Money.Umakant.info - Invest In Future

Fwd: [ISG:271938] Re: Day Trading Guide

2011-12-18T14:51:00.001-08:00

Day Trading Guide

DLF

Initiate fresh short position with tight stop-loss only if the stock fails to move beyond Rs 233 levels.

ICICI Bank

Fresh long position can be initiated with stiff stop-loss if the stock reverses upwards from Rs 859 levels.

Infosys

Initiate fresh long position with fixed stop-loss only if the stock exceeds Rs 2,862 levels.

L&T

Fresh long position can be initiated with stiff stop-loss if L&T rebounds up from Rs 1,340 levels.

ONGC

Make use of dips to buy the stock while maintaining tight stop-loss at Rs 273 levels.

Reliance Industries

As long as RIL trades above Rs 860, its near-term outlook stays positive. We recommend a buy with tight stop-loss at Rs 860 levels.

SBI

Fresh long position is recommended with stiff stop-loss only if the stock moves beyond Rs 1,888 levels.

Tata Motors

Initiate fresh long position with fixed stop-loss if Tata Motors climbs beyond Rs 195 levels.

Tata Steel

Fresh long position can be initiated with stiff stop-loss if the stock reveres higher from Rs 444 levels.

Nifty Futures

On Wednesday, Nifty Futures jumped 50 points or one per cent. As long as it trades above 5,192 levels, its near-term stance remains positive. We recommend a buy in Nifty Futures with tight stop-loss at 5,192 levels.

How low can the Sensex go? Aarati Krishnan

2011-12-18T14:42:00.000-08:00

Market may go below 4600 but there are several factors which suggests short sellers need to cut short positions

- Rs has been bottomed out @54+ atleast for few weeks

- Last round of carnage appears to be mainly to trigger SL of bulls @4700 or may be 4600

- There was no aggressive selling by FII ..it seems they are not ready to sell or not able to sell due to poor liquidity

- Forget Index in most of stocks correction is so deep that price has discounted next 2 poor quarters

That does mean market are good technically or fundamentally but Short sellers also should remember you can not make century by hitting every ball towards boundary ..one need to pass some dot balls and maiden over also

Live Research Report Uploads on Docstoc.com by Umakant Chaudhari

2011-11-04T18:23:00.001-07:00

Hello Every one I have syn-ed all my Research Reports on DocStoc.com
here is the link for the same docstoc.com/profile/icestar
All New Research Reports are Uploaded Live as they are send to me on my Email.
Hope this Research Reports Benefit you all for Trading in our Stock Markets.

Research Reports Nov 2011 on Sugar Syn

2011-11-04T17:35:00.001-07:00

https://www.sugarsync.com/share/opa7s89a6byf

Research Reports Nov 2011 on Sugar Syn

2011-11-04T17:35:00.000-07:00

https://www.sugarsync.com/share/opa7s89a6byf

India: Will An "Arab Spring" Turn Into An "Indian Summer"?

2011-06-08T23:02:00.000-07:00

India: Health Costs Impoverishing Millions

Each year, the cost of health care pushes some 39 million people back into poverty, according to a study published in the Lancet medical journal. Patients shoulder up to 80 percent of India's medical costs. Their share averages about $66 (3,000 rupees) annually per person - a crippling sum for the 800 million or so Indians living on less than $2 a day.

A diagnosis of asthma, a broken leg or a complicated childbirth can mean having to choose between medicine or food, spending on treatment or relying on prayer.

While India boasts an economic growth rate near 9 percent, the wealth has done little to help millions burdened by poverty and disease. The poor, aside from struggling to afford care, also face extreme shortages of doctors and medicines.

The situation is particularly dire in rural areas, where more than 70 percent of the country's 1.2 billion people live. Some desperate patients resort to seeing quacks. Others pay bribes. Many simply don't seek help until it is too late.

The World Bank and other experts have warned that failure to address the country's health care woes could take a toll on long-term growth - especially as two-thirds of the population is under 35 and would form the backbone of India's work force for decades.

Yet India's government spends comparatively little on health care: just 1.1 percent of the country's GDP, a figure that hasn't changed much since 2006 when China was spending 1.9 percent; Russia, 3.3 percent and Brazil, 3.5 percent, according to World Health Organization figures.

"The political will is simply not there yet. We have to help realign the country's priorities," said Dr. K. Srinath Reddy, president of the Public Health Foundation of India and part of a government-commissioned committee recommending reforms.

Statistics that might highlight areas of need are scarce, thanks to erratic case reporting, few autopsies and a tradition of quick cremation that destroys evidence of disease. WHO reports often leave India out for lack of data. A recent study in the Lancet suggests malaria deaths could be 10 times higher than estimated.

India, which says hospital costs impoverish a quarter of all patients, has vowed to raise spending on health to 3 percent of GDP by 2015 and provide universal primary health care - but it's an unfilled promise that's been made before.

The Lancet, in a series on India in January, urged the government to double its pledge to 6 percent by 2020 or jeopardize its ability to shake off poverty.

"What is the point of economic success if there is nothing in it for the population?" Lancet editor Richard Horton said. "In a short amount of time you can do a lot - if you have the right leadership, the right administration and the public will. India has the people and it has the funds. We'll see if they can do it."

Meanwhile, India boasts a thriving medical tourism industry with shiny private clinics luring tens of thousands of foreigners for everything from bargain tummy tucks to experimental stem-cell treatments in an industry estimated to be worth nearly 100 billion rupees ($2.3 billion). The pharmaceutical industry is making lifesaving drugs at cut-rate costs, private hospitals are pioneering advances in open-heart surgery and medical schools are churning out physicians eager to work in the West.

For most Indians, however, this is happening in another world.

Uttar Pradesh, one of India's poorest states and home to the padlock-manufacturing city of Aligarh, is a land of barren rural landscapes pocked by crumbling mud huts, wandering cattle and roadside shacks selling potato chips and curry.

Its infant mortality rate - 96 of every 1,000 newborns die - makes it one of the worst places on Earth to be born. The average Indian rate is better at 63 but still grim compared with China's 15 deaths out of every 1,000 births.

The state's leader, Mayawati, who uses only one name, rose from India's lowest caste to power and prominence. She calls health care a top priority. Yet since taking office in 2007 she has spent just $224 million on medicines for the state's 195 million people, while spending $569 million to build memorial parks and statues of leading dalits - also known as untouchables - such as herself.

In rural India, the poor often have to walk kilometers (miles) to reach a clinic, with no guarantee of finding a doctor or the medicine they need. On any given day, at least 40 percent of government doctors are absent - often busy moonlighting for higher pay at private clinics. Drug supplies are also erratic; last year, India was short 35 million vaccine doses for diphtheria and 30 million for tetanus, a Health Ministry report said.

Many patients simply rely on traditional holistic medicine approaches such as ayurveda, or seek help from quacks, who have become so common the government uses them as information sources on everything from environmental contamination to polio outbreaks.

They advertise in graffiti scrawled across roadside buildings in rural Uttar Pradesh, promising treatments for venereal disease, erectile dysfunction, urinary tract infections - and charging according to what patients can pay.

In the meantime, private health care is booming, with clinics and insurance schemes multiplying and driving up costs. There are piecemeal efforts to help: a national mission launched in 2005 to improve rural care, and some states offering to cover hospital bills for the poorest.

Mutual Fund Review: Taurus Tax Shield

2011-06-06T19:03:00.000-07:00

Taurus Tax Shield has seen a turnaround in performance since 2007, but still remains a volatile offering…

The fund has seen a turnaround in its performance since 2007 and has delivered impressively during market rallies since then.

The portfolio is also more diversified. It contained its downfall to an average level in 2008 but is still one of the most volatile offerings in this category. Bold investors can look at this fund.

Strategy

The fund manager invests across the market capitalisation and sectors. The selection of stocks is made on the basis of long-term business prospects and value creation.

Fund Insight

Launched in March 1996, the fund was a laggard with just two annual outperformances. Concentrated stock bets and high exposure to mid and small caps led to it being hit harder during market downturns. The number of stocks in the portfolio never exceeded 20 and it was not rare to see the top 5 holdings account for around 60 per cent of the portfolio.

After being the worst performing tax planning fund in 2006, it grabbed the top slot in 2007, thanks to concentrated stock and sector bets and high exposure to mid and small caps.

Once the market started its southward journey in January 2008, the fund turned into a more diversified offering. The number of stocks increased and allocation to the top holdings decreased. Coupled with increased exposure to large caps and high cash positions, the fund limited its fall to an average level.

There has been a lot of reshuffling in the fund's portfolio as it has seen frequent fund manager changes. Sadanand Shetty, who joined in May 2010, cut down exposure to Engineering and increased it to Financial Services.

Portfolio Insight

A diversified offering of 38 stocks with the top 5 cornering 26 per cent of the portfolio. Prior to 2008, a clear bias towards mid and small caps was evident. More recently, a multi-cap approach has been adopted and the portfolio changes according to market conditions. Large-cap exposure has moved from 62 per cent (December 2008) to 25 per cent (October 2009) and now stands at close to 74 per cent.

Risks

The track record shows a lot of aggression in terms of concentrated sector and stocks bets. In September 2007, Financial Services accounted for around half (52.43%) the fund's portfolio. Such stances could backfire tremendously.

Easy Guide to Financial Planning

2011-06-06T19:02:00.001-07:00

Financial planning simply means planning finances to meet your future needs. There has been a lot of material based on academic research on the subject, developed over the last few decades and being used by individuals now.

The most popular and followed approach is goal-based financial planning. This simply means:

IDENTIFY A FUTURE NEED: It could be buying a house, planning a vacation, children's education, retirement, etc.

MEASURE THE TIME: Determine how much time will be required to fulfil the need. Will it take six months, 1 year, 3 years, 5 years or 20 years?

RISK PROFILE: Determine the ability to take risk to achieve the goal. In layman's terms, how much loss the individual can bear for the investment to meet his need.

Once the goal or need is identified, the time period is calculated and the risk profile identified, an appropriate investment portfolio needs to be constructed for the amount saved for the goal. Individual investors should keep a few basic things in mind while selecting securities to help them achieve their goals.

DIVERSIFICATION: For every need, the portfolio constructed should be diversified. This probably remains the most important aspect while investing and has been proven to be right way of investing for ages. Diversification can be achieved by holding different asset classes, like equity, fixed income, real estate, gold/commodities, property, etc. One should avoid holding a single asset class portfolio as much as possible.

LIQUIDITY: This is an important aspect one should consider while investing. A few pitfalls of not considering this: not being able to exit while the market is in for a serious fall (eg, the fall of equities in 2008), the investment portfolio is illiquid and the invested paper is not saleable (FMPs holding real estate papers in 2008), etc.

EXPENSES: This is an important aspect an investor should consider. Many products would look very attractive before the expenses are taken into account. But once you add entry and exit loads, management fee, back office expenses and profit share (if applicable), these products would not look all that good.

TAXATION: Not many investors calculate how much short-term taxes could eat into the returns on their investments.

AUTHENTIC SOURCES OF DATA: If possible, an investor should verify the accuracy of the data presented about the performance of a product. Normally, it is difficult to do, otherwise the investor should ask for audited numbers.

For a retail investor, mutual funds are good options for investing in equities, fixed income, and gold/commodities. Unless one is very good in stock-picking and has a proven track record, mutual fund is a very good way to hold diversified portfolios. One could go a step further by investing through multi-asset, multi-manager fund of funds, where asset rebalancing and fund selection are done by a fund manager on behalf of the investor at a negligible additional cost.

Once an investor has constructed the portfolio, he/she should rebalance it on a regular basis. Rebalancing means analysing the market values of each asset class in the portfolio and checking whether they are still in line with expectations. For example, if the equity holding, intended to be 50% of the portfolio, has increased to 60%, the investor should redeem 10% and put it into another asset class. In this case, the investor should be guard against rebalancing the portfolio as this could entail higher transaction expenses and realisation of capital gains tax. Investors should look for vehicles, such as multi-asset fund of fund in case of mutual funds to minimise such expenses.

Second, an investor should analyse whether the individual instruments he or she is holding in each asset class are performing well. If not, a change may be required. In this case, too, frequent changes could entail higher transaction expenses and realisation of capital gains tax.

Cox & King

2011-06-06T16:58:00.001-07:00

There is rumours in the market that COX & King European acquisition has almost finalized and announcement may come in a day or two.

Technically stock is looking very good and today stock has made 22trading days high, Weekly Fry Pan bottom is seen, daily Rounding bottom formation and stock has moved on higher volumes.

Technically, if it is able to close above 410-412 it can move very fast 1st target could be 437-440. one can buy stock with strict SL of Rs. 380.

Income TAX misconceptions

2011-06-06T16:55:00.001-07:00

There are millions of questions on one's mind related to income tax -who should pay them, what are the exemptions, what are the rules?

Given below are a few well known myths and their solutions

1 Tax has been deducted at source, I don't have to worry. Just because taxes have been paid does not mean filing tax return is not required. You still need to put the tax deduction amount shown on the Form 16 on your tax return form 2 Filing tax returns is a complex process.

Contrary to popular belief, filing tax return is quite simple. You can fill and submit the returns online, print a receipt, sign it and drop it off at the income tax office within fifteen days 3 Home loan interest I pay is deductible from my income from house property. This is true if you have home loan for a single house. If you have loan on a second house, interest paid on loan can be claimed as a deduction from your income 4 I receive tax exemption on the rent I pay for my home. If actual rent paid is lower than 10 per cent of your basic salary you receive no exemption. Also, you cannot claim any exemption under this section if you live in your own home 5 Section 80C benefits are available only on making investment. You can claim a deduction for the tuition fees you pay for your children (maximum of two) as long as they are enrolled in a full time programme at any institute in India 6 If I avail medical reimbursement, I can't claim relief on health insurance premium.

Tax free medical reimbursement by your employer for your family's medical expenditure is separate from the deduction available under Section 80D 7 The only interest payment I can claim is the interest paid on home loans. There is a section in the Income Tax Act called 80E that allows deduction on interest paid on loans taken for higher education for self, spouse and children 8 Interest I earn on my savings account balance is exempt from income tax.

Interest income from any source is subject to income tax. If you do not want tax to be deducted you can spread your deposits across multiple bank branches 9 I have to pay taxes on interest received from my fixed deposits only on maturity.

Your tax liability on interest income from your fixed deposit is calculated on an accrual basis. You need to pay tax on the interest credited to your FD account 10 I received cash as a gift from a friend, so don't have to pay tax. If you receive a cash gift, which exceeds Rs 50,000 in one financial year, you are liable to pay I-T. The good news is cash gifts during marriage are totally free from tax Source: iTrust Financial Advisors

Mutual Fund Review: HDFC Taxsaver

2011-06-06T16:54:00.001-07:00

HDFC Taxsaver will take contrarian bets but its performance history speaks for itself

After beating its peers almost every year (barring 1999 and 2002) in its history of close to 14 years, the fund found itself in the fourth quartile in 2007. It was the only year when it underperformed the S&P CNX 500.

But the very next year, it was back to a top quartile performance. It not only curtailed its fall to a lower level in 2008 but also delivered close to 100 per cent in 2009.

The fund has generated superior returns and shown resilience while protecting the downside time and again. Its 10-year annualised return is 28 per cent (February 28, 2010).

Strategy

The fund's mandate is not limited across market caps or sectors.

Fund Insight

Although currently over half of the fund's assets are into large caps, it has not always been the case. In 2004, almost half of the fund's assets were into small caps. In 2006, when large caps outperformed, the fund increased exposure to large caps to 60 per cent of the portfolio and did it again in 2008.

It is among the very few funds which have invested in the Indian Depository Receipts (IDR) of Standard Chartered PLC (UK) and is amongst the few not holding Reliance Industries in its portfolio. Even in its sector allocation the fund is not wary of contrarian moves. In 2000, when most funds were heavy on IT stocks, this one held onto FMCG stocks and was quick to offload its Tech exposure. It delivered 5.74 per cent that year (category average: -24.13%). In 2009 when Energy was chased (category average exposure: 16%), this fund had just 10 per cent allocated. Its contrarian moves can backfire. Being relatively underweight to Energy and Metals in 2007 led to the dismal performance that year.

Portfolio Insight

The rising asset base has led to an increase in the number of stocks to 55, from around 40 stocks (end 2007). However, the fund has a long tail of stocks (currently 23) each with an allocation of less than 1 per cent. They collectively account for close to 10 per cent of the fund's portfolio. With the top 5 holdings accounting for 22 per cent, the fund looks well diversified. Allocation to a single stock has rarely exceeded 7 per cent after Kulkarni took over in November 2006.

Risks

At times the fund is seen taking aggressive sector bets. For instance, Auto (26%) and Engineering (25%) in 2005. Contra sector bets could also backfire.

According to Global Financial Integrity -- a non-profit organisation -- the estimated value of illegal financial flows held abroad is around $500 billion.

2011-06-06T16:53:00.001-07:00

"While calculating this into Indian money, the amount comes up to a whopping Rs 22.5 lakh crore (Rs 22.5 trillion).

