HEADLINES (05 June 2009)

Date: 05 June 2009

GOOD MORNING

Thought for the day

“Winners are losers who got up and gave it one more try.”

–Dennis DeYoung

GENERAL

1)With the Left parties out of the Centre’s decision-making process, the new UPA government is poised to embark on all long-pending reforms in the financial sector along with PSU disinvestment, while initiating measures to combat the ongoing slowdown by enhancing public investment in infrastructure and focussing on the recession-hit export sectors.

Hindu

ECONOMY

2)EVEN though food items became dearer because of the base effect, the wholesale price index(WPI)-measured annual inflation for the week ended May 23 dropped to 0.48%. Fruits, vegetables, pulses and cereals became costlier over the week, while fuel index and index for manufactured items remained unchanged. But agri-analysts suggests that with a normal monsoon in offing, inflation food items is likely to remain soft.

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CORPORATE / INDUSTRY

3)Nissan Renault Automotive India Private Ltd, the first joint venture between the global alliance partners Renault and Nissan, announced that its investment plans for India are intact, allaying fears of the project being called off due to effects of global slowdown.

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MONEY & BANKING

4)The rupee on Thursday recovered but still ended lower for the third straight day against the dollar, this time by 13 paise at 47.20/21, despite the late rally in bourses and the weakness of the US currency in Asian markets.

BL

5)The government is planning to infuse Rs 16,000 crore in over a dozen public sector banks by subscribing to equity shares through right issues. The move is aimed at bolstering the banks’ capital base and help them meet the domestic financing requirements. United Bank of India, Dena Bank, Bank of Maharashtra and IDBI Bank are expected to be among the next set of banks whose capital infusion proposals will be taken up.

BS

6)ICICI Bank, once a price warrior in the retail loan market, may be getting back in the game. The country’s second largest bank has lowered interest rates on loans by 50 basis points, making it the
second rate cut in six weeks. The move will reduce rates on home and auto loans for new and existing borrowers of ICICI. Other big lenders are also pruning rates in the absence of a quick loan
offtake. On May 7, India’s largest home finance company HDFC lowered its prime lending rate – the benchmark rate to which all floating rate loans are linked – by 25 basis points. In a less publicised move, HDFC made an additional 50 basis point reduction in interest rates for new borrowers availing loans in the range of Rs 30 lakh to Rs 1 crore. This was done by revising the spread between PLR and the loan rate.

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INSURANCE

7)INDIVIDUALS who invest their savings in annuity plans offered by insurance firm could see a drop in their tax burden. Insurance Regulatory Authority of India(Irda) is in talks with the government
to make annuity-plans more tax-efficient. If the proposal is accepted in the coming budget, it will augment returns for retired employees and help insurers market these plans better. An annuity is a contract issued by an insurer to make regular payments to a policy-holder for the rest of his life after retirement. The frequency of payment depends on the way the policy is structured.

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MARKETS

8)The Sensex on Thursday closed above the 15,000-level for the first time in nine months as the new UPA Government indicated that divestment of public sector companies was on the cards. The 30-share index closed at 15,008.68, or 0.90 per cent higher than on Wednesday. The broader Nifty rose 0.93 per cent, closing at 4,572.65. The BSE Midcap index rose 2.26 per cent and the small cap index gained 2.2 per cent, both outperforming the Sensex. Though the Sensex opened with a negative gap of 116 points tracking the Asian markets, they picked up following the President’s comments on the economy, with the positive European markets providing further impetus.

BL

9)Kinetic Engineering hit a 5 per cent upper circuit to Rs 55.65 on bagging an order from an European automobile manufacturer. The order requires it to supply specialised transmission gear assemblies.

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10)Nitin Fire Protection rose 3.84 per cent to close at Rs 312.45 on announcement of its fund-raising plans. The board today approved plans to issue capital of up to $50 million through sources such as
QIP. The stock opened at Rs 304.9 and hit an intraday high of Rs 318 and a low of Rs 295. The scrip made a 52-week high of Rs 465 (June 4,2008) and a low of Rs 115 (March 9,2009). The scrip has delivered 55 per cent returns in the last one month.

