Gujarat Gas

For the quarter ended June'07, the consolidated net sales increased by 26% to Rs 283.45 crore. The OPM was up by 720 basis points largely due to continuous emphasis on retail customers. As a result, the OP increased by 80% to Rs 68.25 crore. The other income was up by 4.75 crore. The interest cost was down by 97% to Rs 0.02 crore. The depreciation was up by 24% to Rs 9.48 crore. After providing tax and minority interest, the PAT stood at Rs 41.98 crore, up by 90%.

The volume of gas sold to the retail segment crossed 2.5 mmscmd and the number of vehicles running on CNG in the area of operation of Gujarat Gas crossed 50,000. The total volume of gas contracted in Jhagadia industrial estate has crossed 0.5 mmscmd.

For the half year ended June'07, the net sales stood at Rs 614.12 crore, up by 33% and PAT was up by 64% to Rs 79.58 crore.

Valuation

For year 2007, we expect the company to register consolidated net sales of Rs 1188.11 crore and PAT of Rs 156.94 crore. This gives an EPS of Rs 23.6. At current market price of Rs 277, the scrip trades at only 11.7 times its expected 2007 earnings. The 50% increase in firm supply of gas expected to commence from September 2007 will keep the company on healthy growth path in 2008 also.

Realty IPOs to double every year: JP Morgan

Global investor JP Morgan has said initial public offerings (IPOs) in the Indian real estate sector could double every year.

"Fairly strong activity can be seen in the Indian listing market. We believe IPOs can double every year. In the offshore market, including Singapore Stock Exchange (SGX) and Alternative Investment Market of London Stock Exchange, investor appetite is there for good projects and income-producing assets. Four real estate investment trust (REIT)-type vehicles may list on the SGX in the near future, banking on the success of Ascendas India Trust,'' said Anthony Ryan, managing director, head of Real Estate Investment Banking, JP Morgan Asia, in a video-conference from Singapore.

When the business expands, the need for a third-party capital arises and developers are tapping both public and private equity markets. So far, seven realty companies, including DLF, HDIL, Omaxe and IVR Prime, have tapped the capital market and nearly ten firms have lined up their IPO plans.

"Our estimates suggest that the public floats in the real estate sector could raise from $2.5 billion to $3 billion in the coming months,'' Kaustubh Kulkarni, executive director, Real Estate Investment Banking, JP Morgan India, said.

He said private equity players had committed nearly $15 billion on Indian realty projects. Given the fact that most of them are seven-year vehicles, it would come to $2 billion to $3 billion every year.

"Nowadays, it is not unusual to see a single-ticket investment of $250 million to $300 million in realty projects. Two years ago, it was only $50 million to $100 million," he said.

Ryan said like India, China used to have smaller realty IPOs of $100 million in the beginning. "Now the average market capitalisation of a Chinese realty company is nearly $3 billion,'' Ryan said.

What to make of this global crisis - Ajit Dayal

In May 2006 when the BSE-30 Index declined by 17% in eight sessions, we wrote about the bubble in the Middle East markets - Markets Do Fall (PDF) and said, "Better economic and GDP growth is not an assurance to a perpetually booming stock market".

The link between financial markets in the US and Indian stock markets
Today, as the Indian markets get lashed by something called sub-prime mortgage, we are being asked to remain calm and cool as there is no linkage between what happens to the financial markets in the US and to the Indian stock market.

Well, that is a partial truth and, in effect, a partial lie.

Stock markets are influenced by 2 factors:
1) how much do companies earn, and
2) how much are people willing to pay for those earnings.

The earnings power of a company is a function of the business of the company, its management, and the overall growth rate in the economy in which it operates. There is little change here in our view and we should safely assume that India's GDP will grow at a 6% to 6.5% per annum rate for the next few years. (Many more optimistic people have a higher GDP growth rate for India at 8% plus but we don't subscribe to that view as yet.)

Understanding liquidity & sub-prime debt
How much people are willing to pay for those earnings is a function of what economists call "liquidity" and though there is no clear definition of what "liquidity" is, one can assume that it is how much money is sloshing in the system. Imagine you are at a bar and everyone is feeling a little good from the various other liquids that the bar tender has to offer for a price, of course. Then the bar tender says, "Hey, folks, how about I cut the price of the drinks by 50% - anyone want some more?"

You bet! The crowds get bigger and people feel even more elated. With all those drinks available on the cheap, they lose their sense of judgment. Human nature is anyways tuned to drift into flirtations. With a few more drinks, the drifting becomes a reality. The poor bloke standing next to you in this bar - a total stranger - suddenly feels like a friend. You begin chatting. By the end of the fifth glass, the poor fellow who works as a waiter in some corner restaurant in some obscure town in USA now looks like a promising young man who could one day start his own restaurant, build his own mall, and maybe have a chain of restaurants. So you lend him money to buy a house. He is actually what the credit rating agencies would call a "sub-prime credit risk". But, because that bar tender gave you all those free drinks, in your eyes he becomes a good risk and better still, you turn to the other drunk next to you and re-sell the loan you made to this sub-prime fellow for a profit. And why do you sell the loan for a profit? Because the guy you sell it to (a European, Japanese, Middle Eastern, whoever) is more drunk than you because the bar tender in his country also gives him free drinks. And he cannot assess the risk profile of that sub-prime American any better than you can. So all the drunks are happy. And you use that profit to make another loan to another poor sub-prime fellow and so on and so forth......

Since 2003 all the drunks are having a good time, lending and buying and selling sub-prime loans to each other.

All the sub-prime folks who got this silly money in 2003, 2004, and 2005 from the folks at the bar thought they were rich and started buying big houses and big cars and spent money which was not earned, but borrowed.

The bar tender is serving the drinks because he needs to make sure everyone feels good. There may be an election around the corner. Or if he serves his drinks quick and fast, some big bank group may come in and hire him as a consultant or make him a chairman of a global financial conglomerate riding this tide of global liquidity.

So the central banks were the bar tenders, doling out drinks and money as if their printing presses had to print, and print and print. Rather than being the men in grey suits with grumpy faces worried about the fate of the financial world, they became the stars on TV channels and the toast of conventions: their suits were grey but they were talking about this perfect world and this goldilocks, fairy tale.

And that fairy tale found its way to India and the rest of the emerging markets. From being the poor countries with corrupt governments and inept governments that have consistently failed to look after the needs of their people, these countries got a new name: BRIC. They became the darlings of the drunks. Yes, while there have been significant improvements in many countries - including India - the perception of the depth or the sustainability of these improvements were exaggerated when the drunks at the bar came calling.