"As per Konrad Hummler, chairman of the Swiss Private Bankers Association, $1 trillion -- out of the $2.8 trillion -- in Swiss banks is black money.

"WikiLeaks founder Julian Assange had also said that a majority of the funds stashed away in the Swiss banks belonged to Indians. This would mean that out of the 1 trillion Swiss francs more than half could be owned by Indians. This alone comes to more than $500 billion (1 Swiss franc = 1.2 US dollars). And this is only bank deposits.

"While these are just statistics, the key question is how do we bring back this money . . . If the government is serious about it then it can very well bring back this money. However, the seriousness of the government in this matter is very crucial in this case."

A delegation led by the Prime Minister of India himself must speak with the Swiss officials regarding this issue. However, this need not be in public glare and there is no need to disclose names and things like that.

"The intention should be to bring back the money. Why I am saying that the prime minister should head these talks is because only then will the seriousness of the issue be known to the country in question.

"Now bringing back this money may not seem as easy as it sounds. When we speak with the officials concerned in those countries, we need to tell them to return this money. However, we should also offer to pay 20 per cent tax on the amount while bringing it back. This would make the process easier and also more convincing.

"The other question now would be what happens to the persons who have stashed away their money in these banks.

"If the money is earned through legitimate means then that person could move the Reserve Bank of India and make a claim. He would need to prove that the money that was stashed away was earned through legal means and would have to submit proof for the same.

"However if the money has been earned illegally then he may as well forget about it."

Signs Pointing to Another Round of Global Recession**

2011-06-06T16:52:00.001-07:00

Guys, here is a good chart predicting the future......I have followed the ECRI folks since beginning of the 90's and they are really good. One of the Indian guys in there is a TV personality also now.

These guys do a good prediction of the recession, and it is still a bit further away although moving in that direction......Every definitive dip below zero predicts the recession in the US. This applies only to US, but when US gets a cold, everything starts to sniffle or get a cold also (at least that has been the case in the past).

KKP

On 6/6/2011 3:05 AM, Murtaza Merchant wrote:

Over the past several weeks it's become clear that the global economy is turning down

* Japan returned to recession last month. So did Denmark.

* Malaysia, Botswana, Ireland, Australia, Portugal and Norway all posted negative GDP growth in t...he most recent quarter.

* The euro zone, laden with insolvent countries, is growing at just 0.8 percent. And Germany, the star of the euro zone, is only growing at 1.5 percent — well below its trend growth.

* And there is an increasing likelihood that Europe is in store for a destabilizing economic shock — through a euro member sovereign debt default or a member departure from the monetary union. At best, euro-zone countries could get another extension to put off those aforementioned scenarios, through even more stifling austerity measures.

Given that backdrop, Europe could be quick to follow Japan and Denmark into recession.

As for the UK: The new coalition govt came in last year slashing spending & raising taxes in order to curtail its bulging deficit. Yet its deficit has barely budged. Nor has its economy. In fact, it's flat lined for the past 6 months — no growth. Despite all the govt stimulus, rescues, borrowing, and money printing, the economy is STILL stumbling and slumping. The job market is coming apart at the seams manufacturing is fading fast … housing is sinking again … consumer spending is on the ropes!

How about the Largest Economy in the World?
This was expected to be a great year for the U.S. recovery, many private economists were foreseeing above 4% growth — some estimates were as high as 5 %. But it's turning out to be quite different … The annualized growth for the first quarter is coming in at just 1.8% ! That's not only well below expectations, but well below the country's historical growth trend, even following unprecedented government stimulus.
That was last quarter. This quarter is looking even worse …
• The U.S. housing market is at new post-bubble burst lows, exceeding the decline marked in the Great Depression.
• Manufacturing activity just recorded the worst slide since 1984.
• Confidence has plunged to six month lows.
• And employment growth has now slowed sharply.

At Least We Have China to Lean on, Right? Not so fast.

Through the global financial crisis where more than 60 countries were simultaneously in recession, China's economy still put up solid — in some cases, eye popping — growth. Of course, it took the largest fiscal stimulus package in the world (relative to GDP) to produce that growth. But it was in China's direction where the rest of the world looked, to spearhead a global recovery.

Don't expect China to prop up the global economy during the next recession.
This time, this downturn, China won't be there to open up the spigot of money on its economy. Nor will China have such easy money to spread around the world. Its economy is already overheated. That's why the Chinese have been in a fight to shut the spigot and mop up the money. And it's proving a difficult fight.

Moreover, this time a recession would be accompanied by a sovereign debt crisis that could make the fallout that followed the failure of Lehman Brothers look like just the opening act.

But the next wave of economic pain shouldn't take anyone by surprise. In fact, history shows us it's exactly what we should be expecting following a widespread synchronized global financial crisis and global recession … more booms, more busts, more shocks and a long bumpy road to recovery.

In sum: If the recent data is truly signaling another round of recession, and if the crisis in global sovereign debt does, in fact, play out according to history (i.e. defaults), then expect this round of economic downturn to be worse than the first. After all, the global government ammunition that created the first technical recovery has been all but exhausted.

With that scenario in mind, the answer on whether global investors should be in "risk-on" or "risk-off" mode is pretty simple.

Emerging Markets Are Looking Weak !

There are far reaching negative divergences on a global scale. Most emerging markets stock market indices saw their cyclical highs last November. Their charts are not only showing clear relative weakness, ...but well-formed potential topping formations have also developed.
Emerging markets were first to bottom out during the last bear market. And now they may again be ahead and leading the way into the next global bear market.
This is not the time to be in stocks. The market is at least 40% overvalued and the macroeconomic picture is deteriorating quickly.

One World One Chart

2011-06-05T21:18:00.001-07:00

The latest Global Market Perspective carries the most appropriate marking for what I think is happening in the world today. This chart courtesy Elliott Wave International says it all to anyonetuned to Eliotts markings.

In my recent video update I shows how several European markets

ended 5th waves in 2008 at supercycle degree and 2009 was a wave A bear market and 2010 was a wave B bear market rally. Wave C has probably already started.

I can see this wave count on India and several other markets including the US. I think this count fits the Dow/S&P as well.

2008 appears the Elliott wave 5th wave top for the Globalised world market. It is now apparent that different world markets topped at different times over the last 6 months many not confirming the new highs in the US and now the US has broken its rising trendline yesterday from the March 2009 lows along with many other trendlines as

shown in the attached charts.

- Courtesy Rohit Srivastava

Insurance in DEMAT form

2011-06-05T21:17:00.001-07:00

Like dematerialisation of securities, it will offer dual benefits of cost-effectiveness and convenience

The hassle of managing the paperwork for several insurance policies may soon become a relic. Going forward, you will be able to hold these in a 'demat' account, in an electronic format.

But, first, based on the guidelines issued by the Insurance Regulatory and Development Authority (Irda) last Friday, repositories on the lines of the securities' depositories (such as the National Securities Depository or the Central Securities Depository) will be set up. These agencies would in turn open and hold the e-insurance account.

Industry players deem it a mammoth exercise due to the large number of policyholders and, hence, feel a timeline for the shift cannot be specified. However, understanding the procedural requirements and its advantages will help facilitate the shift, whenever it happens.

THE CONCEPT

Each individual will have his/her own separate and distinct account, with a unique account number. All life and general policies from different insurers can be held in this account. Similarly, parents or guardians can open an account for their minor children as well.

KNOW-YOUR-CUSTOMER (KYC) COMPLIANCE

This will depend on whether you approach the repository directly to open an account or via an insurer. In the former case, the repository will have to carry out the due diligence for establishing the genuineness of your identity.

You will have to give documents for identity and address proof. In case any additional detail is required, the repository will have to mail within three days of receiving the application. And, details of the method of operating the account within seven days of the application.

However, if you choose to open the account through an insurer, he/she will collect the requisite documents from you on the repository's behalf. Once the account is opened, any basic KYC compliance will be waived to avoid duplication of paperwork. Also, say you change your address, you will not have to approach the different insurers separately. You can change it by giving the necessary documents to the repository, who in turn will inform the policy issuers.

COSTS

Demat accounts for securities entail an account opening charge as well as an annual maintenance fee. However Irda, in its circular, has categorically stated that, No cost of e-insurance (account) shall be collected from einsurance account holders, either by an insurance repository or an insurer.

This may, however, seem logical, given insurers expect substantial savings the printing charges, courier charges, etc, in long term.

ADVANTAGES

The basic advantage would be that you won't have to maintain policy papers for a long period. Besides, you could get a lien or borrow against a demat insurance policy much more easily as compared to physical policies. In case of a physical policy, you must first fill an application and send it to the insurer, who will forward it to the lender. While in case of demat policies, you can apply to the repository, who will instantly mark a lien against it and forward it to the lender. The former is a tedious process and could even take a month. However, in case on demat policies, it is much faster and could be done in as less as 24 hours.

Insurers also expect communication with the policyholders will greatly improve post the shift to a demat regime. The e-insurance account will function as a single point contact for the client. It is expected that he/she will be far more pro-active in this case, as communication for all policies can get impacted if he/she fails to provide the correct contact details.

The shift to the demat system may be hailed for the ease and convenience of operation. However, insurers feel it won't be easy, especially for the rural population or those not adept at technology.

Single account for all policies will help consolidate the insurance portfolio

Borrowing against a demat policy easier than borrowing against a policy in hard copy

Communication with insurer will improve as the account will serve as a single point contact

In case of a change of address, inform only the repository and not each insurer individually

US Banks Are Breaking Key Supports, signalling a bigger fall (Mike Larson)

2011-06-05T21:16:00.001-07:00

Bank stocks have just crashed through key support zones ... broken down to new lows for the year ... and started on a beeline for their worst levels of 2010.

That's what my KBW Bank Index chart is showing you — in aces and spades. It's telling you that the 24 major banks it tracks — including Bank of America, Citigroup, Wells Fargo, and JPMorgan Chase — are getting slammed.

But this is more than just about banks. It's also a stark warning for other financial stocks, housing stocks, and ultimately, most of the U.S. stock market.

Why do bank stocks matter? Because banks are the heart and soul of our economy. They make the loans that consumers use to buy houses, cars, and computers. They provide the liquidity to businesses who want to finance inventories, build factories, and construct office towers.

Problem: They're loaded up with millions of foreclosed homes, lousy real estate loans, and other bad assets. Yes, the Fed managed to paper over the banks' problems for a while. But now, the jig is up. House prices have just set new lows, and the bust is back with a vengeance.

Many investors are going to lose fortunes ... just like they did the LAST few times bank stocks crashed. But YOU don't have to take this lying down! You can go on the offense.

What to Do

When blockbuster news like this explodes into the headlines, you really have only two choices: You can either run for cover or come out fighting and by doing so, grab huge profit potential.

The last time this happened, savvy investors who went on the offensive could have made fortunes with investments that are designed precisely for this situation.

Needless to say, not all investments can go up that far in such a short period of time. Nor can we go back in time to grab them now. But this next phase of the debt crisis is shaping up to be even worse than the last one.

The last phase impacted mostly consumers and corporations. This one is also impacting the U.S. government!

The last time, the government bailed out the failing companies. This time, the government itself seems to need a bailout of its own and there's no one on the entire planet rich enough to provide it.

Bryan Rich-A Global Recession Is On The Way

2011-06-05T21:14:00.001-07:00

Over the past several weeks it's become clear that the global economy is turning down …

*Japan returned to recession last month. So did Denmark.

*Malaysia, Botswana, Ireland, Australia, Portugal and Norway all posted negative GDP growth in the most recent quarter.

*The euro zone, laden with insolvent countries, is growing at just 0.8 percent. And Germany, the star of the euro zone, is only growing at 1.5 percent — well below its trend growth.

*And there is an increasing likelihood that Europe is in store for a destabilizing economic shock — through a euro member sovereign debt default or a member departure from the monetary union. At best, euro-zone countries could get another extension to put off those aforementioned scenarios, through even more stifling austerity measures.

Given that backdrop, Europe could be quick to follow Japan and Denmark into recession.

As for the UK: The new coalition government came in last year slashing spending and raising taxes in order to curtail its bulging deficit. Yet its deficit has barely budged. Nor has its economy. In fact, it's flat lined for the past six months — no growth.

How about the Largest Economy in the World?

This was expected to be a gangbuster year for the U.S. recovery, many private economists were foreseeing above 4 percent growth — some estimates were as high as 5 percent. But it's turning out to be quite different …

The annualized growth for the first quarter is coming in at just 1.8 percent! That's not only well below expectations, but well below the country's historical growth trend, even following unprecedented government stimulus.

That was last quarter. This quarter is looking even worse …

The U.S. housing market is at new post-bubble burst lows, exceeding the decline marked in the Great Depression.
Manufacturing activity just recorded the worst slide since 1984.
Confidence has plunged to six month lows.
And employment growth has now slowed sharply.

At Least We Have China to Lean on, Right?

Not so fast.

Throughout the global financial crisis where more than 60 countries were simultaneously in recession, China's economy still put up solid — in some cases, eye popping — growth. Of course, it took the largest fiscal stimulus package in the world (relative to GDP) to produce that growth. But it was in China's direction where the rest of the world looked, to spearhead a global recovery.

This time, this downturn, China won't be there to open up the spigot of money on its economy. Nor will China have such easy money to spread around the world. Its economy is already overheated. That's why the Chinese have been in a fight to shut the spigot and mop up the money. And it's proving a difficult fight.

Moreover, this time a recession would be accompanied by a sovereign debt crisis that could make the fallout that followed the failure of Lehman Brothers look like just the opening act.

But the next wave of economic pain shouldn't take anyone by surprise. In fact, history shows us it's exactly what we should be expecting following a widespread synchronized global financial crisis and global recession … more booms, more busts, more shocks and a long bumpy road to recovery.

In sum: If the recent data is truly signaling another round of recession, and if the crisis in global sovereign debt does, in fact, play out according to history (i.e. defaults), then expect this round of economic downturn to be worse than the first. After all, the global government ammunition that created the first technical recovery has been all but exhausted.

With that scenario in mind, the answer on whether global investors should be in "risk-on" or "risk-off" mode is pretty simple.

The US Economy May Have Already Gone Into A Recession-Mike Larson

2011-06-05T21:12:00.001-07:00

Sell Banking, Construction And Real Estate Stocks

The US Economy created a pathetic 38,000 jobs in May! That was a massive 78 percent plunge from April and the worst reading since September. It also missed forecasts for a reading of 175,000 by a country mile!

These were the ADP Employer Services figures, and the government's "official" data always differ somewhat. But ALL the latest numbers tell the same story: The job market is losing steam!

* Manufacturing activity is decelerating fast! The Institute for Supply Management's benchmark index plunged to 53.5 last month from 60.4 in April. That was the lowest reading in 20 months, and far worse than "experts" were looking for! The service sector index also tanked.

* Home prices are setting fresh lows! The S&P/Case-Shiller Index fell 3.6 percent in March. That year-over-year decline was the worst since November 2009, and it leaves prices in 20 top metropolitan areas at the lowest level in eight years.

Meanwhile, April housing starts plunged almost 11 percent and permit issuance dropped 4 percent … pending home sales just tanked 12 percent — far worse than the 1 percent decline economists were expecting … and industrial production ground to a halt in April, confounding economists who were looking for a gain.

Treasury Secretary Timothy Geithner wrote an op-ed back in August 2010 called "Welcome to the Recovery." Maybe he should have named it "Mission Accomplished" … because his starry-eyed optimism seems every bit as misguided as President Bush's a few years earlier.

Economy's Achilles Heel? It Was "Bought and Paid For" in Washington!

How could the economy possibly be weakening again, when we just officially emerged from recession two years ago? How could this possibly happen, when the Paul Krugmans of the world promised that if we just borrowed and spent a few gazillion dollars, everything would be peachy?

And how could we be staring down the barrel of a serious slowdown, when Fed officials like Ben Bernanke swore on a stack of bibles that quantitative easing would save the economy?

Because "bought and paid for" recoveries are inherently unstable and self-defeating! If governments and central banks could truly vanquish the business cycle by just printing, borrowing, and spending all they wanted with no consequences, wouldn't every single one of them have done it before?

The reality is, the economic and political fallout from borrowing and spending so much eventually becomes too much to bear— and you just can't do it anymore! I believe that's where we are now …

The $14.3 trillion debt ceiling is putting shackles on Congress and the administration. So are global creditors and ratings agencies, who are increasingly punishing nations that think they can run up huge deficits and debt burdens.

Meanwhile, the Fed's QE programs have wildly inflated commodity prices and jacked up our cost of living. But because the Fed can't print jobs and boost wages — only fuel speculation by pumping the asset markets full of easy money — we've hit a wall. The "real economy" can no longer support these artificially inflated "financial economy" prices.

Immediate Steps to Take!

First, if you haven't already taken some profits off the table on your long positions, please do so now. This is the time to pare down your risk levels, regardless of what you're hearing on CNBC.

