HEADLINES (04 JUNE 2009)

GOOD MORNING
Date: 04 June 2009

Thought for the day

“The only thing that stands between a person and what they want in life are the will to try it and the faith to believe it’s possible.”

–Rich Devos

GENERAL

1)Wednesday marked a new page in the Indian Parliament’s history with the unanimous election of Meira Kumar as the first women Speaker of the Lok Sabha. Though her election was unchallenged and evoked promises of cooperation from across the floor, members made it clear that there would be no deferential treatment on account of her gender and Ms.Kumar found herself having to expunge remarks even before her maiden address to the House as Speaker.

Hindu

ECONOMY

2)With hopes of a stable government at the Centre, at least six economic forecasters have raised their economic growth estimate for the current fiscal citing lower-than-expected political risk after the recent general elections.

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3)FOR portfolio investors around the world, China may be the hottest market to be in. But Stephen Roach, chairman of Morgan Stanley Asia, would rather place his bets on India. “India has made improvements in the recent years in the standpoint of macro developments, specially higher savings, increased FDI and a modest improvement in the infrastructure share of the Indian GDP,” said Mr Roach, addressing the media at the Morgan Stanley 11th India summit.

ET

CORPORATE / INDUSTRY

4)Ultra Tech Cement, part of the Aditya Birla group, is all set to overtake ACC this month as the country’s largest cement company in terms of production capacity. This will probably be the first time in the last few decades that ACC will slip to the second position.

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5)State-run BHEL on Wednesday said it has bagged a Rs 375-crore order for executing two gas turbine generating units for a project in Oman. “BHEL has won an export order for two gas turbine generating units of 126 MW each from Oman,” a company statement said.

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MONEY & BANKING

6)The rupee touched a seven-month high, but fell in the last one hour of trade on dollar buying. The domestic currency opened higher at 46.91/92 and touched a high of 46.75 during day trade. It weakened to close at 47.06/08, against the previous close of 46.97.

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7)Having put in place high-tech banking solutions, Union Bank of India has stepped up its business target to nearly Rs 3 lakh crore in FY10, CMD M V Nair said. Embarking upon this high-tech business model in 2007, the bank proposes to give syndicated loans of Rs 25,000 crore this year.

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INSURANCE

8)Bharti AXA Life Insurance, is looking at doubling its new business premium by the end of the current fiscal. Talking to reporters on the sidelines of the launch of ‘Gurarantee builder’, a Ulip product, in Mumbai on Wednesday, Nitin Chopra, CEO, Bharti AXA Life Insurance, said “We have set a target for doubling our new business premium from the mark of Rs 293 crore as achieved by our company at the end of the fiscal 2008-09. Similarly, the total revenue of the company, which was at Rs 360 crore as on March 31,2009, was likely to grow two and half times to Rs 1,000 crore by the end of the fiscal.”

FE

9)ICICI Lombard General Insurance plans to launch in the next quarter a critical illness health insurance cover for high net worth individuals, according to a senior company official. “The insurance cover with a high sum assured of around Rs 25 lakh will cover most critical illnesses, generally excluded in insurance policies, such as heart attack, kidney failure, and cancer,” the executive said.

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PENSION

10)THE New Pension Scheme(NPS) for citizens is expected to get a big push with Budget2009-10 likely to extend tax benefits to contributions to the scheme. The finance ministry is considering a proposal to include pension contributions by private citizens to NPS in the Rs 1-lakh limit for tax-deductible investments under Section 80C of the Income Tax Act,1961.

FE

MARKETS

11)Benchmark indices struggled for direction yet again on Wednesday as investors continued to book profits on concerns that valuations have become expensive and a correction was in the offing. The Sensex briefly crossed the psychological 15,000-mark, but investors chose to play it safe as far as frontline shares were concerned. Institutions, both foreign and local, were not heavy buyers, prompting traders to unwind some of their long positions. The Sensex rose to 15,046.43 early in the session before slipping to 14,870.90 at close, down four points over the previous close. The 50-share NSE Nifty gained 5.45 points to close at 4,530.70. Secondline shares continued to be in demand, with both BSE and NSE Midcap indices gaining 1.5% each.

ET

12)HAVING burnt their fingers in small and mid-cap shares last year, retail investors have taken a more cautious approach this time: they are playing the mid-cap rally through the mutual fund route. Market watchers say this could further fuel the rally in secondline stocks, as fund managers will have to deploy the money collected through this schemes, even if it means having to chase prices. As per May figures, renewed inflows as well as an appreciation in portfolio value has boosted the asset base of mid and small-cap schemes by 18-30%.

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13)STOCKS of the top five state-owned banks – State Bank of India (SBI), Punjab National Bank(PNB), Bank of India(BoI), Bank of Baroda (BoB) and Union Bank of India(UBI) – seem to have caught the fancy of investors since the market began the rally on March 9, as consistently strong operational performance begins to rub off on their share prices.Stock prices have more than doubled in the past three months and crossed their highest levels in a year, outpacing the 76% rise in the benchmark Nifty of the National Stock Exchange (NSE).