India has seen nearly US$ 50 billion of foreign inflows - of which US$ 40 billion have come in since 2003. Yes, the Indian companies and the Indian stock markets did deserve a lot of that but the assessment of risk has been, in my opinion, absent.

The sub-prime fall out
The sub-prime blow has so far seen some US$ 2 billion of losses from funds that have been closed down. There is maybe another US$ 50 to 100 billion of losses that may yet be exposed, according to people who track this industry. While US$ 100 billion is nothing in a world where the market cap of stocks is US$ 30 trillion (300 times the potential losses) and where bonds worth maybe US$ 100 trillion float around, the bar tenders are now serving less of that booze. The drunks are getting more sober. They now see that sub-prime person as someone who may be lucky to keep his job in a restaurant as opposed to their previous assumption (over the rim of their liquor glass) that they were lucky to stumble on the founder of the next new big restaurant chain in USA. And they will price that loan accordingly.

And they will see the investment opportunities in the emerging markets with a little better understanding of risk. Don't get me wrong: the fundamentals for India are fantastic, and money will flow in to India over the next decade. Sensible, risk-assesses money. But for now, the silly money will go out. The P-Note folks will vacate and that will cause the Indian market to suffer.

India has, via its P-Note policy, linked itself to silly money. We enjoyed the ride for the past 4 years, now we will feel a bit of pain.

Keep your money ready to invest. Stay disciplined, never be carried away, politely tell the bartenders to keep their extra, free drinks. And you will profit: steadily but surely.

Investor's Eye dated August 09, 2007

Information Technology

Favourable policy changes

Key points

• The recent policy announcements by the government indicate its growing willingness to protect the rupee against any further appreciation. This is a positive move for the information technology (IT) service companies that have primarily an export-centric business model.
• The policy changes not only allay concerns related to further appreciation in the rupee but could also potentially result in earnings upgrades on the back of the possible weakening of the rupee. The positive impact of the same would be more pronounced in case of the mid-cap companies.
• Despite the distinct pick-up in revenues from the banking, financial services and insurance (BFSI) vertical in Q1 (after a lacklustre performance in Q4), the concerns related to a possible slowdown in demand from the BFSI vertical (in the wake of the subprime woes) would be an overhang on the tech stocks. Especially so, given the fact that the subprime crisis has affected large financial institutions from across the world.
• In terms of our top picks, we continue to prefer HCL Technologies (HCLT; given the company's strong results in the past three quarters, aggressive hedging strategy and reasonably attractive valuations) and Satyam Computer Services (Satyam; based on the distinct improvement in the company's operating metrics, its relatively lower exposure to the BFSI vertical and the strong growth momentum in its enterprise business). In the mid-cap space, we prefer 3i Infotech (purely on valuation basis and due to the company's limited exposure to the US geography).

Banking

RBI modifies ECB guidelines

The government has finally decided to curb the external commercial borrowing (ECB) route, which has been one of the main routes through which overseas money has been entering into India. We had expected a similar announcement during the first quarter monetary policy review. The modifications done to moderate the capital inflows through the ECB route are stated below:

• ECBs of more than US$20 million per borrower company per financial year would be allowed only if expenditure (for permissible end-uses) is in foreign currency; funds raised will need to be parked overseas and cannot be remitted into India.
• While ECBs of less than US$20 million can be raised for rupee expenditure as well, this will need prior approval from the Reserve Bank of India (RBI). Funds raised will need to be parked overseas until actual requirement in India.
• All other aspects of the policy such as the limit of US$500 million per company per year under the automatic route, definition of eligible borrower etc remain unchanged.
• The revised guidelines do not apply to borrowers who have already entered into loan agreements and obtained loan registration numbers from the RBI.

The move is aimed at controlling the dollar inflows via the ECB route as companies have been accessing this route purely to play the interest rate arbitrage mainly for domestic working capital purpose. Some of these borrowings are also getting converted into domestic deposits to exploit the arbitrage that exists between overseas borrowing rates and domestic deposit rates .

Global markets to dictate the trend

Indian market is likely to track closely the movements on the global equity market markets as they have been in the recent past.

The Nifty August 2007 futures continue to trade at discount as compared to spot closing, indicating that undertone remains cautious. On Friday, 10 August 2007 it settled at 4303, a discount of 30.35 points as compared to spot closing of 4,333.35

Market posted third straight weekly loss in the week ended 10 August 2007. The benchmark index BSE Sensex lost 270.15 points or 1.78% to settle at 14,868.25 tracking global weakness.

FIIs who are considered key drivers of the recent rally, have turned sellers as they sold net equity worth Rs 1492.70 for this month, till 9 August 2007.

Crude oil prices have been hovering around the $70 a barrel amid concerns over the US economy. Any sharp rise in oil price may dampen the sentiment further.

Sobha Developers, Helios and Matheson Information Technology, Seamec, Sadbhav Engineering and Rain Calcining will declare their June 2007 quarter results in the coming week.

Volatility to the fore

Global markets dictated trend on Indian bourses over the past few days i.e. market rose when equities rose globally and vice versa. Global bourses witnessed alternate bouts of buying and selling caused by risk aversion or risk appetite that in turn was driven by how concerned the market was about US subprime mortgage woes.

The 30-share BSE Sensex lost 270.15 points or 1.78% to settle at 14,868.25 in the week ended 10 August 2007. The S&P CNX Nifty lost 68.20 points or 1.5% to settle at 4,333.35 in the week.

BSE Small-Cap index outperformed the market gaining 12.59 points or 0.16% to settle at 7,904.13 in the week. BSE Mid-Cap index lost 97.62 points or 1.48% to settled at 6,507.62 in the week.

In the first four trading sessions of the week till Thursday, 9 August 2007, the 30-share BSE Sensex lost 38.25 point to settle at 15,100.15. Nifty gained 1.65 points to 4,403.20.

Weakness in Asian stocks pulled Sensex down 235 points on Monday, 6 August 2007. Nevertheless, the market came sharply off lower level from an intra-day 433 points fall. Asian stock markets slumped after downbeat US economic data, including the influential non-farm payrolls report, adding to fears of the US subprime mortgage crisis.

The market recovered the next day amid mixed Asian markets. However, it came off higher level. Sensex rose 30 points. It had risen as much as 239 points at one point of time during the day.