Second, dump any stocks exposed to the weakest parts of the economy. That would include sectors like banking, construction, and retail.

NewsWire for 06-06-2011

2011-06-05T21:07:00.001-07:00

Dividends in Mutual Funds

Mutual Fund NFO's Open


Fund	Type	Open Date	Close Date
Religare Nifty Exchange Traded (G)	Nifty ETF	23-May-2011	06-Jun-2011
JPMorgan JF Asean China Equity	Foreign FoF	10-Jun-2011	24-Jun-2011

Dividends,Right & Stock Splits

Company Name	Ex-Date	Purpose
Surana Industries Limited	6-Jun-11	ANNUAL GENERAL MEETING AND DIVIDEND `1.80 PER SHARE
Torrent Pharmaceuticals Limited	6-Jun-11	DIVIDEND
Sundram Fasteners Limited	6-Jun-11	2ND INTERIM DIVIDEND
Axis Bank Limited	8-Jun-11	ANNUAL GENERAL MEETING AND DIVIDEND `14/- PER SHARE
Sonata Software Limited	8-Jun-11	ANNUAL GENERAL MEETING AND DIVIDEND `1/- PER SHARE
Megasoft Limited	8-Jun-11	ANNUAL GENERAL MEETING
Automotive Stampings and Assemblies Limited	9-Jun-11	RIGHTS 5:9 @ PREMIUM ` 42 PER SHARE
Asian Paints Limited	9-Jun-11	ANNUAL GENERAL MEETING AND DIVIDEND `23.50 PER SHARE
Bata India Limited	10-Jun-11	ANNUAL GENERAL MEETING AND DIVIDEND `4/- PER SHARE
ITC Limited	10-Jun-11	DIVIDEND FINAL `2.80 AND SPECIAL `1.65 PER SHARE
Shriram Transport Finance Company Limited	10-Jun-11	ANNUAL GENERAL MEETING AND FINAL DIVIDEND-`4/- PER SHARE
Castrol India Limited	13-Jun-11	DIVIDEND `8 PER SHARE
MRO-TEK Limited	14-Jun-11	AGM/DIVIDEND
Navin Fluorine International Limited	14-Jun-11	ANNUAL GENERAL MEETING AND DIVIDEND `8.50 PER SHARE
Century Enka Limited	15-Jun-11	ANNUAL GENERAL MEETING/DIVIDEND ` 6.50 PER SHARE
Andhra Bank	15-Jun-11	ANNUAL GENERAL MEETING AND DIVIDEND `5.50 PER SHARE
Rain Commodities Limited	15-Jun-11	FACE VALUE SPLIT FROM `10/- TO `2/-
Syndicate Bank	15-Jun-11	ANNUAL GENERAL MEETING AND DIVIDEND `3.70 PER SHARE
Torrent Power Limited	16-Jun-11	FINAL DIVIDEND `3/- PER SHARE AND SPECIAL DIVIDEND `2.50 PER SHARE
Thangamayil Jewellery Limited	16-Jun-11	DIVIDEND-`1/- PER SHARE
Bharat Bijlee Limited	16-Jun-11	ANNUAL GENERAL MEETING AND DIVIDEND `25/- PER SHARE
Bank of Maharashtra	16-Jun-11	DIVIDEND-`2/- PER SHARE
Binani Cement Limited	16-Jun-11	ANNUAL GENERAL MEETING/DIVIDEND-`2.50 PER SHARE
JSW Energy Limited	16-Jun-11	ANNUAL GENERAL MEETING AND DIVIDEND `1/- PER SHARE
Binani Industries Limited	16-Jun-11	ANNUAL GENERAL MEETING / DIVIDEND - `3/- PER SHARE
Punjab National Bank	16-Jun-11	ANNUAL GENERAL MEETING AND DIVIDEND `22/- PER SHARE
Kesoram Industries Limited	17-Jun-11	DIVIDEND-`3.25 PER SHARE
Corporation Bank	17-Jun-11	ANNUAL GENERAL MEETING/DIVIDEND `20 PER SHARE
Grindwell Norton Limited	17-Jun-11	ANNUAL GENERAL MEETING/DIVIDEND - `6/- PER SHARE
Kesar Terminals & Infrastructure Limited	20-Jun-11	DIVIDEND-`1/- PER SHARE
Zee Learn Limited	20-Jun-11	ANNUAL GENERAL MEETING
Patni Computer Systems Limited	20-Jun-11	ANNUAL GENERAL MEETING
Hotel Leela Venture Limited	21-Jun-11	ANNUAL GENERAL MEETING AND DIVIDEND `0.15 PER SHARE
Tata Sponge Iron Limited	21-Jun-11	ANNUAL GENERAL MEETING/DIVIDEND `8 PER SHARE
Zydus Wellness Limited	22-Jun-11	ANNUAL GENERAL MEETING AND DIVIDEND `4/- PER SHARE
Whirlpool of India Limited	22-Jun-11	ANNUAL GENERAL MEETING
Surana Corporation Limited	22-Jun-11	DIVIDEND-`1.80 PER SHARE
Housing Development Finance Corporation Limited	22-Jun-11	DIVIDEND-`9/- PER SHARE
Ajanta Pharma Limited	23-Jun-11	DIVIDEND-`5/- PER SHARE
Sobha Developers Limited	23-Jun-11	DIVIDEND-`3/- PER SHARE
Spentex Industries Limited	23-Jun-11	ANNUAL GENERAL MEETING
ICSA (India) Limited	24-Jun-11	ANNUAL GENERAL MEETING AND DIVIDEND `1.80 PER SHARE
Tata Investment Corporation Limited	29-Jun-11	ANNUAL GENERAL MEETING
Alstom Projects India Limited	29-Jun-11	ANNUAL GENERAL MEETING AND DIVIDEND `10/- PER SHARE
Bajaj Finserv Limited	29-Jun-11	ANNUAL GENERAL MEETING AND DIVIDEND `1.25 PER SHARE
Tata Metaliks Limited	29-Jun-11	ANNUAL GENERAL MEETING
Bajaj Holdings & Investment Limited	29-Jun-11	ANNUAL GENERAL MEETING AND DIVIDEND `35/- PER SHARE
Wipro Limited	29-Jun-11	ANNUAL GENERAL MEETING AND DIVIDEND `4/- PER SHARE
Dabur India Limited	29-Jun-11	ANNUAL GENERAL MEETING AND DIVIDEND - ` 0.65 PER SHARE
Atul Limited	29-Jun-11	ANNUAL GENERAL MEETING AND DIVIDEND `4.50 PER SHARE
Wyeth Limited	30-Jun-11	ANNUAL GENERAL MEETING AND DIVIDEND `7/- PER SHARE
IndusInd Bank Limited	30-Jun-11	ANNUAL GENERAL MEETING AND DIVIDEND `2/- PER SHARE
Sesa Goa Limited	30-Jun-11	DIVIDEND-`3.50 PER SHARE
Prism Cement Limited	30-Jun-11	ANNUAL GENERAL MEETING
Indian Overseas Bank	4-Jul-11	DIVIDEND-`5/- PER SHARE
Tata Steel Limited	4-Jul-11	ANNUAL GENERAL MEETING/DIVIDEND `12 PER SHARE
LIC Housing Finance Limited	4-Jul-11	ANNUAL GENERAL MEETING AND DIVIDEND `3.50 PER SHARE
Indo Rama Synthetics (India) Limited	5-Jul-11	ANNUAL GENERAL MEETING AND DIVIDEND `1/- PER SHARE
TTK Prestige Limited	5-Jul-11	ANNUAL GENERAL MEETING AND DIVIDEND `12.50 PER SHARE
India Infoline Limited	6-Jul-11	ANNUAL GENERAL MEETING
Hindustan Media Ventures Limited	6-Jul-11	DIVIDEND-`1/- PER SHARE
Polaris Software Lab Limited	7-Jul-11	ANNUAL GENERAL MEETING AND DIVIDEND `4.50 PER SHARE
Cadila Healthcare Limited	7-Jul-11	ANNUAL GENERAL MEETING AND DIVIDEND `6.25 PER SHARE
Dish TV India Limited	7-Jul-11	ANNUAL GENERAL MEETING
Mahindra & Mahindra Financial Services Limited	7-Jul-11	ANNUAL GENERAL MEETING AND DIVIDEND `10/- PER SHARE
Electrosteel Steels Limited	7-Jul-11	ANNUAL GENERAL MEETING
Graphite India Limited	7-Jul-11	ANNUAL GENERAL MEETING AND DIVIDEND `3.50 PER SHARE
The Karnataka Bank Limited	8-Jul-11	ANNUAL GENERAL MEETING AND DIVIDEND `3/- PER SHARE
Hindustan Unilever Limited	8-Jul-11	ANNUAL GENERAL MEETING AND DIVIDEND `3.50 PER SHARE
EID Parry India Limited	8-Jul-11	ANNUAL GENERAL MEETING
VST Industries Limited	8-Jul-11	DIVIDEND-`45/- PER SHARE
JSW Steel Limited	11-Jul-11	ANNUAL GENERAL MEETING AND DIVIDEND `12.25 PER SHARE
Crompton Greaves Limited	11-Jul-11	ANNUAL GENERAL MEETING
Mahindra Lifespace Developers Limited	12-Jul-11	ANNUAL GENERAL MEETING AND DIVIDEND `5/- PER SHARE
Vinyl Chemicals (India) Limited	12-Jul-11	ANNUAL GENERAL MEETING/FINAL DIVIDEND `0.25 PER SHARE AND SPECIAL DIVIDEND `0.25 PER SHARE
Coromandel Engineering Company Limited	12-Jul-11	ANNUAL GENERAL MEETING AND DIVDEND OF `2.50- PER SHARE
Kirloskar Industries Limited	13-Jul-11	ANNUAL GENERAL MEETING AND DIVIDEND `2.50 PER SHARE
Kirloskar Brothers Investments Limited	13-Jul-11	ANNUAL GENERAL MEETING AND DIVIDEND `2.50 PER SHARE
Tube Investments of India Limited	13-Jul-11	DIVIDEND-`1.50 PER SHARE
Hyderabad Industries Limited	14-Jul-11	ANNUAL GENERAL MEETING /DIVIDEND - `10 PER SHARE
Unichem Laboratories Limited	14-Jul-11	ANNUAL GENERAL MEETING AND DIVIDEND `2.80 PER SHARE
Godrej Properties Limited	14-Jul-11	DIVIDEND-`4.50 PER SHARE
Persistent Systems Limited	14-Jul-11	FINAL DIVIDEND-`1.50 PER SHARE
Balaji Amines Limited	14-Jul-11	ANNUAL GENERAL MEETING AND DIVIDEND `0.60 PER SHARE
Mahindra Holidays & Resorts India Limited	14-Jul-11	ANNUAL GENERAL MEETING AND DIVIDEND `4/- PER SHARE
Rane Brake Lining Limited	14-Jul-11	DIVIDEND-`2/- PER SHARE
GKW Limited	14-Jul-11	ANNUAL GENERAL MEETING
Geometric Limited	15-Jul-11	ANNUAL GENERAL MEETING AND DIVIDEND `1.20 PER SHARE
Eimco Elecon (India) Limited	15-Jul-11	DIVIDEND-`4/- PER SHARE
Gujarat Sidhee Cements Limited	15-Jul-11	ANNUAL GENERAL MEETING
Manali Petrochemical Limited	15-Jul-11	ANNUAL GENERAL MEETING AND DIVIDEND `0.50 PER SHARE
Dewan Housing Finance Corporation Limited	18-Jul-11	ANNUAL GENERAL MEETING AND DIVIDEND `3.50 PER SHARE
Hercules Hoists Limited	18-Jul-11	ANNUAL GENERAL MEETING AND DIVIDEND `3/- PER SHARE
HT Media Limited	18-Jul-11	DIVIDEND-`0.36 PER SHARE
Vinati Organics Limited	19-Jul-11	ANNUAL GENERAL MEETING AND DIVIDEND `1.30 PER SHARE
Halonix Limited	20-Jul-11	ANNUAL GENERAL MEETING
Taj GVK Hotels & Resorts Limited	20-Jul-11	ANNUAL GENERAL MEETING AND DIVIDEND - `2 PER SHARE
Asahi India Glass Limited	20-Jul-11	ANNUAL GENERAL MEETING
Apcotex Industries Limited	20-Jul-11	DIVIDEND-`7/- PER SHARE
Aurobindo Pharma Limited	20-Jul-11	ANNUAL GENERAL MEETING AND DIVIDEND `1/- PER SHARE
Oriental Hotels Limited	20-Jul-11	ANNUAL GENERAL MEETING AND DIVIDEND `0.80 PER SHARE
WABCO-TVS (INDIA) Limited	20-Jul-11	ANNUAL GENERAL MEETING AND DIVIDEND `5/- PER SHARE
Finolex Cables Limited	21-Jul-11	ANNUAL GENERAL MEETING AND DIVIDEND `0.70 PER SHARE
Patspin India Limited	21-Jul-11	ANNUAL GENERAL MEETING
Cholamandalam Investment and Finance Company Limited	21-Jul-11	ANNUAL GENERAL MEETING AND DIVIDEND `1.50 PER SHARE
Sundaram Brake Linings Limited	21-Jul-11	ANNUAL GENERAL MEETING AND DIVIDEND `4/- PER SHARE
GTN Textiles Limited	21-Jul-11	ANNUAL GENERAL MEETING
Greaves Cotton Limited	22-Jul-11	FINAL DIVIDEND - `0.70 PER SHARE
Carborundum Universal Limited	22-Jul-11	DIVIDEND-`1/- PER SHARE
Gandhi Special Tubes Limited	22-Jul-11	ANNUAL GENERAL MEETING
Uniply Industries Limited	22-Jul-11	ANNUAL GENERAL MEETING
Universal Cables Limited	25-Jul-11	ANNUAL GENERAL MEETING AND DIVIDEND `2/- PER SHARE
Apollo Tyres Limited	26-Jul-11	ANNUAL GENERAL MEETING AND DIVIDEND `0.50 PER SHARE
PTL Enterprises Limited	26-Jul-11	ANNUAL GENERAL MEETING AND DIVIDEND `1/- PER SHARE
Century Textiles & Industries Limited	26-Jul-11	ANNUAL GENERAL MEETING/DIVIDEND `5.50 PER SHARE
The Great Eastern Shipping Company Limited	27-Jul-11	DIVIDEND-`4.50 PER SHARE

week ahead --newsletter

2011-06-05T21:04:00.000-07:00

WEEK AHEAD

EGoM meeting on diesel prices in focus

A meeting of the ministerial panel on diesel prices, progress of the monsoon rains and data on industrial production will be on investors' radar next week. A decision on raising diesel price is likely to be taken by the Empowered Group of Minister (EGoM) headed by finance minister Pranab Mukherjee on Thursday, 9 June 2011. If the government hikes diesel prices it will lead to increase in inflationary pressures -- diesel is a key transportation fuel in India.

WEEK

06-06-11 to 10-06-11

NIFTY RANGE

5350-5650

CRUCIAL

SUPPORT 5430 & RESISTANCE 5560

APPROACH

Cautious with positive bias

STRATEGY

Any Dips Should Be Used As An Opportunity To Enter The Markets

MARKET TREND

Trend looks steady for further upmove

MARKET OUTLOOK

Market conditions are not favourable for a secular rally

FACTORS

Macroeconomic Data, EGOM on Fuel & Global Cues

IMPORTANT

Things are pretty volatile and uncertain in the short term

Ø OUT-LOOK:

The price action of Nifty for the last few days has only been an enactment of our prognosis. We were on our toes and remained contrarians' inspite of underlying bearish sentiment around 5300 levels. The encouraging upmove of the markets for the last two weeks has again proved our views correct.

The penultimate and the last day of the previous week may have subdued the strong optimism. There has been a strong rally from the lows of 5330 to high of 5600 and it should only be natural to anticipate few days of pullback. Also the level of 5600 coincides with the 200 DEMA. Hence, such pull back should be construed as healthy as long as key supports on the downside are held. In the short term, we may be undergoing such a phase and post this ,there is a high probability for the Nifty to breach the level of 5600 in the coming weeks. A decisive breach of 5600 level should clear the way for further advance till 5750.

Our views on the midcap index have proved quite accurate. Its strength on the way down and on the way up, makes this index a good candidate for outperformance in the medium term.

Overall, the trend looks steady for further upmove and any dips should be used as an opportunity to enter the markets.

Ø ROAD AHEAD:

The Indian market continues to witness zigzag movements without any clear bias and sense of direction. It is seeing alternating bouts of buying and selling based on certain news flow. Though FII flows have improved slightly, the influx is still not strong enough to lift the key indices substantially. At the same time, macroeconomic landscape remains challenging and the Centre is still grappling with issues of corruption, leaving policy making in a limbo.

This week will yet again be a litmus test for the UPA II as the EGoM on fuel prices assembles. Let's hope the meet doesn't get postponed further. But, if it does take place one must brace for a spike in headline inflation in the days to come. The RBI will decide on policy rates on June 16. Before that, the market will react to April IIP data on June 10 and May inflation on June 14. In the meantime, the progress in monsoon will also have a sentimental impact on the market.

