Midcapmania Multibaggers - March 9 2008

K S Oils (KSO), established in 1985, is a leading name in the edible oil industry.The company has been promoted by the Garg family of Morena, Madhya Pradesh. The Garg family has been dealing in agro-based products since the past 150 years. KSO currently figures among the top-five edible oil companies in India. KSO brands are actively traded in the leading commodity markets and are often looked upon as trend setters in the largely unorganised edible oil segment.KSO has won prestigious awards like "Highest Processor of Rapeseed Oilcake" for 2004-05 and 2005-06 from The Solvent Extractors Association of India. KSO was also awarded the "Emerging Company of the year" in September 2006 by Globoil India.

The company is a manufacturer of mustard and rapeseed oil in India. The company is engaged in the manufacturing of cooking media such as mustard oil, refined oil, vanaspati and non-edible solvent oil and DOC. Double Sher and Kalash (mustard oil) are the company`s flagship brands. Some of its other brands include KS Refined Oil, Crystal Clear (soya vegetable refined oil), KS Gold (vanaspati ghee) and KS Gold Plus (vanaspati ghee). The company has a strong presence in parts of eastern and north-eastern India.

KSO being the largest rapeseed crusher in India enjoys market leadership in the mustard oil segment. The company also enjoys lower manufacturing costs resulting from economies of scale and integrated production, secure raw material supply, extensive distribution network through central distribution points and the company's extraction efficiency of 33% which is more than the other crushers.

KS Oils registered a 60.47% growth in net profit to Rs 324.30 million for the quarter ended December 2007 as compared with Rs 202.10 million for the corresponding quarter, last year. Net sales for the quarter rose 84.72% to Rs 5,636.70 million as against Rs 3,051.50 million for the same quarter, a year ago. Total income for the quarter rose 85.28% to Rs 5,653.90 million as compared with Rs 3,051.50 million for the corresponding quarter, last year. The diluted earnings per share (EPS) of the company stood at Rs 1.05 in the quarter ended December 2007.
Promoters are utilizing this fall to increase their stake. Ramesh Chand Garg(Promoter) increased its stake in the company to 10.77% from 5.19%.

Further FII's have increased their stake in the company for the quater ended December 2007.

We have a buy rating on K S oils Ltd (C.M.P 74.55). Targets - 140+ in 9-12 months and 200+ in 18 months.



Disclaimer: TEAM INTRADAY does NOT vouch for these recomendations. These are by a independent analyst who may have vested interest in the stock

FIIs sell IPOs on listing

If you have tracked book-built initial public offers on the stock exchange Web sites, you would have noticed that retail investors typically rush in at the last hour.

This is because most lay investors are looking out for the subscription numbers for the QIB (Qualified Institutional Bidders) portion of the IPO, especially of FIIs, before they decide to take the leap.

Retail investors often rely on the extent of over-subscription in the QIB portion when deciding to invest or refrain from IPOs. This is built on the premise that FIIs have a much better understanding of new businesses or untested business models when it comes to evaluating IPOs.

Now for the detour. What if the big guys you were tracking were in the issue for the short term? What if they flipped on listing day itself, after securing the much-sought-after allotment?

Business Line looked up large transactions (bulk and block deals) that occurred on both the BSE and the NSE platforms for the 35 IPOs listed from mid-October. The evidence of institutional investors making a short-term profit on the day of listing (known commonly as 'flipping') was strong.

Of the 62 transactions (both buy and sell) that occurred on the listing days, 34 were "sell" trades. Of these, institutional investors exited the stock with substantial profits on 25 occasions.

The numbers may be small but the trend reveals that FIIs too have not been averse to taking a short-term view with their IPO investments.
Cashing in

Mauritius-based investment firms or arms of well-known investment banks feature prominently on the list of investors that made a killing on listing.

Right from BSMA (affiliate of Bear Stearns), Mavi Investment Fund (sub-account of Switzerland-based M.M. Warburg Bank) to less known entities such as Prime India Investment Fund, ITF Mauritius, Amas India Investments; all have been regular investors in IPOs, who have taken profits on listing.

Could it be the overall market mood that caused FIIs to rush in on the day of listing and cash in on their profits? Maybe not. True, the Sensex lost around 22 per cent in value since the first week of January, with many volatile ups and downs in between. However, even through this period, FIIs did keep up steady buying in shares of companies such as Maytas Infrastructure, Edelweiss Capital, Consolidated Construction Consortium (CCCL) and BGR Energy Systems, on Day One.

When it comes to a fancy for newly listed stocks, FIIs do not seem to be very different from the small investor.