The market surged on Wednesday, 8 August 2007, tracking rally across global markets. IT stocks led rally as rupee eased against the US dollar after the government on Tuesday, 7 August 2007, tightened overseas borrowing norms in a bid to check rupee's rise. Stocks rose across the globe after the US Federal Reserve's positive outlook for the US economy helped soothe concerns about a global credit squeeze arising from US subprime mortgage woes.

The market lost ground on Thursday, 9 August 2007, in what was a complete reversal of trend during the day. Holding firm till afternoon trade, the market lost ground later following weak opening of European markets. Sensex lost 208 points. European shares slipped as BNP Paribas suspended redemptions from three funds citing problems in US subprime mortgages. The news came just at a time when worries about global credit problems arising from US subprime mortgatge woes appeared to be easing.

The market lost further ground the next day as markets fell across the globe. Sensex lost 232 points on Friday, 10 August 2007. Yet, it made a strong rebound from an intra-day 529 points fall.

Index heavyweight Reliance Industries (RIL) witnessed alternate bouts of buying and selling. The government on Monday, 6 August 2007, constituted an Empowered Group of Ministers (EGoM) to decide on the pricing of gas from Reliance Industries' KG basin field. The EGoM will be headed by External Affairs Minister Pranab Mukherjee. The eventual formula will apply to all future gas production in India.

Reliance Industries (RIL) is developing two deep-sea gas fields in its D-6 block in the Krishna (KG) Godavari basin, and it aims to produce 80 million cubic metres of gas per day by mid-2008.

IT shares surged on Wednesday, 8 August 2007, as rupee weakened against the dollar after the government on Tuesday, 7 August 2007, tightened overseas borrowing norms. Investor sentiment on the tech stocks has been sluggish in the last few months mainly because of the strong rupee. Rupee has been one of the best performers among Asian currencies in this calendar year so far.

At the time of announcing Q1 June 2007 results, IT bellwether Infosys had last month cut its FY 2008 earnings and revenue guidance in rupee terms due to a surge in rupee against the US dollar. A rise and rupee directly impacts the operating margins of IT firms which derive a lion's share of revenue in dollars.

Bank stocks witnessed alternate bouts of buying and selling despite the view that Indian banks are unlikely to be impacted by US sub-prime mortgage defaults. Following the subprime loan problem, spreads of all credit default swaps have gone up. That is, their prices have gone down. Indian banks will, therefore, have to make higher provisions for losses on these swaps, when they mark to market their investments at the end of the current quarter. But these will be marginal compared to the size of their balance sheet.

Banking sector is expected to benefit from tighter overseas borrowing norms announced by the government on Tuesday, 7 August 2007, as companies looking to raise money abroad now have to turn to domestic banks for credit.

Two capital goods majors and market favourites L&T and Bhel witnessed buying at declines. Robust order book positions of the two firms give strong revenue visibility.

Cement shares, too, witnessed buying at declines due to firm cement prices. Cement firms reported strong dispatches for the month just gone by.

Omaxe settled at Rs 349.95 on BSE on Thursday, 9 August 2007, a premium of 12.8% over IPO price of Rs 310. The stock debuted at Rs 400. The IPO of Omxe had received strong investor response. It was subscribed 68 times. The company had priced the IPO at the top end of the Rs 265 to Rs 310 price band.

India Index Services & Products (IISL), a joint venture between NSE and CRISIL, on Tuesday, 7 August 2007, launched a new sectoral index based on the infrastructure sector. The 25-stock CNX Infrastructure Index includes companies belonging to the telecom, power, port, air, roads, railways, shipping and other utility services providers.

CNX Infrastructure Index constituents represent about 21.01% of the total market capitalisation as on 31 July 2007. The index is a market-capitalisation-weighted index with base date of 1 January 2004, indexed to a base value of 1000.

BSE has revised free-float adjustment factor of four constituents of BSE Sensex. It has raised the free-float adjustment factor of Maruti Udyog to 0.45 from 0.4. It has cut free-float adjustment factor of Bajaj Auto to 0.65 from 0.7 and that of Hindalco to 0.7% from 0.75%. It has cut free float adjustment factor of Ambuja Cements to 0.65% from 0.7%. The revised free float factors would come into effect from 13 August 2007.

Free float adjustment factor is used for calculating a scrip's weightage in Sensex. The free float of a listed security is the proportion of shares available for purchase in the market by investors. In principle, it is the part of shares not held by strategic shareholders or promoters

BSE decided to transfer a total of 32 stocks to trade-to-trade segment to be effective from Friday, 10 August 2007. The stocks transferred to trade-to-trade segment include Adarsh Derivatives, BCC Fuba India, Bihar Sponge Iron, Garware Polyesters, Ras Propack Lamipack and Tanu Health Care, among others.

A Securities Exchange Board of India (Sebi) committee on launch of dedicated infrastructure funds (DIFs) has suggested that the proposed DIFs should operate as a closed-ended scheme with a maturity period of seven years. The committee has also suggested listing options for DIFs to provide liquidity to investors in the fund.

The committee, which submitted its report on Monday, 6 August 2007, also suggested that retail investors investing in DIFs be given tax incentives. The committee has, however, added that such tax benefits should be available only to the original investors.

India's industrial production rose an annual 9.8% in June 2007, lower than the downwardly revised annual growth of 10.9% in May 2007. Manufacturing production was up an annual 10.6% in June 2007, compared with a provisional annual growth of 11.9% in May 2007.

The wholesale price index rose 4.45% in the 12 months to 28 July 2007, higher than the previous week's 4.36% due to increased food and manufactured product prices.

The US Federal Reserve on Tuesday, 7 August 2007, left its benchmark interest rate unchanged at 5.25% in a widely expected move and said while tightening credit conditions had increased downside risks to the US economy, inflation was still its main concern.

Indian government on Tuesday, 7 August 2007, put stiff restrictions on overseas borrowings, a measure sought by the Reserve Bank of India (RBI) to enable it to check the rupee's sharp appreciation. External commercial borrowings (ECBs) above $20 million have now been allowed only for foreign currency expenditure for permissible end-uses and are required to be parked abroad.

As a result, interest costs for companies might jump by 75-100 basis points as ECBs were usually at lower interest rates than domestic borrowings, reports suggest. Indian companies had raised a total of $24 billion of ECBs in 2006-07 against the government's internal target of $22 billion.

According to Society of Indian Automobile Manufacturers (SIAM), domestic motorcycle sales contracted 17.25 % to 3,75,004 units in July 2007 over July 2006. Total domestic sales of two-wheelers fell 9.95% to 5,03,356 units in July 2007 over July 2006.