Globally, investors are on tenterhooks amid worries about anemic growth in the US economy and lingering concerns over sovereign debt problems in the eurozone. Hopefully, the Greece situation will get resolved over the weekend. On Monday, world markets could head south after the US jobs data came in much below expectations. Interest rate decisions are due next week from the central banks in UK, EU and Australia.

In short, market conditions are not favourable for a secular rally. Things are pretty volatile and uncertain in the short term. There is a general lack of confidence among investors at this juncture. This may take a while to change. So, be vigilant and stick to stock centric approach to avoid major hit in your portfolio. Wait for the market to signal a decisive breakout from the current range before resuming your shopping binge.

Ø DERIVATIVES:

High inflation and interest rate would keep the market bias negative for some time

Addition of OI of the 5400 to 5700 strike call due to writing, while at the same time addition of OI due to buying in the 5700 strike put option indicate heavy resistance ahead

Prospects of good monsoon helped the domestic bourses to record gain during the week ended 3^rd June 2011. As mentioned during the previous week, there wasn't enough conviction on the bull side despite addition of long position. Consequently the S&P nifty index recorded gain during the beginning of the week helped by firm global market and the prospects of good monsoon this year. However widening 2G scam, which threatens to include some more corporate and the failure on the part of Reliance to explain lower gas output from the KG basin during their AGM held on Friday resulted in the market correcting sharply on Friday. The nifty fell by 41.65 points and 33.60 points on Thursday and Friday respectively. However for the full week under review, the benchmark nifty closed 40.65 points higher at 5516.75.

The nifty June series future closed at a premium of 6.75 at 5523.50 on Friday. In the futures and option (F&O) segment, both the nifty and the stock future segment added open interest (OI) due to buying initially, however subsequently a lot of those longs where covered while fresh shorts were created in both the counter to wards the end of the week, especially on Thursday and Friday. In the nifty option segment too aggressive short position were created in the 5500 and up call strikes towards the end of the week, while the 5400 and up strike puts witnessed unwinding of puts wrote earlier, thus indicating strong resistance going ahead.

The nifty June series future contract added 4.88 lakh shares in OI on Friday to take the total OI to 2.48 crore shares. During the full week under review the nifty June future added 33.01 lakh shares in OI. Again the market appears to carry the negative bias as there could be some more consolidation going ahead. The domestic monsoon trend and the institution investor buying behavior will be closely watched. High inflation is a major concern for the domestic market while high prevailing interest rate and the expectation of further hike in interest rate do not bode well for Indian industries going ahead. Post the Q4 FY11 result announcements, the forward earnings are being revised downward by major brokerages for most of the sectors. Thus the going ahead may be tough as the market starts discounting these factors. Meanwhile the average traded volume in the futures and option (F&O) segment during the week under review was considerably lower at Rs 79927.79 crore as compared to Rs 145296.66 crore during the previous week, understandably as this was the first week of the new series.

The index put-call ratio on Friday fell to 1.09 as compared to 1.39 during the previous trading day, while the stock put-call ratio increased to 0.44 as compared to 0.38 the previous day. The overall put-call ratio fell to 1.04 as compared to 1.29 the previous trading day.

The market-wide OI on Friday stood at 224.98 crore shares, 2.85 crore shares higher than the previous day. The index and stock option segment witnessed significant addition of OI during the week.

On Friday the 5400 to 5700 strike call option added aggressive OI due to writing, while the 5400 to 5600 strike put option shed OI as put wrote at this level earlier were aggressively covered. Thus there was significant unwinding of long positions during the week. The 5800 strike call option shed OI due to unwinding of calls bought earlier, while the 5700 strike put option added OI due to buying, indicating heavy resistance ahead. The 5500, 5600 and 5700 strike call option added 6.15 lakh shares, 8.71 lakh shares and 8.21 lakh shares respectively in OI to take their total OI to 39.64 lakh shares, 56.84 lakh shares and 57.82 lakh shares respectively. The 5800 strike call option shed 2.53 lakh shares in OI to take its total OI to 65.33 lakh shares. The 5700 strike put option added 3.59 lakh shares in OI to take its total OI to 11.33 lakh shares

Ø TECHNICALLY:

· Medium Term Indicator: The short term/ medium term indicator continue to be on the buy mode. This should support a positive undertone for the Nifty.

· 200 DAY SMA: The 200 Day SMA for the Nifty is currently at 5750. Going by historical evidence, there is a good chance that this level should act as a resistance for the Nifty.

· Outlook: Earlier, we had highlighted the following pionts to support an impending upmove and a possible trend reversal for the Nifty. 1) Pace of rallies is faster than the pace of declines indicating a shift of sentiment. 2) Accumulation pattern which are now becoming evident in the short term. 3) Oversold technical indicators which are now exhibiting positive divergence. 4) Weekly candlestick chart showed a "Dragon Fly Doji" which is a bullish reversal pattern. A good closing for the last week has confirmed this reversal pattern. These factors reaffirm our bullish view in the medium term. Target on the upside should be near the area of 200 Day SMA which comes to around 5750. Moreover, the 200 Day EMA is at 5600 and this level is acting as the logical resistance for the trend.

Ø MACROECONOMIC:

Investors will closely watch macroeconomic data in the near term, which could provide a cue on the Reserve Bank of India's (RBI) likely monetary policy stance at its mid-quarter policy review on 16 June 2011. The government unveils data on industrial production for April 2011 on Friday, 10 June 2011. The government releases data on headline inflation for May 2011 on 14 June 2011.

Ø MONSOON:

Investors will continue to watch the progress of the annual monsoon rains. The India Meteorological Department (IMD) has predicted the southwest monsoon 2011 to be 98% (normal) of the long period average (LPA) with a model error of plus/minus 5%. IMD has indicated that there is very low probability for the season rainfall to be deficient (below 90% of LPA) or excess (above 110% of LPA).

Good rains would help ease food inflation and boost rural income. Rainfall that comes within 96% to 104% of the long-term average is considered a normal monsoon season, but this alone doesn't guarantee a good crop. The timing and spread of the rains are equally important. The quantity and geographical spread of rainfall during the monsoon season is crucial for India's agriculture sector, which lacks irrigation facilities on more than half its farm land. Monsoon rains usually enter India's mainland through the southern state of Kerala in the first week of June, gradually progressing to cover most of central and northern India by July, before retreating in September.

Ø SECTORIAL:

· CNX Defty's: upmove from the lows of 4100 has been encouraging. There is a fair chance that a short term uptrend may have begun and further upsides remains a high possibility in the coming weeks.

· BSE PSU: has moved on anticipated lines, its trend still looks good for further advances closer to 8800.

· BSE Bankex: has achieved our upside target of 12500 and may continue to scale higher. Any declines may only be corrective in nature to this short term uptrend.

· BSE IT: continues to be in a technical short term downtrend. The drifting nature of this weak trend is likely to continue.

· The BSE Cap Goods: has been one of the strong sector for the last few weeks. Its uptrend remains intact. Target on the upside to watch out is 13500 followed by 13800.

· BSE Auto: index remained subdued and underperformed for the major part of last week. The strucutre of its downtrend suggest that there may be minimal downsides. A trend change cannot be ruled out in the coming week.

Ø GLOBAL WATCH:

· S&P 500: had a pull back closer to $1340 level but it lost all its gains towards the end of last week. Technically, it still remains in a downtrend with support at 1295.

· Bovespa: has remained largely sideways with a positve bias. Although its trend is still down, but a close above 65000 would lead to further advances. It is likely to consolidate for a few sessions.

· SSE: has achieved our downside target of around 2650. Its downtrend remains intact.

· Hang Seng: saw a high of 23700 before retracing to close at 22950. The undertone suggests of a positive trend in the short term. Strong support on the downside is at 22500.

· Nikkei: retraced after touching a high of 9700 last week. It is in a consolidation phase and could remain in this phase for some more time.

· FTSE: is in a volatile sideways phase with slightly negative bias. It could consolidate for some more time.

· MSCI EMI's: move from the lows of 1112 indicates that its uptrend may continue in the short term. 1170 is an important resistance above which it can advance closer to 1210 levels.

IN-A-NUTSHEL:

Going ahead post the Q4FY11 results many of the brokerages are revising downward the earnings estimates for FY12 and FY13. Thus when the market starts discounting these factors, the market may further correct. Aggressive addition of OI of the 5400 to 5700 strike call due to writing, while at the same time addition of OI due to buying in the 5700 strike put option indicate heavy resistance ahead. The domestic monsoon trend and the institution investor buying behavior will be closely watched. High inflation and high domestic interest rate would keep the market bias negative for some time.

Morning Brief

2011-06-05T21:03:00.001-07:00

Stocks To Watch:Dr.Reddy's, Indraprastha Gas, Jubilant Life, Vimta
  Monday, Jun 6 - Morning brief for the stock market:
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.
BIG PICTURE
* US economy adds just 54,000 jobs as unemployment rises to 9.1% in May. (var)
* IMF says next tranche of Greece's existing bailout likely in July. (var)
.
.
TOP EVENTS TODAY
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* Annual General Meet of: State Bank Of Bikaner and Jaipur, Zenu Infotec.
.
* Board Meetings of:
+ Colgate Palmolive (India) Ltd, to consider interim dividend.
+ Geojit BNP Paribas Financial Services Ltd, to consider dividend.
+ Indian Infotech & Software Ltd, to consider Jayanti Prime Software's
    open offer proposal.
+ SPL Industries Ltd, earnings for year ended March.
.
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INDICATORS (previous session)
* NSE provisional net buy/(sale) in bln rupees, Jun 3: FII 4.45, DII (3.55)
* Institutional net buy/(sale) in bln rupees, Jun 2: FIIs 1.51, MFs (1.43)
* FII NSE futures net buy/(sale) in bln rupee, Jun 3: index 0.33, shr (4.91)
* Sensex 18,376.48, down 117.70 points; Nifty 5,516.75, down 33.60 points
* Crude: $100.22/bbl; Rupee: 44.81/$1; Gold: $1,545.20/ounce; 10-yr yld: 8.2660%
.
.
OUTLOOK
* Share indices are likely to open weak today, tracking regional markets which were trading weak as disappointing jobs data released in the US on Friday fuelled worries over a slowdown in economic growth..
.
WEEKLY SECTOR OUTLOOK
* AUTOMOBILE: Decision on diesel hike, export sops eyed.
* BANKS: In tight band; private banks to stay top picks.
* CAPITAL GOODS: To track broad market; sentiment subdued.
* CEMENT: Under pressure on low sales in May.
* FMCG: Seen firm on defensive buying, monsoon hopes.
* INFORMATION TECHNOLOGY: Seen range-bound with positive bias.
* OIL & GAS: Reliance Industries, oil retailers seen down.
* PHARMACEUTICAL: In range; stock-specific action likely.
* STEEL: Seen rangebound but with negative bias.
* TELECOM: Rangebound; Reliance Communications seen volatile.
.
.
GLOBAL STOCK MARKETS
* US: US indices end around 1% lower on Friday as data showed a mere 54,000 jobs were added in May, the lowest reading since September and way below
analysts' estimates. The US unemployment rate also rose to 9.1% from 9% in April.
.
* ASIA: Asian equities declined tracking Wall Street as weak jobs data in the US spooked sentiment. Equity markets in Hong Kong, South Korea, China, and
Taiwan are shut for holiday.
.
.
SECTOR NEWS
* AGRICULTURE: Government notifies export of 10,000 tn each of organic sugar, pulses, edible oil.
.
* AUTOMOBILE: General Motors India to unveil Chevy Beat's electric version this month. (BL)
* COAL: State-run International Coal Ventures considering acquisition of a 59% stake in Minas de Revuboe, which owns the Revuboe coal mining project in
Mozambique, for around $1 bln. (Mint)
.
* EDUCATION: Tata Group planning to enter the sector with an initial investment of 1 bln rupees. (BS)
.
* FINANCIAL: Promoters of five microfinance institutions--Asmitha Microfin, Future Financial Services, Share Microfin, Spandana Sphoorty Financial, and
Trident Microfin--agree to pledge 100% shareholding with banks for debt recast. (var)
    Avendus Capital buys 84% of Grama Vidiyal Micro Finance's 108-mln-rupee
loan portfolio in securitisation deal. (ET)
    L&T Infrastructure Finance and SREI Infrastructure Finance to benefit from. Ministry of Corporate Affairs' new guidelines public financial institution status. (Mint)
.
* FMCG: Carlsberg to buy partner Lion Brewery's share in India operations, raise stake to 90%. (ET, Sat)
.
* GLASS: Saint-Gobain has approached Tamil Nadu and Andhra Pradesh governments seeking 60 acres of land for setting up a factory to produce
glass for solar power plants. (BL, Sat)
    To invest 15 bln rupees in India across its manufacturing facilities over a period of two years. (FE, Sat)
.
* HEALTHCARE: Vasan Healthcare in talks with private equity investors for raising $150 mln. (FC)
.
* IT: Genpact to have nearly 60% of its senior leadership based outside India in the next 12-18 months, a move aimed at being closer to global clients.
.
* LOGISTICS: Freight premiums on imported coal likely to increase 20% from next year. (Mint, Sat)
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* SHIPPING: Companies like Greatship India, Great offshore, Essar Shipping and Global Offshore are acquiring vessels to tap the oil exploration and
drilling services market in countries like Brazil. (ET)
.
* MEDIA: Government agrees to hike foreign direct investment in broadcast carriage services to 74% from 49%, while retaining that for local cable
operators at 49%. (Mint)
.
* METALS & MINING: Karnataka government may set terms on exporters with regards to quantum and mode of transport of iron ore. (BL, Sat)
    Gujarat Mineral Development Corp is looking at private partnerships to add value to its mineral products. (BS)
.
* MONSOON: India Jun 1-3 average rainfall 14.4 mm, 67% above normal.
.
* OIL & GAS: Empowered Group of Ministers' meet on gas allocation called off. (BS, Sat)
    Centre sets Jul 15 deadline to resolve payment crisis for Iranian crude oil. (BL, Sat)
.
* PHARMACEUTICAL: Government drafts uniform rules of conduct for the industry. (ET, Sat)
   Drug Controller of India summons Wyeth, Quintiles, Lilly, Amgen, Bayer, Bristol Mayer, Sanofi, Pfizer and PPD for clinical trials-related deaths.
(ToI)
.
* POWER: Southern region to be completely integrated with national power grid in three years. (BL, Sat)
    Lanco Infratech and GMR Group have sought clarity from the government on natural gas supplies from Reliance Industries Ltd's D-6 block in
Krishna-Godavari basin. (PTI)
    Governemnt expects to achieve additional power generation capacity of 16,000 MW in the remaining 10 months of the 11th five-year plan. (ET)
.
* REAL ESTATE: Indiareit Fund Advisors and Ambience to jointly develop 17.63 acres of land in Gurgaon. (ET, Sat)
   Indiareit Fund Advisors plans funds to tap rental yield, debt market. (BL, Sat)
.
* REGULATORY: Securities and Exchange Board of India says infrequently traded Indian Depository Receipts must be redeemed.
    SEBI eases prior-approval norm for bourse members, sub-brokers.     The Central Board of Direct Taxes to make disclosure of Permanent Account
Number mandatory in high value transactions. (ET, Sat)
    Reserve Bank of India cancels registrations of S K Capsec Pvt Ltd and Sansun Leasing and Finance Pvt Ltd for carrying on the business of a
non-banking financial institution after their exit from the business. (var, Sat)
.
* RETAIL: Wal-Mart may tie up with 'kirana stores' for bigger India play; to
open new outlets in Maharashtra, Andhra Pradesh, and Chhattisgarh. (ToI, Sat)
.
* RUBBER: Prices of the commodity set to recover as production enters lean phase. (ET, Sat)
.
* TELECOM: Nokia forays into dual-SIM mobile market. (BL, Sat)
.
STOCKS
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* ABG SHIPYARD: Plans to cut debt by 17% in 2011-12; aims to turn debt-free by 2014. (DNA, Sat)
.
* ASHOK LEYLAND: May total sales 5,725 units, down 12% on year.
.
* BALAJI TELEFILMS: Plans to launch film-focused private equity firm. (Mint)
.
* BHARAT HEAVY ELECTRICALS: Prepares strategic plan to take on competition; railway transportation and defence to expand in a big way while power
business will continue to be the most important constituent of company's portfolio. (Mint, Sat)
.
* BHARAT PETROLEUM CORP: Plans to add 1,70000 barrels per day refining capacity at its Kochi and Bina plants. (DNA)
.
* CAIRN INDIA: To soon take up minority shareholders' concerns regarding deal with Vedanta with parent company Cairn Energy. (BL, Sat)
.
* CORPORATION BANK: To open 200 branches, hire 1,200 personnel this fiscal. (var, Sat)
.
* DABUR INDIA: Keen to enter consumer healthcare segment. (ET, Sat)
.
* DR REDDY'S: Directorate of Factories, Andhra Pradesh, files second case against company's US FDA-certified manufacturing facility at Bollaram for
alleged safety-related lapses. (PTI)
*
* HERO HONDA: The Munjals, promoters of the company, decide to drop the 'Honda' tag. (ToI, Sat)
.
* HOUSING DEVELOPMENT & INFRASTRUCTURE: Sees transfer of development rights sales 20% lower for 2011-12 (Apr-Mar). (BS, Sat)
.
* INDRAPRASTHA GAS: Hikes compressed natural gas prices by up to 55 paise per kg.
.
* INFRASTRUCTURE DEVELOPMENT FINANCE CO: and Khazanah plan infrastructure development joint venture in India.
.
* JINDAL STEEL & POWER: Managing Director Navin Jindal is on a visit to Bolivia to give a push to the company's plans of investing $2.1 bln in next
few years in mining and in a 1.7 mln tn per year steel plant in the South American country. (FE)
.
* JUBILANT LIFE SCIENCES: Gets US Food and Drug Administration's approval for Alzheimer's drug Aricept generic.
.
* JYOTHY LABORATORIES: Looking at possibility of introducing new categories such as hair care, body care, and adhesives post Henkel India buy. (BL, Sat)
.
* KARNATAKA BANK: To recover 2.5-bln-rupee bad loans in 2011-12. (BL, Sat)
.
* KITPLY: Approves closure of Igatpuri laminate unit on operational loss.
.
* LIC HOUSING FINANCE: To raise 1 bln rupees via 3-year bonds at 10.20%.
.
* MAHANAGAR TELEPHONE NIGAM: To spend 11.45 bln rupees on 3G network expansion. (FE)
.
* MAHINDRA & MAHINDRA: Has asked its suppliers to focus on reducing cost and deliver on time. (PTI)
.
* MANGALORE REFINERY & PETROCHEMICALS: Ongoing 150-bln-rupee expansion may get delayed if road blockade by agitating displaced people of Mangalore special economic zone continued at Jokatte. (FE, Sat)
.
* MARUTI SUZUKI: The standoff between workers and management at the company continues as workers demand recognition of a new union and retention of
contract labourers. (DNA)
.
* MAXWELL INDUSTRIES: To sell Erode spinning unit to MC Spinners for 390 mln rupees.
.
* NIIT: To acquire balance promoters' stake in Evolv Services. (
.
* NMDC: Inks memorandum of understanding with Australia's Minemakers to jointly develop the Wonorah phosphate deposits in Northern Territory.
.
* NTPC: To get showcause notice for dyke collapse at Orissa plant. (BS, Sat)
* PERSISTENT SYSTEMS: US telecom major Sprint Nextel Corp to enter India by buying 74% stake in a joint venture firm, Sprint Telecom India, floated by
the company. (FE, Sat)
.
* PTC INDIA FINANCIAL: Sanctions 5-bln-rupee debt to three power companies.
.
* RURAL ELECTRIFICATION CORP: Plans to raise up to $1.75 bln by November through Foreign Currency Convertible Bonds and External Commercial
Borrowings. (ET)
.
* SATYAM COMPUTER SERVICES: Has sought more time to build an IT/Ites special economic zone in Hyderabad. (PTI)
.
* SHREE GANESH JEWELLERY: Plans to foray into the NBFC space. (BL, Sat)
.
* SHOPPERS STOP: Promoters Raheja Group are looking at exiting the Crossword Bookstores business. (BS)
.
* SOFTBPO GLOBAL SERVICES: Approves 25-for-1 rights issue at 55 rupees per share.
.
* STEEL AUTHORITY OF INDIA: To invest 36 bln rupees for setting up four pellet units in the next two-three years. (BL, Sat)
    May rope in four private companies to bid for Hajigak mines in Afghanistan. (BL)
.
* WENDT INDIA: 3M arm makes open offer to acquire 20% more in the company at 1,366.34 rupees a share.
.
* TATA MOTORS: To meet additional credit requirement in a high interest rate and lower sales market Tata Motors has infused an additional 7.5 bln rupees
in fully-owned arm Tata Motors Finance. (FE)
.
* TATA POWER: Solar plant in Pune goes on stream; to contribute 4.5 mln units a year to the grid. (BL, Sat)
.
* UNITY INFRAPROJECTS: Eyes 25% growth in revenue in 2011-12. (FE, Sat)
.
* VIMTA LABS: European firm seen interested in taking over the company; suitor said to have bought 10-11% through leading investment company. (DNA, Sat)
.