Just as a small investor would try to buy shares in the secondary market for a company in whose IPO he/she did not get allotment, foreign investors too seem to follow this practice. This may partly explain the bulk deals in Maytas, Edelweiss, CCCL and BGR, whose issues were oversubscribed over 50 times during their IPOs!
Taking chances

What about other constituents of the QIB group who are allocated around 50-60 per cent of a company's net issue? Apart from FIIs, mutual funds and financial institutions, insurance companies also are included in this list.

An analysis of the reported transactions shows that domestic mutual funds have not engaged in 'flipping', as much as the foreign investors. They feature prominently in the buyers list on the day of listing, with funds such as JM Financial, Franklin Templeton MF, ICICI Prudential and HDFC MF actively engaged in buying shares.

India's largest bank, the State Bank of India, also seems to be a participant in the IPO segment, making quick gains with investments in IPOs of Barak Valley Cements and Renaissance Jewellery.

But could it happen that daily market movements too influence these deep-pocketed investors? They do not, as an analysis for the October-February period shows. 'Sell' transactions in IPO stocks were roughly the same in number whether the Sensex finished lower or higher on listing day.

While most transactions by institutions on listing day appeared to be motivated by the chance to make quick gains, a few also helped limit the downside. DB International, India Diversified Mauritius, Ultra India Mauritius, Deutsche International and Elara India Opportunities were some institutional sellers on day one, in stocks such as Empee Distilleries, KNR Constructions and Bang Overseas.

Their move to exit was well-timed, as each of these IPOs lost as much as 20 per cent on listing day. Cords Cable Industries was among the exceptions, which managed to close at a 3 per cent premium after listing at a discount.
What's in it for you

Many small investors take cues from strong QIB subscription numbers to subscribe to and project listing gains on IPOs.

Strong institutional interest during an IPO is taken as a sign that the stock may attract buying post-listing. However, if above trends are any evidence, it is possible that institutional investors too (at least a few of them) are in the game for the short term.

Remember the hype surrounding Reliance Power IPO? Overall, the IPO was oversubscribed 62 times, while the QIB portion was over-subscribed a massive 83 times. But the stock still closed Day One well below its offer price.

Although there is no record of bulk/block deals related to the Reliance Power stock on listing day, one must remember that quite a bit of institutional selling may escape the "bulk deals" net, if transactions are broken into smaller trades, thus escaping notice.

Apart from 'flipping' being a risky game (refer 'Flipping your stock is a risky game', Business Line, September 30, 2007), these trends are reason to take IPO subscription numbers with a pinch of salt.

Large investors too are driven by profit motives and their mere presence in an IPO may not be a vote of confidence in the company or its long-term prospects.

Via Businessline

JK Tyres

Investors can consider buying the JK Tyres stock with a two-three year perspective. The company is the third largest manufacturer of tyres in India with a market share of 17 per cent. While the commercial vehicles segment brings in 75 per cent of the revenues, passenger vehicles chip in with the rest.

As is the case with most companies, bulk of these earnings (over 60 per cent) comes from the replacement market; exports contribute 14 per cent to the revenues.

Volume growth resulting from capacity expansion, increased demand from OEMs and an improved product mix in favour of radial and OTR (off-the-road) tyres suggest good earnings prospects. At the current market price of Rs 130, the stock trades at around a 5 times trailing 12-month (TTM) earnings. This valuation is at a discount to bigger players such as MRF and Apollo Tyres, which quote at about 10 times their TTM earnings.
Demand Scenario

The replacement market has been the key driver of growth for the industry so far. But the buoyant trends in automobile sales in the past few years has enabled the company step-up its supplies to OEMs. JK Tyres is the exclusive supplier for the Swift, SX4 and the Zen Estilo from Maruti and the Logan from the Mahindra stable.

The company will also be supplying to the Nano. The success of the Swift and the SX4 and the potential market for the Nano will translate into higher revenues for the company.

Besides, the duty cuts on buses and trucks announced in the Budget, coupled with the possibility of a softer interest rate regime, may provide a fillip to the commercial vehicle industry, which has otherwise been reeling under a slowdown in the medium and heavy commercial vehicles segment. JK Tyres, a supplier to Tata Motors, Force Motors and Volvo is a likely beneficiary from this revival.
Radial and OTR tyres

India has low levels of radialisation at less than 5 per cent for trucks and buses due to constraints such as higher costs and maintenance involved and poor road infrastructure. The fast improving highway infrastructure, the Supreme Court ban on the overloading of vehicles and the move towards a hub and spoke model are expected to indirectly rev-up the demand for radial tyres as they offer better fuel efficiency, have longer life and turn out to be cheaper in the long run.