Domestic passenger car sales increased 11.18% at 89,548 units in July 2007 over July 2006. Domestic sales of commercial vehicles edged up 2.53% to 33,496 units in July 2007 over July 2006.

The prime minister's office on Wednesday, 8 August 2007, said India is committed to the present system of fertiliser subsidy for this year and will ensure adequate funds are made available.

The Reserve Bank of India said on Thursday, 9 August 2007, it has formed a working group to find ways to revive trading of interest-rate futures and to consider whether foreign investors should be allowed to trade in the derivatives.

Weekly close: Subprime credit..A nightmare !

Yo yo across with US subprime worries and housing concern haunting this week. US is the super power and no other market was in a position to overcome US excuse any way.. not even India. The fall started with day one of the week. Some bounce was seen on Tuesday or Wednesday but Firday proved to be black once again. Rupee continues to be strong and that?s make thing difficult for exporter. To make things bit easy here Govt. amended the ECB norms which helped market to bounce. But credit worries seems to be getting worsen as many major banks liquidated there positions resulting in global down fall. ICICI is one in India to have exposure to subprime market and it was badly hit. The new ECB norms curb the excess inflow of liquidity so as to curb the rupee strengthening. IT recovered form this but this really won?t help much we think. FM has asked the corporate to be ready for strong rupee without any sops. So exporter will have to manage themselves?short term pressure will continue here. Adding to this was Chinese threading US to liquidate its vast reserve of USD if Washington imposes trade sanctions to force a yuan revaluation. For now it seems to be a cold war?Let see how things pan out.

Sensex Ended down by 1.7% for the week. Amongst Gainers TCS (+4.16%), Wipro (+ 2.17%), Tata motors (+1.90%), Dr.reddy's (+1.30%),Satyam (+1.3%), Infosys (+1.59%) and Losers were Bharti Airtel (-8%), Hindalco (-6.22%), ICICI Bank (-5.5%), ONGC(-4.99%) Rcom (-4.34%), Maruti (-4.2%), HUL (-3.79%), LNT (-3%).

Weekly performance for the Markets : BSE IT index 1.5% up, Sensex down 1.7%, Reality down 4.5%, Metal down 4%, Index gainers Suzlons and Jet (4% up each), Index losers VSNL (8.35% down); ICICI Bank (5.5% down); Nifty down 1.4% ( 61 points down); Midcap 2% down; Small cap down 0.3%

Mid caps index slipped by 2%...But one should note that mid and small caps is holding the strength and that is really good sign. This indicates that there value buying. Market is more value driven rather than liquidated.

Wipro was in news on its acquisition of Info crossing. This company provides infrastructure management services, data centers, help desk, network management, data security and shared services including storage. With revenues of $229m and 18% EBIDTA..at $ 600 mn value, its certainly not come cheap. Wipro seems to be gunning for growth and the price paid certainly is not less. The capacity utilisation is 50% and thats some consolation but its clearly not a great deal. We believe that Wipro would have to work hard to make this deal look good. However let?s not belittle their efforts. Managing a company of their size, it?s certainly creditable. This may prove to be a good long term decision but near term it offers no excitement. With the subprime fallout, the impact on software companies will be felt. Financial services form bulk of revenues for most biggies and even the small companies. The Exposure for the companies to this space is as follows. TCS - 43%, Infosys - 36% Wipro - 24% Satyam 24% HCLT 28%. Over the last two quarters growth has been muted for Infosys in this space.. but TCS has seen good growth. We expect a fallout here over the coming quarters. At these valuations this risk is not priced in or may be we are wrong in assuming that no such risks exist.

Reliance is in the eye of the storm for now. The group of Ministers will decide on the pricing for gas. Anything left to Indian politics to be decided carries its share of negatives. Gas prices clearly cannot be market determined given that there is no market. Next few days will see hectic lobbying. RNRL and NTPC are beneficiaries from a negative for Reliance. The penchant to 'squeeze' the Private sector is in the blood of the politicians seen politically right. Thus RIL is more likely to be on the receiving end. The Fertiliser companies are ones who will also get the gas and that could be the driving factor for the pricing. Let?s see whether Reliance manages a coup up the needs.

TTK prestige?s performance for the quarter was brilliant with the bottom line witnessing a growth of over 80%. This is the period of consolidation for them as the company has decided not to have any more smart kitchens across the country. They already have 180. The sales growth was muted at only 9%. In a discussion with the Management we were informed that as SAP got implemented across the company, some sales got delayed into the current quarter. Margins were good on the back of higher margins Kitchen appliances selling more than the Cookers. Interesting to note that Mixies and Gas stoves drew the sales big way. This company too saw lower adspend this quarter though in absolute terms it?s the same. That seems to be the trend in brand driven companies. We remain positive and the stock is on its way to perform. Do refer our research note for details.

We Spoke with Mcnally Bharat Management. The company is expecting Rs 2000 crore orders from Iisco. The company has Rs 5000 crores of orders which it had already bid for. Going ahead steel based projects would comprise a bulk of its revenues, but its tie up for port based and power plant projects make?s it well placed. This group seems to be quite open about its businesses and accessible too. Steel projects have a life cycle of 36 months. This year will see muted growth in the bottom line on higher tax payouts. We are positive here. A company at 9x FY09 earnings with expected order book and jumping margins has limited downsides.

Tyres companies had great Quarter. Rubber prices jumped to trade at Rs.93 per kg. The increase is on account on heavy rainfall in Kerala which has made taping of rubber difficult. Adding to this Jump in prices is the Chikungunia disease in Kerala. This has created shortage in supply of rubber. However, the supply side constrains seems to be short term in nature and are expected to be sorted out within a month. No major impact of it is expected on the tyre companies. We have a positive view on Apollo tyres and Balkrishna Ind. We have note on both these companies just do read to get more idea.

Ambuja Cements Ltd., India's third-largest cement maker, recently stopped its operations at its plants in Gujarat due to floods. The total capacity in Gujarat is nearly 6 mn tones. Loss from the flood will be covered by insurance; this might not impact much for the company. Last week South Indian cement companies increased prices by Rs 3-5 per bag. The major players in south are ACC, India Cement, Kesoram and Madras Cement who are to benefit. Due to huge demand even in monsoon, a price hike is expected. ACC Sales for the month of July were goo as its witnessed a growth of 15% yoy. The company's production grew by 11% in July to 1.63 mn tonne from 1.47 mn tonne a year ago. During January - July, the company's production stood at 11.84 mn tonne against 11.15 mn tonne in the same period last year and despatches rose to 11.84 mn tonne from 11.10 mn tonne as compared to same period a year ago. Due to strong demand even in monsoon season we expect the company to deliver good numbers for the coming quarter. We are positive on this sector; one can look as an investment opportunities here.