EVEREST KANTO CYLINDERS Limited By GEPL Capital

2011-06-04T19:29:00.003-07:00

Source: GEPL Capital

Everest Kanto Cylinders Ltd. 4QFY11 & FY11 Results Update

EKCL's FY11 results were ahead of consensus estimates (company beat its earnings guidance of Rs 5.4 by 16%), its revenue increased by 19 % YoY due to higher turnover from Dubai subsidiary owing to robust demand scenario, EBITDA margins increased sharply to 17.6% for FY11 from 9.6% in FY10 due to superior performance from the Dubai subsidiary (running at 120% capacity utilization), reduction in Raw material cost (due to removal of previously held high cost inventory).

Consequently, the reported PAT was also higher at Rs 702 mn with a YoY margin increase of 700 bps at 9.0%. PAT margins increased due to two primary reasons:

• Reduction in interest cost outgo as company's Net Debt decreased from Rs 4.4bn in FY10 to Rs 3.2bn in FY11, thereby also improving Balance Sheet quality.

• Reduction in Tax provisions; despite Indian subsidiary providing for full taxes, higher contribution from Dubai and losses made at US & China Subsidiaries kept the cumulative Tax outgo low.

Segmental Performance:

Dubai plant displayed superlative performance on both revenue as well as margin terms, while Indian plant remained flattish on sales term but improved PAT margins by 400 bps YoY owing to better capacity utilizations. Though China & US plant still remain a drag, management has indicated that they will turn around in FY12 as demand has picked up in US & they have $ 30mn worth orders (Jumbo Cylinders) which will keep there US plants occupied for next 7-8 months. In China, capacity utilization is expected to improve (FY11 capacity utilization at 34%)
with increasing demand in the country as well as opening up of office in Thailand to cater to local demand. Management expects output to grow by 50% from China in FY12 over FY11.

The growth in India was led by better off-take in CNG cylinders (up 40.9% YoY) led by revival in demand form OEM's (EKC now has 80% market share of OEM's against 65% in last year). For the full year FY11, the consolidated volumes grew 27.5% YoY to 876, 000 cylinders mainly driven by India (up 21% YoY) to 572,000 cylinders and UAE (up 49.2% YoY) to 234,000 cylinders. The Dubai Plant is expected to continue its superlative performance; management is also increasing its capacity by 50% in FY12 with a cap-ex of $ 20mn (to be funded by internal accrual & debt). The increased capacity will start adding to revenue from 4QFY12 onwards and is expected to boost the annual volume growth of Dubai plant by
25% in FY12E.

Other Highlights:

Average realization/Cylinder have been better since Q2FY11, still due to decline in same in Q1FY11, the FY11 annual average realization/Cylinder came in lower at Rs 8800 against Rs 9453 in FY10. Though, a positive sign was that EBITDA/Cylinder has constantly been in a decent range, EBITDA/Cylinder for FY11 stood at Rs 1574 which is almost twice of that in FY10.Also, concerns with respect to high inventory have been allayed with sharp reduction in inventory days to 142 in FY11 from 231 in FY10.

Management Guidance:

Management has given guidance of more then 20% EBITDA margins for FY12E & increases it further ahead in FY13E. They steered clear of any upfront guidance's on sales front, though they gave individual plant based guidance's:

• China plant is expected to grow by 50% in volume terms and management expects to break even there in FY12E.

• US plant is also expected to break even in FY12E

• Indian plant is expected to grow by 15 % for this year and increase momentum in FY13E, Billet based plants are expected to be operational in Q1FY12E & plates based plants will be operational from Q3FY12E, this will increase EBIT margins in Indian margins from Q3FY12 onwards as raw material cost will decrease further.

• Dubai plant is increasing its capacity by 50%, same is expected to kick-in in the last quarter of FY12, and it is also expected to grow sales volume by 25% this year with sustained margins.

Putting together all the above guidance's, EKCL is expected to grow by more then 20% in both margin as well sales volume terms. Though realization may be down in Q1FY12E due to lower raw material cost, but improvement in the same in rest three quarters will give sales growth of around 15-20%. Due to better operating parameters earnings growth will beat sales growth by 300-400 bps.

Valuation & Viewpoint:

Owing to improved demand scenario in Industrial Cylinder (growing at 15% per year in India) & CNG cylinders (due to increasing OEM's interest &
rising conventional fuel costs), improving off-take of Jumbo Cylinders in US & China, visible sales growth in Dubai Plant with sustained margins, improving balance sheets quality due to decreasing debt & inventory days, and constantly improving plant capacity utilizations & hence margins, EKC looks well set to achieve its growth targets. Although a earnings growth of 18-24% is on the cards for next two years, decreased RoE's
& ROCE's (due to ongoing expansion in plants) might not allow the stock to garner its historical premium of more then 20X PE multiples.
Consensus FY12 & FY13 EPS target for EKCL are Rs 8.3 & 10, at CMP of Rs 90, the stock is trading at 13.6X its FY11 EPS, 10.8X its FY12E consensus EPS & 9X its FY13E consensus EPS. We think that on the conservative side, even ascribing a PE multiple of 11X FY13E
EPS of 10, stock looks attractive at current valuations.

Buy Apar Industries Limited - Nirmalbang

2011-06-04T19:29:00.001-07:00

Source: Nirmalbang

Apar's results were in line with our expectation. Going forward we are confident that, from FY12, margins of conductors will be better on account of execution of higher margin business and increase in volume due to capacity
expansion

Key Highlights

- During the quarter, Apar report 59.6% (YoY) increase in sales. This was mainly attributed to strong volume growth of 74% (YoY) in conductors (31836 MT). For FY11 (cons) company reported sales of Rs. 3034 crs, an increase of 36% YoY.

-For the quarter, EBIDTA stood at 42.4 crs against the loss of Rs. ‐ 31.75 crs in Q4FY10. EBIDTA margin stood at 5.5%. For FY11, EBIDTA increased by 37% and margin remain stable at 6.2%.

- On Segmental performance, revenue in conductors segment increased by 72% (YoY,) but EBIT margin decline by180bps (YoY) on execution of lower margin business. For FY11, Conductor division grew by 34% (YoY) with EBIT margin of 3.5% against 6.1% (YoY). On Specialty oil division front, revenue increased by 42% (YoY) and EBIT margin of 9.7% against 6.9% (YoY). This 280bps increase in margin was mainly on account of better product mix. For FY11, Oil division posted growth of Rs. 36% with EBIT margin of 9.7%

-Current Order book of Apar stands at Rs. 1260 Crs (PGCIL is Rs. 400 crs). During the quarter, Apar reported more than Rs. 500 Crs worth of order inflow.

- Apar report Adj PAT of Rs. 22.5Crs against 20.5 Crs. Company reported quarterly EPS of Rs. 6.9 per share.

-Company has allotted 0.363 crs shares to Templeton on preferential basis at a premium of Rs.210per share, which has resulted in equity dilution. Total equity post allotment has increase to 3.957 crs

Plan your investments to save taxes

2011-06-04T19:26:00.003-07:00

It's that time of the year when your office asks for your tax-saving investment plans for the new financial year.

Here's a dummies' guide on the tax breaks available to a salaried individual and how to make the most of them

EVERY year as the financial year comes to a closure, like most of the salaried taxpayers, you start scrambling for arranging tax-related investments and documents that you need to submit to your organisation to save your hard-earned money. Tax saved is income earned.

There are numerous ways and opportunities available to you so that you can minimise your tax liability legally. Although Albert Einstein had once admitted "the hardest thing in the world to understand is income tax", it really does not require a genius to understand taxation and plan tax saving options.

As the year has just started, it is the right time to plan for a higher take home pay. It is prudent to start deciding on your investments from the beginning to avoid payment of additional taxes from your coffers. Here are a few tips: Structure your salary: As per the law, tax is required to be deducted at source by an employer. In most companies, the employees are given the option of structuring their salaries tax-efficiently to minimise their tax burden.

Some ways of structuring salary could be as follows – individuals staying in a rented accommodation may structure part of their salary towards house rent allowance and keep it in line with the rent paid for the accommodation. Medical reimbursements up to Rs 15,000 per annum can be claimed as exempt from tax if the employee submits supporting bills.

An individual is also allowed tax exemption towards transport allowance up to Rs 800 per month. Additionally, depending on the company policy, employees may also opt for an employer-provided car for official and personal purposes. The same will be taxed as a perquisite in the hands of the employee at a discounted value of Rs 2,400 per month and an additional Rs 900 per month if a chauffeur is also provided with the car.

Any amount that is recovered from the employee will be reduced to arrive at the perquisite value. The above options may bring some breather from taxes.

Buy a house: If you plan to buy a house and obtain a loan for the same, it may help in minimising your tax.

In case of a self-occupied property, an exemption up to Rs 1,50,000 can be claimed with respect to the interest paid on such loan. Additionally, the repayment of principal paid can also be claimed as a deduction up to Rs 1,00,000 under section 80C of the act.

An option that married couples may explore is buying a house jointly and applying for a joint housing loan and then both will be able to claim a deduction for the principal and the interest amounts paid separately from their incomes to the extent of their respective share in the house and the loan.

Capital gains: Gains from sale of a capital asset are taxed as capital gains.

Broadly, if the assets such as real estate and gold are held for a period of three years or more, then the gain arising from the sale of such assets are long-term capital gains and are taxed at the rate of 20 per cent, subject to indexation. If the assets are held for less than three years and sold, then the gain on sale is short-term capital gain, which is taxed at the normal rate, that is, at the rate of 30 per cent if the person is in the highest tax bracket.

On the other hand, if such assets are held for less than one year and then sold, the gains, subject to certain conditions, are taxed at the rate of 15 per cent. Thus, individuals should plan to invest their money in line with their financial goals.

Gifts: Gifts are taxable subject to a few exceptions. Gifts received from anyone during special occasions such as marriage are exempt from tax. Any sum of money received as gift up to Rs 50,000 from a person other than the specified relatives is also exempt from tax.

Proposed investments: There are many investment options under section 80C of the act that enable tax payers to reduce their taxable income by a maximum of Rs 1,00,000. Some of the prominent options are contribution to employees' provident fund (EPF), public provident fund (PPF), national savings certificate (NSC) and life insurance premium. Keeping in view the importance of education in our country, the government allows the taxpayer to claim deduction for paying tuition fees of his child up to Rs 1,00,000 for his full time education.

Besides Section 80C, an individual may invest additional Rs 20,000 in infrastructure bonds which is allowed as deduction under section 80CCF. Taking medical insurance for self/spouse/dependent children and parents, allows a tax benefit u/s 80D of the act of up to Rs 15,000. If the medical insurance is being taken for a senior citizen, a deduction of Rs 20,000 can be availed.

In case an individual has taken an education loan, the interest payable for that loan is deductible from the taxable income under section 80E of the act.

If an individual plans to make a donation to certain other specified institutions/funds, an exemption of the amount, either 100 per cent or 50 per cent as the case may be, can be claimed under section 80G of the act.

Also, an individual can claim a deduction under section 80GG of the act, in case he is staying in a rented accommodation and does not own a house property in the city of workplace.

The amount allowed as deduction would be the minimum of the rent paid in excess of 10 per cent of the total income or Rs 2,000 per month or 25 per cent of the total income as specified.

However, if he is already claiming an exemption for the rent paid from the HRA received from his employer, he cannot claim the deduction again under this section.

Individuals who see a liquidity crunch in the near future should opt for short term investments, and those who have spare funds for a long period of time can look at investing in long term avenues that are more secure and give a higher return on investment.

Tips to File Your Income-Tax Returns

2011-06-04T19:26:00.001-07:00

Remember Scarlett O'Hara's immortal words in the novel 'Gone with the Wind? "....After all, tomorrow is another day…" With the financial year (FY) 2010-11 behind us, one would probably be muttering these words while looking forward to FY12.

While planning for FY12, one should remember that though FY11 is over, the return filing compliances required for the year are far from over. Compliance for FY11 can be laid to rest only after the due filing of income-tax returns (ITR) for the year is done, as required under the law.

There would be numerous questions with respect to tax filing by individual taxpayers; some of which have been addressed below.

WHO SHOULD FILE AN ITR?:

Every individual, whose total income exceeds the prescribed exemption limit (which is . 160,000 for male assesses, . 190,000 for female assesses and . 240,000 for those above 65 years of age [i.e. senior citizens]), is required to file an ITR with the Indian revenue authorities on or before the prescribed due date. If you have agriculture income as well as non-agriculture income and your non-agriculture income is less than the minimum threshold limit, you will not be obliged to file an ITR. In case of a deceased person, his executor, administrator or other legal representative would be required to file an ITR for the deceased.