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11)If the global markets do not throw in more surprise and if the Indian government does go ahead with reforms, the Sensex could be trading at the 19,000 levels by the end of the current calendar
year, said Mr Ridham Desai, Managing Director at Morgan Stanley Equity Research. Even if there is bad news globally, the market here will not touch the lows it did in October of last year, he
said. Corporate earnings will rise over the next two fiscal years as there would be an increase in domestic demand with more consumers spending and with improved sentiment.

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12)In an order which suggests that Ketan Parekh might still be playing an active role in the stock market, the Securities and Exchange Board of India on Thursday debarred 26 entities from transaction in securities until further orders.

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MUTUAL FUNDS

13)Mutual fund houses which have been waiting in the wings for conditions to improve have already started flocking the markets, lining up several new fund offers(NFOs) to be launched over the next few months. In fact, Shinsei AMC, the Indian arm of Shinsei Bank, Japan, has already filed an offer document for its ‘Industry Leader Fund’ with market regulator Securities and Exchange Board of India(Sebi) and will be launching schemes in the next two months.

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COMMODITIES

14)Spot bullion prices ended down on Thursday, tracking intra-day losses in global markets, traders said. However, depreciation in rupee against the dollar restricted further fall in domestic prices, they said. Pure gold closed at Rs 14,830 for 10 gm, down Rs 115 from Wednesday. Standard gold declined by similar margin to end at Rs 14,830 for 10 gm. Silver closed at Rs 23,265 a kg down Rs 535 rupees.

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15)Pepper futures slipped to trade marginally lower on the country’s leading agri exchange, National Commodity and Derivatives Exchange (NCDEX), as traders preferred booking profits. On the NCDEX,
pepper for the most-active June month contract was trading 0.52% down at Rs 12,425 per quintal, with an open interest for 4,282 lots. The pepper for delivery in the July-month contract also turned weak.

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REAL ESTATE

16)Realty major Parsvnath Developers today said it bagged an order worth Rs 19.86 crore from Delhi Metro Rail Corporation(DMRC) for construction of a residential project. “The company has bagged a contract from DMRC for construction of a residential project,” Parsvnath Developers said in a filing to the Bombay Stock Exchange.

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BUSINESS PROCESS OUTSOURCING

17)SOME of the big offshoring players are now relying on ‘speed dating’ – a quicker and cheaper channel for selecting the vendor for their back office and IT outsourcing needs – in an economic climate
that is forcing these firms to reduce their sourcing time and costs. Under traditional outsourcing procedures, a contract worth $30 million to $100 million and above, could take up to nine months to
finalise a vendor. This long process includes inviting bids from several vendors, spending time in understanding each vendor’s competency, and preparing a final shortlist of suppliers to chose from.
‘Speed dating’ cuts through the expenses and time invested in clinching outsourcing contracts allowing firms to select a vendor within 60 days. The experienced outsourcers are now beginning to avoid an exhaustive analysis of the entire vendor landscape and are instead preferring to keep the work with their existing suppliers.

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INFORMATION TECHNOLOGY

18)Even as they moved many hundred of jobs back to India over the last couple of quarters to cut costs on the back of a slowing global economy, Indian IT firms have realised the importance of creating
more local jobs in the geographies in which they operate. This is especially true in the US where they need to counter growing “protectionist” rhetoric from US senators and pressure from the Obama
administration. Thus, over the last six months alone, analysts estimate that for the first time, Indian IT-BPO firms would have created over 10,000 jobs in international locations, the majority
of them in the US.

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19)With the economic downturn continuing in western markets, India’s third-largest software exporter Wipro is seeing opportunities in the domestic market in a big way. ‘Given the kind of spend that is happening and that will happen even in India and China, there will be big
opportunity,”Wipro CFO Suresh Senapathy said.

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INTERNATIONAL

20)Oil rose above $67 a barrel on Thursday after a 3.5 per cent decline the previous day, boosted by forecasts of higher oil prices from US investment bank Goldman Sachs.US crude for July delivery rose $1.10 to $67.22 a barrel by 1135 GMT. London Brent crude gained $1.43 to $67.31. Further support for oil prices came from a weaker US dollar, which can boost the appeal of oil and other commodities as a hedge against inflation.

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FOR MORE INFORMATION, PLEASE BROWSE THROUGH THE FOLLOWING SITES.

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