Technically: Market waits for further lower levels. Traders should not confuse pull back as strength and take aggressive positions. For strength we need to see market consolidate between 15100 and 14900. The saving grace in this fall is that, markets have not violated the trend line supports around 14440 on the Sensex and 4200 on the Nifty and today's mild pull back came from 75% retracement level on the Nifty. These positives may not be enough for market to turn around and test of these levels are a distinct possibility in the next week. Let the fear wash itself out and wait for market to bounce off a strong support area, until then stay light on your portfolio or stay in cash.

Punj Lloyd : Multibagger by PN Vijay

Punj Lloyd : Multibagger by PN Vijay, Investment Advisor

Punj Lloyd is increasingly focusing on the high value added Hydrocarbon vertical where the margins are higher and the work is also more specialized

Current Market Price: Rs 275.30
Target Price: Rs 500

Punj Lloyd is a leading construction company with two major verticals, namely Hydrocarbon and Infrastructure. It also has an overseas subsidiary SembCorp. It is showing significant growth in both its verticals due to strong order flows in the Oil and Energy sector and in basic infrastructural sectors. During the first quarter which just ended, Punj Lloyd reported an increase in its net sales of 73%, EBITDA of 39% and a net profit growth of 126% to Rs. 59.5 crores on a consolidated basis. The quarter was marked by a robust growth in new orders in the pipeline division.

REASONS TO BUY:

1. The company is increasingly focusing on the high value added Hydrocarbon vertical where the margins are higher and the work is also more specialized. There has been an impressive improvement in the profitability of SembCorp.

2. The debt level is reduced significantly and the debt / equity ratio now stands much lower than one.

In terms of valuation it is trading around 22 times its expected EPS to Rs. 12 for 2007-08. This is an almost 100% improvement on the EPS just concluded financial year.

CONCERNS:

1. A possible reduction in order flows in Hydrocarbons.
2. Delay in execution leading to under achievement of profit targets.

These concerns are endemic to the entire sector and we believe that Punj Lloyd has very good expertise in project implementation.

Disclaimer:

Punj Lloyd shares are a part of our proprietary portfolios and also in many of the portfolios managed by us.

Indian Hotels Company - Multibagger (India Infoline)

Indian Hotels Company : Reco Price Rs. 135.90 (India Infoline Picks)
We expect higher volume growth on the back of increased room inventory, moderate average room rate and expansions in key subsidiaries to be main drivers for Indian Hotel over FY07-FY09E.

Indian Hotels CMP Rs 135.90

Valuations and Recommendation

We expect higher volume growth on the back of increased room inventory, moderate average room rate and expansions in key subsidiaries to be main drivers for Indian Hotel (IHCL) over FY07-FY09E. The company, along with its subsidiaries, has aggressive capex plans to the tune of Rs1,500cr over the next two to three years which implies addition of around 3,810 owned rooms and 2,439 under management contract. With a pan-India presence, international acquisitions and moderate Average Room Rate (ARR) increase in domestic market, we expect earnings CAGR of 19.7% over FY07-FY09E. We recommend BUY with a target price of Rs164, providing upside of 21.5% from current levels.

Company background

IHCL is the largest hotel chain in the country and owner of the "Taj" brand with a portfolio of 81 hotels in India and abroad, and room inventory of about 9,900 rooms. It has presence across major price segments of the industry with the launch of "Ginger" brand of budget hotels in FY07. The domestic hotel industry has enjoyed robust ARR growth with stable occupancies which has helped the company post sales and earnings CAGR of 38.1% and 54.9% respectively over the FY05-07 period.

Shareholding Pattern:

Holding	No. of Shares
As on 30 June 2007	(%)	(in crs)
Promoters	29.2	17.6
Foreign & institutions	47.1	28.4
Non-promoter corp. holding	4.1	2.5
Public & others	20.2	11.9

Business outlook
Room inventory to increase 33% in parent company
IHCL has plans to expand its room inventory to an estimated 4,302 rooms, an increase of 33.1%, over the next two to three years at a capex of about Rs800cr. These expansions are likely to add about 12% to total room revenues (standalone) in FY09 and even higher in FY10 which would be their first full year of operation.

Expansion plans:

Owned Hotels	Rooms
In IHCL	1157
In group company, of which
Domestic	2257
International	396
Management contracts
Domestic	1855
International	584

	FY06	FY07	FY08E	FY09E
Revenues	1837	2506	2923	3518
Growth (%)		36.4	16.6	20.3
EBITDA	546	807	885	1061
EBITDA margin (%)	29.7	32.2	30.3	30.2
PAT	249	370	411	530
Growth (%)		48.9	11.1	28.7
EPS (Rs)	4.3	6.1	6.8	8.8
P/E (x)	32.8	22.7	20.5	15.9
P/BV (x)	4.2	4	3.6	3.1
EV/EBITDA (x)	17	12.8	12.1	9.9
ROE (%)	12.9	17.7	17.4	19.4
ROCE (%)	12.2	15.6	14.6	17.3

Source: Company, India Infoline Research

Subsidiaries also in expansion mode
Along with IHCL, its subsidiaries also plan to aggressively increase room inventory through a mix of owned assets and management contracts. About 2,653 rooms would be owned through various subsidiaries and JVs both in India and abroad while another 2,439 rooms would be under management contract.

Going international through acquisitions
In January 2007, IHCL had acquired the erstwhile Ritz Carlton Boston (now Taj Boston) and the Campton Place Hotel in San Francisco in April 2007. Additionally, it is expected to commission hotels in South Africa, Malaysia and Thailand. This international expansion is likely to provide some hedge against the anticipated downturn in ARRs beyond FY09. Moreover, the company intends to own assets only in key global cities like New York (The Pierre), London (St.James), and Sydney (The Blue) amongst others. In line with this strategy, it has exited from properties in Seychelles, Oman and Saa'na last year.

Volatility to the fore

Global markets dictated trend on Indian bourses over the past few days i.e. market rose when equities rose globally and vice versa. Global bourses witnessed alternate bouts of buying and selling caused by risk aversion or risk appetite that in turn was driven by how concerned the market was about US subprime mortgage woes.

The 30-share BSE Sensex lost 270.15 points or 1.78% to settle at 14,868.25 in the week ended 10 August 2007. The S&P CNX Nifty lost 68.20 points or 1.5% to settle at 4,333.35 in the week.