WHAT IS THE DUE DATE?:

The prescribed due date is September 30, 2011 for FY11, if the individual, being a sole proprietor, has his accounts subjected to tax audit or is a partner of a partnership firm whose accounts are subject to tax audit. In all other cases, the due date is July 31, 2011.

WHICH FORM TO FILL?:

It may sound strange, but the fact is that the ITR form for FY11 is yet to be prescribed. So, the filing would have to wait till it is prescribed.

WHO SHOULD SIGN THE ITR?:

The ITR is required to be signed by the individual himself or herself. However, in case the individual is not physically present in India to sign the ITR or in case of a nonresident, a power of attorney holder could sign the ITR. In case of deceased assesses, the executor, administrator or other legal representative would be required to sign the ITR. A word of caution: An unsigned return is not a valid return.

CAN YOU FILE ITR ELECTRONICALLY?:

Well, yes an ITR can be filed electronically with the income-tax department website (www.incometaxindia.gov.in) with or without a digital signature. In case an ITR is filed online without the digital signature, the acknowledgement generated is required to be signed and sent to the Central Processing Centre (till last year, only in Bengaluru, Karnataka).

ARE ANY DOCUMENTS NEEDED?:

Currently, no documents can be submitted along with the ITR. However, the tax authorities sometimes ask for a copy of the PAN card or acknowledgement of previous ITR filed, to verify the tax jurisdiction.

In case the ITR is signed by a legal representative, copy of the power of attorney is required to be filed.

WHAT IF YOU MISS THE DUE DATE?:

If the ITR is not filed before the prescribed due date and also if the taxes due are not deposited before the said date, the individual would be subject to penal interest at the rate of 1% per month of such taxes due, for the duration of the non-compliance. In addition, a penalty of Rs 5,000 could be levied by the authorities if the ITR is not filed before the end of the assessment year (i.e. March 31 following the year for which the tax return pertains).

CAN YOU FILE IT LATER?:

An ITR can be filed after the prescribed due date but before the end of one year from the end of assessment year. So for FY11, ITR can be filed by March 31, 2013. But you should be aware of the fact that the belated return so filed cannot be revised under any circumstances.

Also, if you have business loss and capital loss during the financial year, it cannot be carried forward to subsequent financial year, impacting your next year's planning.

Multicap Mutual Funds

2011-06-04T19:25:00.000-07:00

Unlike large-, mid- or small-cap funds that are subject to restrictions regarding where they can invest, multi-cap funds face no limitations regarding the market capitalisation of stocks they can invest in. Their mandate is to buy stocks across the entire market-cap spectrum in order to generate alpha. Managers of multi-cap funds are also allowed to invest in both value and growth stocks in their quest for beating their benchmark or category average. Theoretically, multi-cap funds are meant to weather all kinds of market conditions and come up winners. Many of them actually do.

Multi-cap funds as those that have allocated between 40-60 per cent of their assets to large-cap companies over the last three years.

In a multi-cap fund the fund manager is pro-active, changing and realigning his allocations to different market caps whenever market conditions change.

Advantages

Flexibility and freedom are the key advantages of multi-cap funds: the fund manager can go anywhere in search of value or growth. The current market conditions, where stock prices have corrected across market capitalisations, are particularly well suited for such a fund. The fund manager can take advantage of opportunities available across the market-cap spectrum.
In the early stages of a bull run, usually large-cap stocks tend to do well. But as the bull run continues and large caps reach high valuations, investors shift their focus to mid- and small-cap stocks. It is then the turn of the latter to play catch up. Often, by the time a bull run peaks, mid- and small-caps have outperformed their large-cap counterparts. Similarly, in a bear market, mid- and small-cap stocks tend to correct much more sharply than large caps.
A good multi-cap fund manager is able to realign his portfolio rapidly and thus benefit from changing market conditions.

Disadvantages

As is clear from the above, a lot rides on the fund manager's abilities. If the fund manager fails to read market conditions well (even veteran fund managers fail to do this consistently) and doesn't alter the complexion of his portfolio rapidly, his returns would lag. His fund would fall behind the category average in a bull market while declining more in a bear market.
The multi-cap fund manager must also be able to manage his sectoral allocations well. Sectors too go in and out of favour frequently depending on which part of the economic and market cycle one is in.

Since fund managers of multi-cap funds also tend to churn their portfolios more, their expense ratios can rise. Over the long-term this can affect the returns from the fund.

For all these reasons, multi-cap funds are more high-risk, high-return holdings than, say, a pure large-cap fund. Before investing in them, look up the fund manager's track record carefully both in up- and down-cycles.

Portfolio Strategy

Both aggressive and conservative investors can hold multi-cap funds in their portfolios. However, their position and role would differ. While these funds can be part of an aggressive investor's core portfolio, they should be part of a conservative investor's satellite portfolio.

Notable characteristics of multi-cap funds

• Multi-cap funds are those that have had between 40 to 60 per cent of their assets in large-cap companies over the last three years.
• These funds offer investors exposure to large-, mid- and small-cap stocks in a single portfolio.
• These funds have the latitude to find attractive stocks without market-cap, sector or style constraints.
• The investment process may involve high portfolio turnover. This could raise costs and hurt the fund's performance.
• These funds can also have more volatility and risk.
• These are higher-risk funds that should complement the core portfolio (comprising large- or large- and mid-cap funds) of a conservative investor. They should have only a limited allocation to these funds in their satellite portfolio.

Online Income tax filing returns

2011-05-30T23:45:00.000-07:00

STEP 1:

Log on to www.incometaxindiaefiling.gov.in and register yourself with your PAN — which acts as the user ID — and log in to your account.

• STEP 2:

From the 'Downloads' menu, select the ITR form applicable to you for assessment year (AY) 2010-11 and download the same. For a salaried individual with no other source of income, the relevant one is ITR-1.

• STEP 3:

Open the downloaded excel utility with 'macros enabled'. For example, if you are using Office 2003, then go to Tools > Macro > Security, set the security level at 'medium' and enable macros while opening the excel utility.

STEP 4:

Fill in the relevant details with the help of the Form 16 issued by your employer.

• STEP 5:

Validate all the information by clicking the 'Validate' key and proceed to generate an XML file. It will be automatically saved in your machine.

• STEP 6:

Upload this XML file on to the website by going to the drop down menu under the 'Submit Return' section; select AY 2010-2011 and the applicable Form. Select 'No' for the question 'Do you want to digitally sign the file?', unless you have obtained a class II digital signature.

STEP 7:

If you have followed all steps correctly, a message about successful efiling will be displayed on the site, along with a note that the ITRVerification form has been mailed to your e-mail ID.

• STEP 8:

Download the ITR-V form, print it out, sign the same and send it by ordinary post to Income Tax Department-CPC, Post Bag No-1, Electronic City Post Office, Bangalore - 560100, Karnataka within 120 days of filing your returns online. A failure to adhere to the deadline will mean going through the process all over again. If you do not have a printer at home, you can simply save the file in a pen drive/CD and carry it to a printing centre.

FOOTNOTE:

* This flow chart has been designed keeping in mind individuals with zero tax liability. For those who are liable to pay taxes or entitled to a refund, the flow chart will entail certain additional steps like entering the details of taxes paid, bank account number, MICR code and the like.

Global Markets Update

2011-05-30T23:24:00.001-07:00

American Markets: DOW JONES: 12441 + 38 NASDAQ: 2796 + 13

USDINR: 45.16 +0.07 EURINR: 64.07 +0.20 DXY : 74.57 - 0.33

GBPINR: 72.66 +0.12 EURUSD: 1.41 -0.01

GBPUSD: 1.61 -0.00 USDJPY: 80.80 -.14

Yesterday US markets were closed due to Memorial day. S & P's 500 Index futures added 0.4%. Treasuries rose, headed for their biggest two-month gain since August. U.S. payrolls probably rose 185,000 in May, slowing from a 244,000 gain in April, according to the median forecast in a Bloomberg News survey before Labor Department figures June 3. A separate survey showed the Institute for Supply Management's factory index likely fell to 57.6 this month, the lowest level since October.

Asian Markets: NIKKEI: 9595 + 90 HANG SENG: 23380 + 195 KOSPI: 2089 - 10 SGX NIFTY 5478 + 11

Japan Industrial Production Rose 1% in April

Japan's industrial production rose less than economists forecast in April & unemployment climbed, increasing the likelihood that the economy will contract for a third quarter.

Factory output rose 1% in April from a record drop in March, the Trade Ministry said in Tokyo today, missing the 2%median estimate of 30 economists surveyed by Bloomberg News. The jobless rate advanced to 4.7% from 4.6% as payrolls fell, a separate report showed.

The reports suggest that the immediate boost to the economy from manufacturers restarting their factories after the March 11 temblor may be limited. Toyota Motor Corp., Nissan Motor Co., and Honda Motor Co., the nation's three-biggest carmakers, said last week that their production plunged in April because of disruptions caused by the earthquake.

Toyota Motorsaid last week that its production in Japan fell 78%in April, the largest decline in 35 years. Nissan said its domestic output declined 49% while Honda said its Japan output fell 81%.

European Markets: FTSE: 5938 + 57 CAC: 3942 - 8 DAX: 7160 -3

Euro Rises on Optimism Over Greece Aid

The euro climbed against most of its major peers, while Asian stocks and U.S. equity-index futures advanced amid speculation European nations will pledge more funds to repair Greece's finances. Wheat sank the most in three weeks after Russia said it will allow grain shipments to resume.

Europe's 17-nation currency strengthened 0.6% to $1.4369 and rose 0.5% to 116.13 yen as of 9:35 a.m. in Tokyo. The MSCI Asia Pacific Index climbed 0.6%, paring its steepest monthly slump in a year. Wheat tumbled as much as 4.4%. Oil erased earlier losses, while copper snapped a four- day advance in New York.

EU leaders will decide on a new aid package for Greece by the end of next month, said Luxembourg's Jean-Claude Juncker, who leads the group of euro-area finance ministers. Greek Prime Minister George Papandreou said on May 27 he'll press ahead with new austerity measures after failing to win backing from the main opposition parties.

The euro appreciated against 14 of its 16 most-actively traded counterparts. It slid against all but 2 yesterday after Antonis Samaras, leader of Greece's biggest opposition party, New Democracy, rejected Papandreou's plan

Morning Brief

2011-05-30T23:23:00.001-07:00

Stocks To Watch: NTPC, Camlin, IOC, Tata Communications, Provogue
Tuesday, May 31 - Morning brief for the stock market:
.
.
BIG PICTURE
* Subbarao overruled RBI technical panel majority on policy rate hike. (NW18)
* Talks between government and civil society activists on the draft
Lokpal Bill almost broke down Monday after an attempt was made to
bring the Prime Minister
and higher judiciary under the purview of the Lokpal. (var)
.
.
TOP EVENTS TODAY
.
* Jan-Mar earnings to be detailed by: Alkyl Amines Chemicals, BEML,
Hilton Metal Forging, Omega Interactive Technologies, Rama Pulp &
Papers, and Rasi
Electrodes.
.
* Board Meetings of:
+ BAMPSL Securities to consider dates for rights share issue.
+ Sterling Biotech to consider dividend.
.
.
INDICATORS (previous session)
* NSE provisional net buy/(sale) in bln rupees, May 30: FII 2.53, DII (0.50)
* Institutional net buy/(sale) in bln rupees, May 27: FIIs 2.54, MF 2.86
* FII NSE futures net buy/(sale) in bln rupee, May 30: index (2.25), shr (0.09)
* Sensex 18232.06, down 34.04 points; Nifty 5473.10, down 3.00 points
* Crude: $100.59/bbl; Rupee: 45.08/$1; Gold: $1,538.70/ounce; 10-yr yld: 8.4316%
.
.
OUTLOOK
* Share indices are likely to open firm tailing gains in Asian markets
amid optimism European officials may sanction further aid to
debt-ridden Greece, but estimates of gross domestic product growth
would lend direction later in the session.
.
.
GLOBAL STOCK MARKETS
* US: US stock markets were shut on Monday for Memorial Day holiday.
.
* ASIA: Key Asian markets were up today amid optimism European
officials will clear more aid for Greece, with Japan's Nikkei
advancing on the back of industrial production data for April.
.
.
SECTOR NEWS
.
* AGRICULTURE: Government is set to announce 15-17% hike in the
minimum support prices of most crops to be planted during the ensuing
kharif season to
compensate farmers for higher cultivation costs. (BL)
.
* AUTOMOBILE: Germany's OBO Bettermann plans to invest 1.5 bln rupees
to set up a manufacturing facility at Oragadam, near Chennai. (BL)
.
* BANKING: Reserve Bank of India has clarified villages with
population of over 2,000 are open to all banks for business
development and expansion. (var)
.
* EDUCATION: Government to spend around 1 bln rupees a year on
advertising to popularise vocational education and reduce shortfall of
skilled workers. (Mint)
.
* ENERGY: Iran has expressed optimism over resolving crude oil payment
issue with India.
    India's petroleum regulator has proposed that part of gas
allocated for power plants be used for city gas distribution projects
for which investments of
around 900 bln rupees are in the pipeline. (ET)
    Government expects to pay out another 150-200 bln rupees of
petroleum subsidy in 2011-12 (Apr-Mar). (DNA)
.
* EXCHANGES: National Stock Exchange has moved Delhi High Court in a
matter under which it has been charged with abuse of its dominant
position in the
currency derivatives segment by the Competition Commission of India. (var)
.
* FOREIGN RELATIONS: German Chancellor Angela Merkel is arriving on a
day-long visit to Delhi today.
.
* GOVERNMENT: Mauritius government has assured the Central Bureau of
Intelligence and Enforcement Directorate that it will be able to
ferret out information on the ownership and financial pattern of
Delphi investment and Loop Telecom within a month. (ET)
    Government's plan to offer a unique identification number to every
Indian may get a fillip as life Insurance Corp of India has said it is
ready to offer unique identification cards to its policyholders. (BS)
.
* INFRASTRUCTURE: International Finance Corp is set to extend a loan
of $5 mln to Hyderabad-based Vishwa Infrastructures & Services backed
by Axis Private Equity. (FC)
.
* MINING: Several mines in north Karnataka, which supply high-grade
iron ore to major international and domestic steel companies, have
been given a fresh lease
with the state government allowing them to resume operations and
transport ore. (BL)
.
* POWER: Companies have expressed concerns over government's proposal
of "pooling" international and domestic coal prices to sell the raw
material at
a uniform price to customers. (BS)
.
* REGULATOR: Securities and Exchange Board of India may restore the
controversial G Mohan Gopal report on the initial public offer scam.
(BS)
.
* SHIPPING: Andhra Pradesh has approached Prime Minister's Office
seeking to build another big-size port in the state to accelerate its
economic development.
(ET)
.
* STEEL: Sterlite Group is the lone bidder for the proposed
11-bln-rupee iron ore export terminal at Mormugao Port in Goa. (BL)
    JSW STEEL, STEEL AUTHORITY OF INDIA and Essar Steel are planning
to raise product prices by 500 to 750 rupees from June 1. (FC)
.
* TAXATION: With doubts being raised about the government's ability to
meet its fiscal deficit target, Home Minister P. Chidambaram has
proposed imposition of consumption and inheritance taxes. (BS)
.
* TELECOMMUNICATIONS: The Joint Parliamentary Committee examining the
2G scam has questioned Comptroller and Auditor General Vinod Rai to
know how he quantified the "notional loss" of 1.76 trln rupees in
allotment of spectrum.
    Former telecommunications minister A. Raja plans to apply for bail
for the first time and argue his own case. (ET)
    A special court on Monday denied bail to Karim Morani, director of
Cineyug Media and Entertainment Pvt Ltd, who is accused in the 2G
spectrum allocation
scam. (var)
.
.
STOCKS
.
* A2Z MAINTENANCE: Has posted 2010-11 (Apr-Mar) consolidated net
profit at 771.18 mln rupees, net sales at 13.44 bln rupees.
.
* ABG SHIPYARD: Has posted Jan-Mar net profit at 406.7 mln rupees and
net sales 5.32 bln rupees.
.
* ACKRUTI CITY: Has posted net profit of 1.71 bln rupees for 2010-11
(Apr-Mar) and net sales at 4.26 bln rupees.
.
* ADITYA BIRLA NUVO: Has posted net profit at 3.80 bln rupees for
2010-11 (Apr-Mar) and net sales 62.83 bln rupees.
    Plans capital expenditure of 5.89 bln rupee by the end of 2012-13
to enhance operating margins. (BL)
.
* AHLUWALIA CONTRACTS: Has posted 2010-11 (Apr-Mar) consolidated net
profit at 720.53 mln rupees, net sales at 17.29 bln rupees.
.
* BERGER PAINTS: Has posted Jan-Mar consolidated net profit at 338 mln
rupees and net sales at 5.87 bln rupee.
.
* CARIN INDIA: Vedanta Resources may renegotiate offer to buy stake in
company if it accepts government's condition on cost recoverability of
Rajasthan
oilfield. (BS)
.
* CAMLIN: Has announced a strategic partnership with Japan's Kokuyo
Co, wherein the latter will acquire a 50.3% stake in the Mumbai-based
stationery
products maker in three tranches.
.
* CHOKSI IMAGING: Cancels rights issue on "changed circumstances".
    To pay 1.50 rupees per share dividend.
.
* CUMMINS INDIA: Has posted Jan-Mar net profit at 1.44 bln rupees on
net sales 10.1 bln rupees.
.
* D.B. REALTY: Has deferred its board meet to approve annual financial
results by at least 10 days, indicating auditors may be clashing with
management over
financial numbers. (BS)
.
* DEVELOPMENT CREDIT BANK: Gets RBI approval to open 10 branches.
.
* GEODESIC: Is in talks to buy a US-based mobile payments firm and
hopes to close the deal by August. (DNA)
.
* GODREJ INDUSTRIES: Has posted Jan-Mar net profit at 506.4 mln rupees
and net sales at 3.11 bln rupees.
.
* HINDALCO INDUSTRIES: Is facing cost overruns on its ongoing
expansion projects that have been delayed, but the company exuded
bullish vibes on
future demand for aluminium, despite global inventory levels going up.
.
* HINDUSTAN UNILEVER: Four senior executives of company have resigned
over past few months. (var)
.
* HOUSING DEVELOPMENT & INFRASTRUCTURE: Plans to cut total debt by
one-fourth by 2011-12 (Apr-Mar) end. (BS)
.
* INDRAPRASTHA GAS: Has posted net profit of 2.60 bln rupees for
2010-11 (Apr-Mar) on net sales of 17.44 bln rupees.
.
* INDIAN OIL CORP: May raise petrol prices by 1.35 rupees per ltr. (ET)
.
* JET AIRWAYS: Has signed a deal with Arab Air Carriers Organisation
to partner in various joint projects in areas such as fuel management
ground
service, safety initiative and training.
.
* JK PAPER: Issues foreign currency convertible bonds worth 35 mln
euros to global investors to partially fund capacity expansion. (ET)
.
* JYOTHY LABORATORIES: To raise up to 5 bln rupees via qualified
institutional placement of shares.
.
* MARUTI SUZUKI INDIA: Managing Director Shinzo Nakanishi may meet
Gujarat Chief Minister Narendra Modi today on a likely plan to set up
a production
facility in the state. (BS)
.
* NATIONAL ALUMINIUM CO: Has posted Jan-Mar net profit at 3.05 bln
rupee on net sales of 17.87 bln rupees.
.
* NAVA BHARAT VENTURES: Is set to sign a pact with TATA STEEL for
supply of ferrochrome, which will impact NAVA BHARAT's topline
positively. (DNA)
.
* NTPC: To raise at least $500 mln via a dollar denominated issue.
(DNA)    Has approached the Indian Railways for a sharp reduction in
freight rate
for coal ash. (FE)
.
* OIL AND NATURAL GAS CORP: Has reported a 26.1% on year decline in
its Jan-Mar net profit due to impact of higher payouts to state-owned
oil
marketing companies.
    ONGC may move court over royalty payments for Rajasthan oilfield
irrespective of the outcome of Vedanta Resources' bid to buy Cairn
India
that operates the field. (ET)
    Arm ONGC Videsh plans to bid for less than 20% stake in an
upcoming hydrocarbon block of Russia's OAO Novatek. (Mint)
.
* OIL INDIA: Has posted Jan-Mar net profit of 5.63 bln rupees on net
sales of 20.19 bln rupees. Net realisation in the reporting quarter
was at $58 per
barrel.
.
* OMAXE: Has posted 2010-11 (Apr-Mar) consolidated net profit at 927.1
mln rupees, and net sales at 15.2 bln rupees.
    Has repaid loans worth 5.8 bln rupees in 2010-11, and aims to cut
its debt to equity ratio to 0.7:1 before March.
.
* PARSVNATH DEVELOPERS: Has posted a 19% on-year decline in
consolidated net profit for Jan-Mar at 281 mln rupees due to lower
sales.
.
* PROVOGUE (INDIA): Has posted 2010-11 (Apr-Mar) consolidated net
profit at 261.78 mln rupees, and net sales at 6.61 bln rupees.
.
* PSL: Will diversify into port construction business and has been
awarded a contract by the Gujarat government to build a jetty at
Kandla port. (BS)
.
* RELIANCE CAPITAL: Has posted consolidated net profit of 2.91 bln
rupees for 2010-11 (Apr-Mar) on income of 53.3 bln rupees.
.
* RELIANCE COMMUNICATIONS: Has posted consolidated net profit of 13.5
bln rupees for 2010-11 (Apr-Mar), and net income from operations of
220.89 bln rupees.
.
* S. KUMARS NATIONWIDE: Has posted a consolidated net profit at 3.31
bln rupees for 2010-11 (Apr-Mar) on net sales of 51.81 bln rupees.
.
* SHIPPING CORP OF INDIA: Has posted Jan-Mar net loss at 61.7 mln
rupees, and net income at 8.6 bln rupees.
.
* STATE BANK OF INDIA: To mitigate risk on agriculture portfolio by
buying insurance cover for all crop loans. (Mint)
.
* SUNDARAM FINANCE: Sees slowdown in growth in 2011-12 (Apr-Mar), in
line with slower growth forecast for automotive industry. (ET)
.
* TATA COMMUNICATIONS: Plans to spend at least $400 mln-$450 mln as
capital expenditure in 2011-12 (Apr-Mar). (BS)
.
* TELEVISION EIGHTEEN: Has sharply narrowed its consolidated net loss
during 2010-11 (Apr-Mar) to 201.12 mln rupees, down 82.84% on year,
driven mainly by a strong revenue growth.
.
* TV TODAY NETWORK: Has posted Jan-Mar net profit at 95.03 mln rupees,
and net sales at 843.47 mln rupees.
.
* UTTAM GALVA STEELS: Has posted Jan-Mar net profit at 140.6 mln
rupees on net sales of 16.3 bln rupees.