The company already has the first mover advantage in the manufacture of radial tyres for commercial vehicles where its market share is around 80 per cent. To cater to this expected increase in demand, the company plans to increase its radial tyre capacity to 10 lakhs by FY-09 and 12 lakhs by FY-11.

Besides, the company is also increasing its capacity in the OTR segment. It has entered into a tripartite agreement with Bharat Earth Movers (BEML) along with Apollo tyres for the manufacture and supply of OTR tyres. The company will, thus, be able to ride on the construction boom to bring in higher revenues. The improved product mix in favour of high value, high margin radial and OTR tyres will also benefit the company in terms of greater realisations and healthier margins.
Financials

For the quarter ended December 2007, net sales grew by 10 per cent to Rs 723 crores on a year-on-year basis and net profits, by 175 per cent to Rs 22 crore. EBITDA margins also improved from around 8 per cent to 10.6 per cent. But both profits and margins have declined marginally on a sequential basis. This can partly be attributed to the firm trends in raw material prices.
Concerns

The reduction in Cenvat duty in the budget has been a welcome relief and the company has already announced price cuts to pass on the benefit to its customers. But with the reduction passed on, operating margins are likely to be under pressure due to firm trends in the prices of natural rubber and crude oil based raw materials. Any increase in prices pegged to increase in cost of raw materials could face resistance from its OEM customers. Net margins may also be affected from increased depreciation and interest costs due to ongoing capacity expansion.

Mid Market: Sensex below 16k...Blood bath!

Indian markets opened the day on a low note tracking weak cues from the global markets. Major Asian markets tumbled down due to dented confidence in the US as worries creep up that economy is near recession. Choppy sessions were seen very time market would make attempt to recover the lost gains. All sectoral indices slipped in red with Banking, power and realty stocks worst hit. Reliance Energy was biggest loser from the Sensex pack after board approved for Buy back of shares. Indices slipped further as Inflation rose 5.02% in 12 months to 23 February 2008, higher than the previous week's rise of 4.89%. The annual inflation rate was 6.20% during corresponding week of previous year. Concerns on political front also weighed on the market after CPM renewed its threat on the UPA government saying that the ruling coalition?s future depended on how it took the call on pursuing Indo-US nuclear deal. Meeting is to be held on 15th of this March and outcome of this would see some direction for the market. Even mid and small caps hit badly compared to front line indices. European markets started in red.

Sensex is trading down by 781 points at 15761. Restricting the gains are Rel Energy (1300,-11percent), Bajaj Auto (1913,-10 percent), ICICI BANK (874,-9 percent) and Hindalco (191,-8 percent).

NIIT Technologies has entered into a strategic partnership with Ramco Systems, a global provider of innovative software products and services. NIIT Technologies' recently launched its new paradigm offering, 'Software as a Service' (SaaS), which will deliver process based application solutions through an innovative, business transaction-based, SLA driven and highly secure delivery model. The company has gone live with its procurement solution, procure easy which is fast gaining traction. As the SaaS is relatively very new it would take some time to deliver things and also the approachable market for this type of platforms is very high. NIIT Tech has been facing some problems from the Room solutions revenues and also from the Adecco JV.

Technically Speaking:- Indices started the day on a weak note and slipped further down as the sessions progressed. Sensex made an intraday high of 16212 and low of the day at 15690 levels. Declines are edging their way ahead then the Advances. Declines are 2415 against Advances of 149. Volumes have been extremely low as it churned around Rs 2771 cr so far. Close below 15800 can take the sensex upto 14000 levels.

Worst since May 2006

 Steepest weekly decline since May 2006.

Spooked by falling global markets and higher-than-estimated inflation figures, Indian markets on Friday plunged to their steepest weekly decline since May 2006, shaving off Rs 2,08,361 crore in market capitalisation.

The outlook for next week also looks bleak with stocks in Europe (which opens in the latter half of trading hours on the Indian markets) and US stock futures falling on concern that credit-market losses will deepen for financial companies and an employment report may show that the US has slipped closer to recession.

With the dollar falling to its weakest in three years against the Japanese yen, foreign funds, which have used the cheap Japanese currency to buy stocks in emerging markets like India, are under pressure, said dealers.

The Bombay Stock Exchange's (BSE's) 30-share Sensex fell 566.56 points, or 3.42 per cent, to close at 15,975.52 points, its lowest level since September 18, 2007. The 50-share Nifty index of the National Stock Exchange closed for the week at 4,771.6 points, lower 149.8 points, or 3.04 per cent.

Real estate, power and bank stocks were the worst hit in Friday's mayhem.