BSE Small-Cap index outperformed the market gaining 12.59 points or 0.16% to settle at 7,904.13 in the week. BSE Mid-Cap index lost 97.62 points or 1.48% to settled at 6,507.62 in the week.

In the first four trading sessions of the week till Thursday, 9 August 2007, the 30-share BSE Sensex lost 38.25 point to settle at 15,100.15. Nifty gained 1.65 points to 4,403.20.

Weakness in Asian stocks pulled Sensex down 235 points on Monday, 6 August 2007. Nevertheless, the market came sharply off lower level from an intra-day 433 points fall. Asian stock markets slumped after downbeat US economic data, including the influential non-farm payrolls report, adding to fears of the US subprime mortgage crisis.

The market recovered the next day amid mixed Asian markets. However, it came off higher level. Sensex rose 30 points. It had risen as much as 239 points at one point of time during the day.

The market surged on Wednesday, 8 August 2007, tracking rally across global markets. IT stocks led rally as rupee eased against the US dollar after the government on Tuesday, 7 August 2007, tightened overseas borrowing norms in a bid to check rupee's rise. Stocks rose across the globe after the US Federal Reserve's positive outlook for the US economy helped soothe concerns about a global credit squeeze arising from US subprime mortgage woes.

The market lost ground on Thursday, 9 August 2007, in what was a complete reversal of trend during the day. Holding firm till afternoon trade, the market lost ground later following weak opening of European markets. Sensex lost 208 points. European shares slipped as BNP Paribas suspended redemptions from three funds citing problems in US subprime mortgages. The news came just at a time when worries about global credit problems arising from US subprime mortgatge woes appeared to be easing.

The market lost further ground the next day as markets fell across the globe. Sensex lost 232 points on Friday, 10 August 2007. Yet, it made a strong rebound from an intra-day 529 points fall.

Index heavyweight Reliance Industries (RIL) witnessed alternate bouts of buying and selling. The government on Monday, 6 August 2007, constituted an Empowered Group of Ministers (EGoM) to decide on the pricing of gas from Reliance Industries' KG basin field. The EGoM will be headed by External Affairs Minister Pranab Mukherjee. The eventual formula will apply to all future gas production in India.

Reliance Industries (RIL) is developing two deep-sea gas fields in its D-6 block in the Krishna (KG) Godavari basin, and it aims to produce 80 million cubic metres of gas per day by mid-2008.

IT shares surged on Wednesday, 8 August 2007, as rupee weakened against the dollar after the government on Tuesday, 7 August 2007, tightened overseas borrowing norms. Investor sentiment on the tech stocks has been sluggish in the last few months mainly because of the strong rupee. Rupee has been one of the best performers among Asian currencies in this calendar year so far.

At the time of announcing Q1 June 2007 results, IT bellwether Infosys had last month cut its FY 2008 earnings and revenue guidance in rupee terms due to a surge in rupee against the US dollar. A rise and rupee directly impacts the operating margins of IT firms which derive a lion's share of revenue in dollars.

Bank stocks witnessed alternate bouts of buying and selling despite the view that Indian banks are unlikely to be impacted by US sub-prime mortgage defaults. Following the subprime loan problem, spreads of all credit default swaps have gone up. That is, their prices have gone down. Indian banks will, therefore, have to make higher provisions for losses on these swaps, when they mark to market their investments at the end of the current quarter. But these will be marginal compared to the size of their balance sheet.

Banking sector is expected to benefit from tighter overseas borrowing norms announced by the government on Tuesday, 7 August 2007, as companies looking to raise money abroad now have to turn to domestic banks for credit.

Two capital goods majors and market favourites L&T and Bhel witnessed buying at declines. Robust order book positions of the two firms give strong revenue visibility.

Cement shares, too, witnessed buying at declines due to firm cement prices. Cement firms reported strong dispatches for the month just gone by.

Omaxe settled at Rs 349.95 on BSE on Thursday, 9 August 2007, a premium of 12.8% over IPO price of Rs 310. The stock debuted at Rs 400. The IPO of Omxe had received strong investor response. It was subscribed 68 times. The company had priced the IPO at the top end of the Rs 265 to Rs 310 price band.

India Index Services & Products (IISL), a joint venture between NSE and CRISIL, on Tuesday, 7 August 2007, launched a new sectoral index based on the infrastructure sector. The 25-stock CNX Infrastructure Index includes companies belonging to the telecom, power, port, air, roads, railways, shipping and other utility services providers.

CNX Infrastructure Index constituents represent about 21.01% of the total market capitalisation as on 31 July 2007. The index is a market-capitalisation-weighted index with base date of 1 January 2004, indexed to a base value of 1000.

BSE has revised free-float adjustment factor of four constituents of BSE Sensex. It has raised the free-float adjustment factor of Maruti Udyog to 0.45 from 0.4. It has cut free-float adjustment factor of Bajaj Auto to 0.65 from 0.7 and that of Hindalco to 0.7% from 0.75%. It has cut free float adjustment factor of Ambuja Cements to 0.65% from 0.7%. The revised free float factors would come into effect from 13 August 2007.

Free float adjustment factor is used for calculating a scrip's weightage in Sensex. The free float of a listed security is the proportion of shares available for purchase in the market by investors. In principle, it is the part of shares not held by strategic shareholders or promoters

BSE decided to transfer a total of 32 stocks to trade-to-trade segment to be effective from Friday, 10 August 2007. The stocks transferred to trade-to-trade segment include Adarsh Derivatives, BCC Fuba India, Bihar Sponge Iron, Garware Polyesters, Ras Propack Lamipack and Tanu Health Care, among others.

A Securities Exchange Board of India (Sebi) committee on launch of dedicated infrastructure funds (DIFs) has suggested that the proposed DIFs should operate as a closed-ended scheme with a maturity period of seven years. The committee has also suggested listing options for DIFs to provide liquidity to investors in the fund.

The committee, which submitted its report on Monday, 6 August 2007, also suggested that retail investors investing in DIFs be given tax incentives. The committee has, however, added that such tax benefits should be available only to the original investors.

India's industrial production rose an annual 9.8% in June 2007, lower than the downwardly revised annual growth of 10.9% in May 2007. Manufacturing production was up an annual 10.6% in June 2007, compared with a provisional annual growth of 11.9% in May 2007.

The wholesale price index rose 4.45% in the 12 months to 28 July 2007, higher than the previous week's 4.36% due to increased food and manufactured product prices.