ET

14)The rally in mid-cap stocks has taken the fizz out of the futures and options(F&O) segment of the equity market. The interest in F&O has come down because investors are pumping in most of their funds into mid- and small-cap stocks in order to cash in on the recent rally, say market players.

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15)Anil Ambani-controlled Big FM, the country’s single largest private FM radio company with a licence to operate 45 radio stations, will be listed at the Bombay Stock Exchange(BSE) and the National Stock Exchange(NSE) in one to two months. Big MF will become the second FM radio operator to list on BSE after Entertainment Networks India Ltd, which operates under the Radio Mirchi brand.

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IPO

16)Hydro power firm National Hydroelectric Power Corporation (NHPC) Ltd is likely to launch its much-awaited Rs 1,670 crore initial public offer by August to part finance its expansion
plans.

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MUTUAL FUNDS

17)Portfolio management services(PMS) of mutual funds are targeting high networth individuals(HNIs) with quant-based schemes. ING Mutual Fund is planning to launch “BSE 200 Quant”, PMS scheme for HNIs and ultra HNIs. The minimum investment will be 20 lakh. It had launched another quant fund in February.

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CORPORATE SCORE

18)OIL India(OIL), the nation’s second-biggest state-run energy explorer, on Wednesday reported a more-than-20% jump in net profit at Rs 2,161.68 crore in 2008-09 mainly due to increase in oil and gas production. OIL, which is planning an initial public offering (IPO) by September, reported the highest-ever net profit of Rs 2,161.68 crore in 2008-09 as compared to Rs 1,790.06 crore in the previous fiscal, a company statement said.

ET

COMMODITIES

19)Copper futures climbed 0.57% in early trade, extending a long rising trend, on the Multi Commodity Exchange(MCX) largely in tandem with firming trends in the global markets where signs of a revival in the economy raised hopes of a take-off in demand for the metal. At the MCX platform, copper for delivery in June-month contract rose 0.57% at Rs 239.75 per kg, in a turnover of 22,124 lots.

FE

20)Silver prices recovered on the bullion market on fresh industrial demand. Gold prices also rebounded moderately on mild buying enquiries. Silver ready(.999 fineness) hardened by Rs 180 a kg to Rs 23,800. Standard gold(99.5 purity) moved up by Rs 20 for 10 gm to Rs 14,875. Pure gold(99.9 purity) looked up by Rs 25 for 10 gm to Rs 14,945.

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REAL ESTATE

21)DLF, India’s biggest real estate firm by market capitalisation, is learnt to have put its commercial property in Andheri, a suburb in Western Mumbai on the block. This property was being developed with Akruti City and the asking price for the property is said to be at least Rs 500 crore.

ET

COMMUNICATIONS

22)THE government has put loss-making PSU Indian Telephone Industries (ITI) on the block. This may perhaps be the first instance where the government plans to split up a PSU into blocks and sell it as it is unlikely to find a buyer for the entire company. This comes after all efforts to merge ITI with state-owned operator BSNL have failed.

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BUSINESS PROCESS OUTSOURCING

23)BPO firms expect a revival in business soon as their clients see stability in their own businesses. Genpact president and CEO Pramod Bhasin said the BPO clients seem to have hit bottom and are now on the path to recovery. “We are seeing clients stabilise. The resumption of business will take a little while longer,” he said. The country’s largest BPO firm by revenues counts GE, Nissan, GlaxoSmithKline and Cadbury among its clients. The BPO industry has managed to withstand the economic slowdown well, pointed out WNS Global Services CEO Neeraj Bhargava, with most companies reporting a decent growth in profitability recently. “The question now is how soon can the topline growth be restored. The deal pipeline is beginning to build up and we are in early stages of pickup,” he said.

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INTERNATIONAL

24)THE number of US homebuyers who agreed to buy a previously occupied home took the largest monthly jump in nearly eight years in April, but there are still plenty of danger signs for the US housing market. Home sales appear likely to head upward this summer, potentially to levels not seen since the stock market collapsed last autumn, but prices are expected to keep falling well into next year. Layoffs, which are causing foreclosures to soar, coupled with rising mortgage rates could dampen any real estate recovery.

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25)AUSTRALIA became the only major western nation to avoid recession during the current global economic slump as it posted surprise growth in the first quarter of 2009. The data came a day after better-than-expected export figures and led prime minister Kevin Rudd to hail Australia as the strongest advanced economy in the world.

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26)Crude oil futures extended declines after a US goverment report showed an unexpected increase in inventories. Supplies rose 2.87 million barrels to 366 million in the week ended May 29, the Energy Department said in a weekly report on Wednesday. Inventories were forecast to decline by 1.5 million barrels. Crude oil for July delivery fell $1.42, or 2.1 per cent, to $67.13 a barrel at 10:35 am on the New York Mercantile Exchange.

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