GDP-expectation

2011-05-30T23:19:00.000-07:00

Median forecast from a poll of 28 economists is for an annual growth
of 8.2 per cent in the quarter through March, unchanged from the
previous quarter.

Forecasts ranged from 6.3 per cent to 8.9 per cent.

The economy is expected to have grown 8.5 per cent in fiscal year
2010/11 that ended in March, just below the 8.6 per cent estimated by
the government, and up from 8 per cent a year earlier, the poll
showed.

Forecasts for the full fiscal year growth ranged between 8.0 per cent
and 8.7 per cent.

FACTORS TO WATCH

Industrial output grew an annual 7.3 per cent in March, smashing
forecasts on the back of a revival in capital goods production.

Services sector gained momentum in April, with strong growth in new
business orders, a HSBC survey showed early this month.

Manufacturing sector maintained its strong rate of expansion in April,
helped by higher output and employment, the latest purchasing
managers' index ( PMI )) data showed.

While both input and output price indexes fell from the highs seen in
March, they remained way above the 50 mark as soaring fuel and raw
material prices drove up costs and fed into output prices, a clear
indication that high inflation was here to stay.

Inflation eased to 8.66 per cent in April, but upward revisions to
past readings and the prospect of higher energy prices will keep
pressure on the RBI to raise interest rates in June and maintain its
hawkish stance.

The Reserve Bank of India (RBI), which has been one of the most
aggressive of major central banks in tightening policy, early this
month raised rates by a higher-than-forecast 50 basis points and said
it was willing to sacrifice a bit of growth to tame inflation.

The RBI has raised its policy rate nine times by a total of 250 basis
points since March 2010.

Most economists in a recent poll expect the RBI to raise rates by at
least another 75 basis points in 2011.

Monsoon rains, which are vital for boosting farm production and rural
incomes in the nation of more than 1.2 billion people, have been
forecast to be normal in 2011.

MARKET IMPACT

Bond dealers said a March-quarter GDP growth number of around 8.1-8.3
per cent will have little market impact.

However, they said a number below 8 percent could push yields down by
4 to 5 basis points as the market has been heavily sold in recent
sessions, while a number above 8.5 per cent could push up yields by 2
to 3 basis points.

--

Mark Sunshine: Why Is The Fed Inflicting Collective Misery On The World?

2011-05-30T16:56:00.001-07:00

Mark Sunshine

QEII failed to deliver either on unemployment or real estate, so why is Wall Street speculating on QEIII? The fact remains, the Fed holds the power to pop the commodities bubble-but why is it inflicting collective misery on the World by simply doing nothing?

I don't know about you, but I'm fed up with being a victim of Wall Street speculators who are driving food and fuel prices up through the roof. The recent plunge in commodities prices confirms what everyone knew all the time — inflation is being driven by commodities speculators who are profiting from everyone else's collective misery.

Last week the margin requirements for silver — a relatively minor commodity — were changed and triggered a widespread sell off. The evidence of a speculator driven bubble was unmistakable by the end of the week — crude oil was down almost 15%, corn down about 10% and wheat down almost 8%.

If margin rule changes for a minor commodity can trigger a general price run, imagine what would happen if a series of broad based rule changes were implemented.

Well I have a suggestion for our economic leadership in Washington — go crazy — change the rules for all commodities. I guarantee that the commodities price bubble will instantly pop. The Fed has the regulatory authority to immediately implement this policy by ordering banks to stop funding, investing, clearing or facilitating derivatives commodity trading.

The problem that the Fed needs to fix is that the commodities markets have been "financialized" by Wall Street. Prices that used to be determined by producers and users of commodities are now set by financial speculators making naked bets on how much price pain consumers can endure without breaking by buying and selling derivatives commodity contracts.

These speculators don't own, or otherwise have a long term interest, in the commodities that they bet on, they are just in the market for the quick financial kill.

Over the past decade, commodities markets have become a large bookmaking operation where bets are placed on the amount of economic torture consumers can take before crying "uncle." In the last 12 months when oil at $100 per barrel didn't destroy American families, speculators raised the stakes and tried $110. When oil at $110 didn't break us, speculators were willing to go to $115.

Despite the rapidly rising prices, there was no shortage of crude oil to justify the run up of price in the commodities pits. In fact, oil spot prices have consistently been far below reported "market" prices.

If you think the commodities markets seem like a Las Vegas casino operation that isn't a coincidence.

Commodities speculation enjoys a special exemption from criminal gaming laws and only exists because Congress says that wagering on oil, corn and wheat isn't the same as gambling and that the people that run the markets aren't the same as gangsters.

If he wants to, Bernanke can fight back at commodities wagering by stopping banks from funding or supporting naked commodities bets. That action won't hurt producers or users of commodities or the commodities trading markets that actually have something to do with the purchase and sale of the underlying goods. Nevertheless, it will stop financial speculators from using liquidity that was actually intended as economic stimulus from being diverted into legalized commodities gambling.

Thirty years ago Paul Volcker attacked a similar liquidity fueled commodities bubble by declaring banks couldn't fund commodities speculation. Prices plunged and the bubble was popped. Bernanke can learn a thing or two from Volcker.

Put simply, the Fed has the regulatory authority to stop bank holding companies, and their subsidiaries, from being the "house" at the commodities casino.

Unfortunately, in recent years the Fed has been at best a reluctant regulator. The Fed needs to ditch its policy of regulatory non-intervention, at least when its own monetary policy is creating unintended economic distortions.

Fed action doesn't have to be broad based to be effective — in fact, narrower is better. Lending and capital rules only need to change for the financing and clearing of non-delivery derivative commodities contracts. Fed policy shouldn't change for physical delivery contracts that are used by producers and users of commodities.

Bernanke needs to get some backbone and stand up to commodities speculators, and the sooner the better. He should remember that there was a time when the Fed Chairman wasn't afraid of Wall Street and didn't hesitate to use all of the regulatory tools at his disposal.

Punishing everyone by raising interest rates, or waiting until inflation overtakes the economy, isn't a rational choice. Bernanke has the power to pop the commodities bubble right now without hurting the rest of us. Let's hope he uses it.

Daily Insight: The Case Against Diversification

2011-05-30T16:42:00.000-07:00

The Case Against Diversification

Over-diversification can do you more harm than good, stick to your core competence instead…

What is the first piece of investment wisdom that self-appointed experts teach you? Hold many eggs in many baskets, because you don't know which egg (or which basket) is bad. The argument for making a portfolio out of everything is repeated so often that its echo is often confused as the prevailing wisdom. Yet, when we talk about real businesses, we make the exact opposite argument, i.e., focus on your core competence. The underlying assumption is that for a business to be competitive, it must have scale; intelligence, knowledge and data (about costs and revenues); and enough perspective, wisdom, philosophy and know-why in all its business processes to ensure that it outperforms competition.

Few activities require as much perspective as investing. If markets are a mechanism for the transfer of wealth from the foolish (many) to the intelligent (few), then the meaning of these words has to be spelt out carefully. Investing is at least as much about having intelligence as it is about having money (to invest) in the first place. Thereafter, the principle of compounding tells us that intelligence or perspective plays a disproportionate role in deciding who wins the investment sweepstakes.

Warren Buffet tells you to buy a part of the business, and thereafter, to own your shares like you own a business. He dwells on these aspects at length, and then goes on to tell you that "the best time to sell a good investment is never". Indirectly, he too is harping on the principle of core competence.

Do not diversify blindly
Blind diversification for its own sake is just that —blind. If you don't know what you are doing, you are more likely to step into a puddle if you walk on many roads. As any blind person will tell you, the best way to 'see' where you are going is to get a sense of a place by doing repeated passes down the same road.
Jobbers often look like day traders, and have been unfairly given a bad name, both the categories being tarred with the same brush. Some of the best jobbers, however, stick to the same stock for a lifetime, actually adhering to Warren Buffet's advice of never leaving a stock, even as they buy and sell the stock many times during a day. Not only do they add liquidity to the stock, they have local insights about the price discovery prevailing in a stock, its different moods, and its penchant for surprise that outsiders will never have. This is perspective, something the stereotypical day trader does not have.

Frame a hypothesis
Investors get paid to identify trends; they make money when they correctly anticipate a trend. Markets are a discounting mechanism. The winners are those who forecast accurately, and then put their money behind a hypothesis. If any of these three is missing (i.e., the forecast, the money or the hypothesis), you don't make money. The hangers-on, i.e., the pundits, sit on the sidelines and pass comment on the players. They are about as right as any cricket fan about whether Sachin will carry India to victory. And their winning odds are similar.
So diversify, they say, but against what? If you don't articulate the risks you face, what will you diversify against? The gullible investor actually buys hope, and as we all know, "hope is not a strategy". The cost of buying hope is actually the cost of buying randomness, and variability and unpredictability in investment returns. Most importantly, if you don't know what you did right, you have no hope of ever being able to repeat your success.
The pundits will tell you that your winners will make up for your losers, and that is the purpose of diversification. But if you don't know (and don't learn) how to tell one from the other, you have to live with the general belief that most stocks go up in the long run. This is often referred to as market returns. This, as we know, from recent experience, is not true over long stretches of time, and (as you know from personal experience) is not the experience of most retail investors. However, this opinion (that markets go up in the long run) is prone to take widespread root in a late bull market, and shortly thereafter, is seen to be in the breach. Ironically, poor timing kills the people who claim to ignore market timing.
Over the last five months, you could have bought low-beta stocks (like Bharti, Power Grid Corporation), sold high-beta stocks (like real estate and banks), bought the dollar (against the rupee), sold the Euro (against the rupee), and bought silver and sold gold. Most of these positions would have worked out. To the uninitiated, this would look like diversification, but it is actually the same investment hypothesis, the same forecast. It may have been articulated over different instruments, but the underlying economic logic is unified. Similarly, in 2007-08, you could have bought a low-beta stock like Hero Honda, sold a high-beta stock like DLF, bought the dollar (against the rupee), sold the dollar (against the Japanese yen), bought gold and sold the broad market. If you diversify blindly, you might get some legs right by accident, but you would be most likely to get enough legs wrong to ensure that you destroy value.
If you have the right economic arguments, you may choose to articulate it with one instrument or 10. That in itself is irrelevant. If your method of building your investment hypothesis is flawed, you have no hope — rather like the novice skydiver who took along three parachutes instead of one, but forgot to learn how to open them. Without the underlying knowledge, diversification is bound to lead to disaster. How about telling the novice to eschew skydiving till he learns enough about it? Novices should not be investing; they should be saving, generating capital, and if they must diversify, they can always buy two-year bank fixed deposits along with one-year bank fixed deposits.
If you do not know how to articulate an investment hypothesis, diversification is actually "di-worse-ification", i.e., it means that you are investing in the probability that you are wrong. The way to manage that is through hard work and greater diligence, not through diversification. If it turns out that you did a good job, you will actually reduce your investment returns, not your risk.
It is when you don't know which way the trend is going (i.e., you don't know investing), you say that through diversification: I don't know, and I am just hoping.