The US Federal Reserve on Tuesday, 7 August 2007, left its benchmark interest rate unchanged at 5.25% in a widely expected move and said while tightening credit conditions had increased downside risks to the US economy, inflation was still its main concern.

Indian government on Tuesday, 7 August 2007, put stiff restrictions on overseas borrowings, a measure sought by the Reserve Bank of India (RBI) to enable it to check the rupee's sharp appreciation. External commercial borrowings (ECBs) above $20 million have now been allowed only for foreign currency expenditure for permissible end-uses and are required to be parked abroad.

As a result, interest costs for companies might jump by 75-100 basis points as ECBs were usually at lower interest rates than domestic borrowings, reports suggest. Indian companies had raised a total of $24 billion of ECBs in 2006-07 against the government's internal target of $22 billion.

According to Society of Indian Automobile Manufacturers (SIAM), domestic motorcycle sales contracted 17.25 % to 3,75,004 units in July 2007 over July 2006. Total domestic sales of two-wheelers fell 9.95% to 5,03,356 units in July 2007 over July 2006.

Domestic passenger car sales increased 11.18% at 89,548 units in July 2007 over July 2006. Domestic sales of commercial vehicles edged up 2.53% to 33,496 units in July 2007 over July 2006.

The prime minister's office on Wednesday, 8 August 2007, said India is committed to the present system of fertiliser subsidy for this year and will ensure adequate funds are made available.

The Reserve Bank of India said on Thursday, 9 August 2007, it has formed a working group to find ways to revive trading of interest-rate futures and to consider whether foreign investors should be allowed to trade in the derivatives.

Polaris Software leads gainers in 'A' group

Mid-sized IT firm Polaris Software Lab gained 3.99% to Rs 121.20 and it topped gainers in BSE's A group shares. IT shares bounced back today as rupee weakened against the dollar.

Apollo Tyres moved up 3.80% to Rs 390.20. It was second biggest gainer among A group shares.

HCL Technologies rose 3.80% to Rs 323.80 and stood third among top gainers in A group. As per reports, HCL Tech has dropped out of the race to acquire a 48% stake in Cambridge Solutions – a Bangalore-based Rs 1,200-crore IT and BPO services provider.

Satyam Computer rose 2.63% to Rs 479.40 and came fourth among top gainers in A group. Earlier on 31 July 2007, Satyam Computer had won two multi-million dollar contracts from Federation Internationale de Football Association (FIFA) for its forthcoming events.

Suzlon Energy flared up 2.56% to Rs 1300.25 and was the fifth biggest gainer in A group. Merrill Lynch has maintained buy rating on Suzlon Energy with a target price of Rs 1550.

Sensex sheds 232 points on weak global markets

The market which plunged sharply in opening trade, tracking weak global cues, kept on recovering as the day progressed on value buying coupled with short covering. It settled near day's high. Trading was marked by a high degree of volatility. All the indices on BSE except the BSE IT index settled lower. All the European indices were trading lower.

The wholesale-price-based inflation rose 4.45% in the week ended 28 July 2007 compared to 4.36% rise in the previous week.

India's industrial production in June 2007 grew at the slowest pace in eight months as interest rates at a five-year high curbed consumer spending. Production at factories, utilities and mines rose 9.8% from a year earlier, following a revised 10.9% gain in May 2007.

The BSE 30-share Sensex lost 231.90 points or 1.54% at 14,868.25. It opened with a sharp 466-point downward gap at 14,631.15 and slumped further to touch a low of 14,570.89. From here, it started recovering to hit a high of 14,901.31 at 15:20 IST.

The BSE Sensex oscillated in a range of 330.42 points today as compared to a gyration of 480.10 points on Thursday, 9 August 2007.

The S&P CNX Nifty declined 69.85 points or 1.59% at 4,333.35. It also recovered sharply from a low of 4239.20. The Nifty August 2007 futures settled at 4303, a discount of 30.35 points as compared to spot closing.

Sensex had slumped 207.83 points to 15100.15, on late sell-off yesterday, 9 August 2007 after European indices opened weak after BNP Paribas suspended redemptions from three funds citing problems in US subprime mortgages.

The market breadth also recovered sharply, but still was negative on BSE with 1,574 shares declining as compared to 1127 that advanced, while 58 remained unchanged.

The BSE Mid-Cap index was down 0.79% to 6,507.62 while the BSE Small-Cap index slipped 0.75% to 7,904.13

Among the sectoral indices, the BSE Capital Goods Index (down 0.90% at 12,768.35), BSE Health Care Index (down 1.37% at 3,601.09), BSE Auto Index (down 0.69% to 4,736.40) and BSE FMCG Index (down 0.88% to 1,903.05), ended down.

The total turnover on BSE amounted to Rs 5,196 crore as against to Rs 5,495.26 crore on Thursday, 9 August 2007. The NSE F&O turnover was Rs 48,868.82 crore as compared to Rs 55,930.24 crore on Thursday, 9 August 2007.

Among the 30-member Sensex pack, 22 slipped while 8 gained.

IT stocks staged a solid comeback from the day's low. The BSE IT Index gained 0.85% at 4,774.13. The BSE IT index had declined 2.77%over the last one month to 9 August 2007. It had touched a 52 -week high of 5,611.33 on 19 February 2007 and a 52- week low of 3,983.83 on 9 August 2006.

India's fourth largest software exporter Satyam Computers surged 2.33% to Rs 478 on 8.68 lakh shares. It was the top gainer from Sensex pack. It recovered from low of Rs 452.15

Infosys Technologies gained 0.72% to Rs 1949.90, off the session's low of Rs 1872 and Wipro rose 0.51% to Rs 480.45, off the day's low of Rs 455. TCS settled 0.37% lower to Rs 1142.30, after touching a low of Rs 1050

The Indian rupee was trading at 40.63 against the US dollar, weaker that as compared to yesterday's close of 40.53/40.54

India's largest listed cellular services provider Bharti Airtel plunged 3.60% to Rs 838.10, on 3.82 lakh shares. It was the top loser from the Sensex pack. Bharti Airtel added 2.1 million cellular customers in July 2007, taking its user base to 44.8 million.

India's largest private sector company Reliance Industries (RIL) lost 1.21% to Rs 1819.80 on 9.18 lakh shares. It moved in a band of Rs 1778 and Rs 1821.80. The Egyptian government said on Thursday, 9 August 2007, that Reliance Industries (RIL) will invest $10 billion in the oil refining, petrochemical and plastic industries in Egypt.

