high, as investors poured money into crude markets to protect themselves against the inflation risks posed by a weakening US dollar. Oil, which typically trades inversely to the dollar, has more than doubled in price in three months as traders also cheered news showing the worst of a severe US recession is likely over. They brushed off data – such as a 9.4% US unemployment rate in May – that suggest crude demand will remain weak. Even growing inventories have not checked oil’s stellar rise.

ET

24)CONFIDENCE in the world economy rose for a third month as US job losses slowed and global production improved, adding to signs the worst of the crisis is over, a Bloomberg survey of users on six continents showed. The Bloomberg Professional Global Confidence Index climbed to 43.57 in June from 38.72 in May, reaching the highest level since the survey began in November 2007. A reading below 50 means pessimists still outnumber optimists.

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FOR MORE INFORMATION, PLEASE BROWSE THROUGH THE FOLLOWING SITES.

Karvy Consultants Ltd www.karvy.com
www.khojhyderabad.com
www.indiacorporateadvisor.com
www.karvycomtrade.com (Commodities)
KARVY Global Services Ltd www.KARVYGlobal.com
KARVY Realty (India) Limited www.karvyrealty.com
Economic Times www.economictimes.com
The Financial Express www.financialexpress.com
Business Line www.businessline.in
Business Standard www.business-standard.com
The Times of India www.timesofindia.com
The Hindu www.hindu.com
Deccan Chronicle www.deccan.com
The New Indian Express www.newindpress.com