How good is a buy-and-hold strategy?
Which brings me to the idea of 'buy and hold', another canard floating around in the investment markets. When we buy a stock, we are actually buying a business, whose returns over the long-term are linked to the fortunes of the business. Now, business risk is complex, has many aspects, and there are many of them. Even the people running the business don't have a full grip on all the risks in that business, and cannot tell you, for example, how much they will make (and why) in, say, five years. Why then, would buy-and-hold be such a good idea? Just because you don't know any better, and the pundits you trust don't know either?
How about trying to figure out the volatility (of price discovery) in a stock? It is difficult and complex, perhaps, but it saves you the effort of trying to understand the long-term prospects of the sector. For example, it is much easier to buy a telecom stock when everybody is decided that "telecom is an underperformer", and then try to figure out the patterns in the stock, i.e., buy the stock when the rollover cost is negative and sell it when the rollover cost crosses 1 per cent per month. Try figuring out the rest of the business: which way will 3G go, what effect will cloud computing have on telecom, which African country is going up in flames, who is the new telecom minister, what new social network is emerging among kids (and is it a threat to, or an opportunity for, telecom), and which new industry is going to come out of nowhere to suddenly replace the existing technologies in telecom?

Market timing is important
To those who say, 'just buy a mediocre management in a great business, rather than good management in bad business', make sure that you define 'good business' well. Is soft drinks a great business, and is Coke a great company? And if it is (a great company), is it also a great stock? Depends on when you catch it. Market timers might choose to look for an irrational seller, who gives away great value because of a weaker moment. Those who choose to ignore timing are saying that the company's business performance will be adequate to create value, i.e., the greatness of the business is a replacement for the lack of skill on the part of the investor. Because the company works hard, you (the investor) don't have to!

--Sanjeev Pandiya

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MARKET ENDED 30.05.2011 MONDAY

2011-05-30T16:31:00.001-07:00

MARKET ENDED 30.05.2010 MONDAY

SENSEX 18232.06 -34.04

NIFTY 5473.10 -03.00

NASDAQ 2796.86 +13.94

UPDATEDTIME 09.28 PM 30 MAY 2011

Benchmarks snapped two-day winning streak and ended choppy session in the negative terrain due to lack of buying support near resistance levels and weak cues from global peers. However, participation was seen in broader markets as midcaps and smallcap stocks outshone the benchmarks. According to market experts, investors should start identifying good quality midcap stocks as they are likely to outperform once the market conditions turn favorable.

"The valuation discount between mid-cap and large-caps has widened and probably it might widen some more as the market environment continues to settle down in next three to six months. But we think that at this point in time you will find good quality mid-cap stocks where there is a good value, comfort around future prospects.

So this is a time to start evaluating good quality, high quality ideas and build your position in next three to six months because when the market environment turns back, the mid-cap stocks typically tend to outperform large caps significantly and it becomes very difficult to build sizable positions in these stocks.

The market opened on a positive note and turned lackluster due to lack of buying momentum. While the investors rejoiced early onset of monsoon in Kerala two days ahead of forecast, concerns of hike in diesel, kerosene and LPG prices kept the bulls under check.

Bombay Stock Exchange's Sensex closed at 18232.06, down 34.04 points or 0.19 per cent. The 30-share index hit a high of 18380.17 and low of 18199.52 in trade today.

National Stock Exchange's Nifty ended at 5473.10, down 3 points or 0.05 per cent. The broader index touched a high of 5509.30 and low of 5458.60 intraday.

"The coming week is likely to witness a range of 5600 on the upside as long as the Nifty stays above the bullish pivot at the 5425 mark. In case of declines, the Nifty is likely to test a level of 5225 as long as the bears keep the Nifty below the 5375 levels. Adventurous traders with a higher risk appetite may venture small sized buys in the first half of the week.

BSE Midcap Index was up 0.85 per cent and BSE Smallcap Index moved 0.55 per cent higher.

Amongst sectoral indices, BSE Auto Index was down 1.50 per cent, BSE Oil&gas Index moved 0.64 per cent lower and BSE Capital Goods Index declined 0.30 per cent. BSE Healthcare Index was up 2.24 per cent, BSE Realty Index moved 1.77 per cent higher and BSE Bankex advanced 0.50 per cent.

M&M (-5.34%), Hindalc (-2.33%), ONGC (-1.63%), Tata Motors (-0.96%) and Jindal Steel (-0.96%) were the top Sensex losers.

Mahindra & Mahindra posted net profit of Rs 606.54 crore for the quarter ended March 31, 2011 as compared to Rs 570.26 crore in the same quarter a year ago. Total Income increased to Rs 6825.57 crore from Rs 5322.75 crore.

Hindalco reported standalone net profit of Rs 2136.92 crore for the year ended March 31, 2011 as compared to Rs 1915.63 crore in the same period a year ago. Net sales were at Rs 23859.21 crore from Rs 19522.09 crore previous fiscal.

Cipla (3.55%), Reliance Communications (2.94%), DLF (2.58%), HDFC (1.90%) and Bajaj Auto (1.03%) were the major gainers.

DLF plans to sell developed properties including five IT parks and its hotel business hoping to mop up Rs 7000 crore in the next two years and reduce its burgeoning gross debt of Rs 23990 crore.

Market breadth was positive on the BSE with 1629 advances as compared to 1150 declines.

Regards

Italy, Spain, Portugal, Greece and Ireland Are likely to Default on Debt Payment-Negative For Global Banks

2011-05-22T22:56:00.001-07:00

Asian markets were sharply lower Monday amid signs of U.S. economic sluggishness and escalating worries about Europe's debt crisis after Italy and Greece were slapped with credit downgrades.

Oil prices fell to near $99 a barrel Monday in Asia as a stronger U.S. dollar made commodities more expensive for investors with other currencies.

Japan's Nikkei 225 slid 1.4 percent to 9,474.83; South Korea's Kospi tumbled 1.8 percent to 2,073.01 and Hong Kong's Hang Seng index slumped 1.6 percent to 22,817.95.

Shares of Japanese auto maker Honda Motor Corp. were down 1.6 percent as the company announced its workers would take 14 days off this summer because of production interruptions caused shortages of parts. The work days will be made up for those days later in the year.

Operations at Honda, like scores of other manufactures, were severely hindered following a devastating earthquake and tsunami on March 22 struck Japan's industrial northeast. The region, largely wiped out, was home to hundreds of companies that manufacture parts for the country's powerhouse manufacturing industry.

In Europe, meanwhile, Standard & Poors cut its ratings outlook for Italy's debt from stable to negative Saturday, citing the country's poor growth prospects and concerns about the government's ability to reduce public borrowing.

But with a ratings outlook still at A+/negative, Italy remains in far better shape than Greece.

Credit ratings agency Fitch cut Greece's long-term credit rating further into junk status on Friday, saying the indebted country faces challenges changing its economy and government to reduce debt.

Investors remain concerned that Greece will have to stretch out its debt repayments or pay creditors less than what they're owed. Europe's banks, especially those in Greece, hold lots of Greek bonds, and a restructuring could hurt them.

Also in Europe, Spain is holding regional elections this weekend, leading to speculation that new politicians might say the country is even more deeply in debt than the current government had forecast.

That raises the possibility that Spain would need to seek a bailout, following the path of Greece, Ireland and Portugal.

In New York on Friday, stocks closed broadly lower for a third straight week on signs that U.S. consumer demand may be weakening.

Retailers Gap Inc. and Aeropostale Inc. each lost more than 14 percent Friday after cutting their profit forecasts for the year, in part because of higher costs for raw materials and sluggish sales. That was a worrying sign for investors who had counted shoppers to lead a recovery in spending.

The Dow Jones industrial average fell 0.7 percent to 12,512.04. The Standard & Poor's 500 index lost 0.8 percent to 1,333.27. The Nasdaq composite dropped 0.7 percent to 2,803.32.

May is traditionally a weak month for the stock market. Traders have little to base buying and selling decisions on with corporate earnings season officially over and economic news scarce.

Interesting article in today's Mint - China's dangerous growth bet

2011-05-20T00:50:00.001-07:00

I recently took two trips to China just as the government launched its 12th Five-year Plan to rebalance the country's long-term growth model. My visits deepened my view that there is a potentially destabilizing contradiction between China's short- and medium-term economic performances.

China's economy is overheating now, but, over time, its current over- investment will prove deflationary both domestically and globally. Once increasing fixed investment becomes impossible--most likely after 2013--China is poised for a sharp slowdown. Instead of focusing on securing a soft landing today, Chi- nese policymakers should be worrying about the brick wall that economic growth may hit in the second half of the quinquennium.

Despite the rhetoric of the new Five-year Plan--which, like the previous one, aims to increase the share of consumption in gross domestic product (GDP)--the path of least resistance is the status quo. The new Plan's details reveal continued reliance on investment, including public housing, to support growth, rather than faster currency appreciation, substantial fiscal transfers to house- holds, taxation and/or privatization of state-owned enterprises (SOEs), liberalization of the household registration (hukou) system, or an easing of financial repression.

China has grown for the last few decades on the back of export-led industrialization and a weak currency, which have resulted in high corporate and household savings rates and reliance on net exports and fixed in- vestment (infrastructure, real estate and industrial capacity for import- competing and export sectors). When net exports collapsed in 2008-09 from 11% of GDP to 5%, China's leader re- acted by increasing the fixed investment share of GDP from 42% to 47%.

Thus, China did not suffer a severe recession--as occurred in Japan, Germany and elsewhere in emerging Asia in 2009--only because fixed investment exploded. And the fixed-in- vestment share of GDP has increased further in 2010-11, to almost 50%.

The problem, of course, is that no country can be productive enough to reinvest 50% of GDP in new capital stock without eventually facing immense overcapacity and a staggering non-performing loan problem. China is rife with overinvestment in physical capital, infrastructure and property. To a visitor, this is evident in sleek but empty airports and bullet trains (which will reduce the need for the 45 planned airports), highways to no where, thousands of colossal new government buildings, ghost towns and brand-new aluminum smelters kept closed to prevent global prices from plunging.

Commercial and high-end residential investment has been excessive, automobile capacity has outstripped even the recent surge in sales, and overcapacity in steel, cement and other manufacturing sectors is in- creasing. In the short run, the investment boom will fuel inflation, owing to the highly resource-intensive character of growth. But overcapacity will lead inevitably to serious deflationary pressures, starting with the manufacturing and real-estate sectors.

Eventually, most likely after 2013, China will suffer a hard landing. All historical episodes of excessive in- vestment--including East Asia in the 1990s--have ended with a financial crisis and/or a long period of slow growth. To avoid this fate, China needs to save less, reduce fixed in- vestment, cut net exports as a share of GDP, and boost the share of consumption.

The trouble is that the reasons the Chinese save so much and consume so little are structural. It will take two decades of reforms to change the incentive to overinvest.

Traditional explanations for the high savings rate (lack of a social safety net, limited public services, aging of the population, underdevelopment of consumer finance, and so on) are only part of the puzzle. Chinese consumers do not have a greater propensity to save than Chinese in Hong Kong, Singapore and Taiwan; they all save about 30% of disposable income. The big difference is that the share of China's GDP going to the household sector is below 50%, leaving little for consumption.

Several Chinese policies have led to a massive transfer of income from politically weak households to politically powerful companies. A weak currency reduces household purchasing power by making imports expensive, thereby protecting import competing SOEs and boosting ex- porters' profits.

Low interest rates on deposits and low lending rates for firms and developers mean that the household sector's massive savings receive negative rates of return, while the real cost of borrowing for SOEs is also negative.
This creates a powerful incentive to over invest and implies enormous redistribution from households to SOEs, most of which would be losing money if they had to borrow at market-equilibrium interest rates. Moreover, labour repression has caused wages to grow much more slowly than productivity.

To ease the constraints on house- hold income, China needs more rapid exchange-rate appreciation, liberalization of interest rates, and a much sharper increase in wage growth.
More importantly, China needs either to privatize its SOEs, so that their profits become income for house- holds, or to tax their profits at a far higher rate and transfer the fiscal gains to households. Instead, on top of household savings, the savings--or retained earnings--of the corporate sector, mostly SOEs, tie up another 25% of GDP.

But boosting the share of income that goes to the household sector could be hugely disruptive, as it could bankrupt a large number of SOEs, export-oriented firms, and provincial governments, all of which are politically powerful. As a result, China will invest even more under the current Five-year Plan.

Continuing down the investment- led growth path will exacerbate the visible glut of capacity in manufacturing, real estate and infrastructure, and thus will intensify the coming economic slowdown once further fixed-investment growth becomes impossible. Until the change of political leadership in 2012-13, China's policymakers may be able to maintain high growth rates, but at a very high foreseeable cost.

An ATM at your kirana shop

2011-05-17T01:26:00.001-07:00

THE next time you fall short of cash while on a shopping spree, you may not have to rush to the nearest automated teller machine (ATM). The Reserve Bank of India (RBI) has allowed banks to set up electronic retail machines at the merchant's establishment, popularly called point of sales (POS). This will allow you to withdraw cash — up to `1,000 at one time — with your debit card at the shop itself.

At least five banks — Union Bank of India, ICICI, HDFC Bank, IDBI and Axis bank — have started installing these electronic retail machines or cash at POS machines at merchant establishments across select cities. This should soon be a pan-Indian service, as the network expands and other banks follow suit.

Importantly, it can be done with or without purchasing anything from the enabled merchant establishment with POS terminals. If you withdraw cash at merchant establishments along with the purchase of merchandise, the receipt generated should separately show the amount withdrawn.

This move will particularly benefit those who do not like to carry cash. One can use this to make small purchases or to pay cab fare. But for bigger purchases, this facility does not work so well.

Moreover, although the merchant establishment will not charge a fee for dispensing cash, your bank could. While this service is free for IDBI and HDFC Bank's debit cardholders, both ICICI and Axis Bank are currently levying a service fee of `10. At this cost, paying through your debit card rather than cash will be cheaper. Also, don't use to withdraw very small amounts because the cost, as applicable in some cases, is not worth it.

MARKET ENDED 16.05.2011 MONDAY

2011-05-16T17:59:00.001-07:00

MARKET ENDED 16.05.2010 MONDAY

SENSEX 18345.03 -186.25

NIFTY 5499.00 -45.75

NASDAQ 2817.73 -10.74

UPDATEDTIME 09.28 PM 16 MAY 2011

Indian markets ended near day's lows as weak cues from global peers and inflation data back home hurt sentiments. India's inflation for the month of April rose to 8.66 per cent against 9.04 per cent in March.

There are concerns in the market that any possible hike in diesel prices, following a hike of Rs 5 per litre in petrol, will further increase inflationary pressure. Rate sensitive sectors were under pressure on worries of further interest rate hike by the Reserve Bank of India.

"India's April WPI headline inflation "eased" as we had predicted to 8.7% y-o-y (vs. 9% in March), which was above consensus. While food inflation slowed, energy prices rose and core inflation remained sticky-high. The change in inflation dynamics brings permanence to the upward pressures and calls for continued RBI tightening, with the next rate hike coming at the June meeting.

National Stock Exchange's Nifty closed at 5499, down 45.75 points or 0.83 per cent. The broader index touched a high of 5541.80 and low of 5487.65 intraday.

Bombay Stock Exchange's Sensex ended at 18345.03, down 186.25 points or 1.01 per cent. The 30-share index hit a high of 18492.68 and low of 18319.88 in today's trade.

BSE Midcap Index was down 0.77 per cent and BSE Smallcap Index moved 0.74 per cent lower.

Amongst sectoral indices, BSE Realty Index fell 1.47 per cent, BSE Metal Index declined 1.45 per cent and BSE Bankex slipped 1.18 per cent. BSE Healthcare Index was up 0.93 per cent.

Jaiprakash Associates (-3.20%), Bajaj Auto (-2.72%), M&M (-2.71%), Tata Steel (-2.64%) and DLF (-2.58%) were the major Sensex losers.

Jaiprakash Associates reported net profit of Rs 301.95 crores for the quarter ended March 31, 2011 as compared to Rs 243.97 crores a year ago. Total income increased to Rs 4074.62 crores from Rs 3358.38 crores a year ago.

Hero Honda (3.87%), BHEL (0.93%), Bharti Airtel (0.83%) and TCS (0.01%) were the only index gainers.

Market breadth was negative on the BSE with 1713 losers against 1052 gainers.

Meanwhile, the European markets were under pressure on concerns of sovereign-debt crisis and the futures indicated a negative start on the Wall Street. At 4:30 pm IST, Dow Jones futures was down 0.41 per cent, S&P 500 was 0.43 per cent lower and Nasdaq edged 0.22 per cent down.

NIFTY FUTURE - INTRADAY TRADING LEVEL - BUY / SELL :: 17th May 2011

2011-05-16T17:58:00.001-07:00

Long Nifty Future above 5510 with stop loss 5480 for target 5540 / 5565 / 5590

Short Nifty Future below 5565 with stop loss 5495 for target 5440 / 5415 / 5380

Trade Only If The Level Crossover Above or Below With-In The First Hour of Trading Session