Oil & Natural Gas Corporation (ONGC) lost 2.94% to Rs 841. BSE Oil and Gas Index was down 1.71% to 7,755.96

India's largest commercial vehicle maker Tata Motors rose 0.85% to Rs 668.70. Tata Motors, India's top bus and truck maker, is looking to expand its auto sales in Southeast Asia and it plans to use Thailand as a manufacturing base.

Banking and financial shares were under selling pressure throughout the day. The BSE Bankex was down 2.52% at 7,773.71, and was the worst performer among the sectoral indices on BSE. The Bankex had touched a 52-week high of 8,531.80 on 20 July 2007 and a 52-week low of 4,882.74 on 8 August 2006.

India's largest housing finance company Housing Finance Development Corporation (HDFC ) slumped 3% to Rs 1955.

ICICI Bank (down 2.84% to Rs 865), HDFC Bank (down 2% to Rs 1132) and SBI (down 2.58% to Rs 1607) also slipped.

Other bank stocks also declined. Kotak Mahindra Bank (down 3.62% to Rs 740), Oriental Bank of Commerce (down 1.56% to Rs 228.50), Punjab National Bank (down 2.63% to Rs 498.90), Bank of India (down 1.34% to Rs 242.50), Bank of Baroda (down 0.91% to Rs 295), Axis Bank (down 2.29% to Rs 593) and Allahabad Bank (down 1.64% to Rs 90) were trading weak.

NTPC (down 2.68% to Rs 165.10), and Reliance Communications (down 2.41% to Rs 523.80), were the other losers from Sensex pack.

Deepak Fertilisers (down 6.69% to Rs 95.55), ICSA India (down 9.44% to Rs 1654), Max India (down 6% to Rs 208.80), Lokesh Machines (down 9.28% to Rs 101.65) were the top losers from small-cap and mid-cap basket.

Atlanta (up 10% to Rs 280.40), ANG Auto (up 10.80% to Rs 230), Orbit Corporation (up 16.56% to Rs 524.70), Educomp Solutions (up 5.55% to Rs 2620), and Falcon Tyres (up 5% to Rs 146) surged.

Metal shares lost ground as global metal prices declined. Hindalco Industries (down 2.37% to Rs 152.30), Hindustan Zinc (down 2.36% to Rs 713), Sterlite Industries (down 3.47% to Rs 589), JSW Steel (down 1.80% to Rs 625), and Sail (down 0.86% to Rs 149) slipped.

Commodities futures from Shanghai to Tokyo, including copper and precious metals, fell sharply on global risk aversion. The BSE Metal Index declined 2.30% to 10,863.61

World's sixth-largest steel-maker Tata Steel shed 2.37% to Rs 637 on reports that the company would pay 50 basis points more on the $1-billion tranche with a seven-year tenure to fund the Corus deal.

Orbit Corporation was the most active counter on BSE with turnover of Rs 317.72 crore followed by IFCI (Rs 231.54 crore), and DLF (Rs 171.65 crore).

United Breweries jumped 4.10% to Rs 321.40 on high volumes of 30 lakh shares after two block deals of 13.51 lakh shares each were struck at an average price of Rs 301.37 per shares on BSE by 10:02 IST

Tube Investments rose 0.74% to Rs 61 after two block deals of 6 lakh shares each were executed at Rs 58.95 per share on BSE at 10:09 IST.

Tata Power Company was down 0.49% to Rs 686.10. It signed a contract with Toshiba Corporation for Turbine Generators for the first 4000 MW Ultra Mega Power Project at Mundra.

Jai Corp was locked at the 5% upper circuit of Rs 5580.45 after its board approved a 1:1 bonus issue. The scrip surged 71.02% from a recent low of Rs 3107.60 on 25 July 2007 to Rs 5314.75 on 9 August 2007 backed by the company's decision to split and/or bonus issue.

Omaxe slipped 1.91% to Rs 343.25 after the National Stock Exchange (NSE) barred further F&O positions in Omaxe as 95% of marketwide limit was reached on Thursday, 9 August 2007.

Aditya Birla Nuvo was down 3.63% to Rs 1410 after the Gujarat High Court approved the scheme of amalgamation of Aditya Birla Insulators with the company. The unlisted firm, Aditya Birla Insulators is the largest Indian manufacturer of high voltage porcelain insulators. It is a subsidiary of Aditya Birla Nuvo.

Ahluwalia Contracts India rose 4.10% to Rs 572 on bagging construction contract worth Rs 688 crore for the Commonwealth Games 2010 Village Residential project from Emaar MGF Construction . The current order book value of the company stands at Rs 2748 crore.

Idea Cellular lost 2.33% to Rs 121.35. It gained 877,931 subscribers in July 2007, lifting its total users to 17 million.

Industrial Investment Trust had gained 1.90% to Rs 98.35 after NN Financial Services and Nimbus (India) made an open offer for 20% stake in the company at Rs 111 per share. The acquirers want to mop up 20,00,000 equity shares of Rs 10 each.

Drug maker Cadila Healthcare slipped 2.80% to Rs 340 despite reports that it is close to acquiring a mid-sized Spanish pharmaceutical firm for about $30 million.

Hindustan Copper advanced 4.70% to Rs 125.90 on reports it plans to enter gold mining in India and is scouting copper mines abroad. The stock jumped 20% in the past 4 trading session from Rs 99 on 3 August to Rs 120.25 on 9 August 2007. Meanwhile, recent reports suggest the Ministry of Mines had proposed a financial restructuring package worth Rs 637 crore for HCL's revival.

All the Asian indices tumbled today, 10 August 2007, following a rout in global markets as credit jitters flared up after a major French bank BNP Paribas froze three funds that invested in US subprime mortgages. Financial shares across the region were hit hard. Nikkei tumbled 2.37%.

Hong Kong's Hang Seng (down 2.88%), Taiwan's Taiwan Weighted (down 2.74%), Singapore's Straits Times (down 1.58%), Shanghai Composite (down 0.10%), and South Korea's Seoul Composite (down 4.20%) plunged.

US stocks fell yesterday, 9 August 2007, on deepening fears about a spreading credit crunch. The Dow Jonex Industrial Average fell 387.18 points, or 2.83%, to 13,270.68. The broader Standard & Poor's 500 index fell 44.40 points, or 2.96%, to 1,453.09. The Nasdaq Composite index fell 56.49 points, or 2.16%, to 2,556.49.

Oil prices were steady at above $71 on Friday, 10 August 2007, as investors watched for any further signs of distress caused by the US subprime mortgage sector crisis. US crude fell 5 cents to $71.54 a barrel. London Brent crude rose 11 cents to $70.32.