With Friday's fall, the Sensex has lost 4,897.81 points or 23 per cent from its peak on January 8 of 20,873. This week alone has seen the index falling by 1,603.2 points, or 9 per cent.

This is the biggest weekly loss since May 15 to 19, 2006, when the Sensex lost 10.96 per cent (1,346.50 points). This is also the biggest post-budget weekly fall for the benchmarks.

Foreign institutional investors (FIIs) continued to be net sellers throughout the week. In March so far, they have net-sold equities up to Rs 35,000 crore. Domestic institutional investors bought Rs 20,000-odd crore this month, but could not counter FII selling pressure.

Market breadth remained extremely weak with only 295 stocks advancing against 2,384 stocks declining.

160 stocks hit the lower circuit in Friday's trading session with only six stocks in the upper circuit, reflecting the absence of buyers in the market.

Small- and mid-cap stocks suffered the most. This week, the small-cap index has fallen 8.5 per cent or 818.34 points and the mid-cap index shed 566.21 points or 7.37 per cent.

The Hang Seng (down 841.4 points or 3.6 per cent), Nikkei 225 (down 432.62 points or 3.27 per cent) and Taiwan Weighted (down 127.26 points or 1.47 per cent) were deep in the red.

Key American indices, the Dow Jones Industrial Average (down 214.6 points or 1.75 per cent) and S&P 500 index (down 29.36 points or 2.2 per cent) had a dismal trading session on Thursday after news that Thornburg Mortgage Inc, a mortgage lender, was in default after failing to meet creditor demands for more upfront cash.

"The market is reacting to any bad news on the global front. Purely on the basis of fundamentals, Indian markets are in a buying zone. A lot of large caps are now moving towards value. Markets have factored in a slowdown in corporate earnings and hence that is not likely to affect the market sentiment in a significant way," said Amar Ambani, Vice President (Research), India Infoline.

Via Business Standard

BSE Bulk Deals to Watch - March 7 2008

Deal Date Scrip Code Scrip Name Client Name Deal Type * Quantity Price **
7/3/2008 531223 ANJANI SYNTH ARVIND MULRAJ UDESHI S 95000 57.97
7/3/2008 505185 BOSCH CHA SY HITEN A SHETH HUF B 336000 643.00
7/3/2008 505185 BOSCH CHA SY GAGANDEEP CREDIT CAPITAL PVT. LTD. S 336000 643.00
7/3/2008 508918 GREYCELLS EN PRIME BROKING CO INDIA LTD ACPWM B 30000 221.24
7/3/2008 532951 GSS AMERICA MBL AND COMPANY LIMITED B 78632 468.66
7/3/2008 532951 GSS AMERICA H.J.SECURITIES PVT.LTD. B 205382 467.95
7/3/2008 532951 GSS AMERICA TRIPLET TRADERS PVT LTD B 148203 466.38
7/3/2008 532951 GSS AMERICA B.K. SHAH CO. B 335488 469.62
7/3/2008 532951 GSS AMERICA CROSS BORDER INVESTMENTS PVT LTD B 650000 425.00
7/3/2008 532951 GSS AMERICA MBL AND COMPANY LIMITED S 78632 470.60
7/3/2008 532951 GSS AMERICA MANGALA SHRIMAL S 67000 427.65
7/3/2008 532951 GSS AMERICA NAGARJUN VALLURIPALLI S 125000 440.27
7/3/2008 532951 GSS AMERICA H.J.SECURITIES PVT.LTD. S 205382 468.12
7/3/2008 532951 GSS AMERICA TRIPLET TRADERS PVT LTD S 148203 491.03
7/3/2008 532951 GSS AMERICA B.K. SHAH CO. S 335029 470.19
7/3/2008 532951 GSS AMERICA INDIA DIVERSIFIED MAU LTD S 650000 425.00
7/3/2008 530049 JJ EXPORTER PACIFIC CORPORATE SERVICES LTD S 310384 34.99
7/3/2008 532950 MANJUSHREE N D NISSAR B 104574 27.12
7/3/2008 532950 MANJUSHREE N D NISSAR S 104574 27.15
7/3/2008 526169 MULTIBASE 1 SAK TECHNOLOGIES LIMITED S 116000 30.50
7/3/2008 532722 NITCO TILES PRASAM TRADING AND FINANCE PRIVATE LIMITED B 314374 255.00
7/3/2008 526415 OK PLAY INDI B K KHULLAR AND CO B 43000 58.80
7/3/2008 532675 PRITHVI INFO BSMA LTD. B 115000 217.12
7/3/2008 513436 SHAH ALLOY L PACIFIC CORPORATE SERVICES LTD S 122033 39.75
7/3/2008 523606 SIKA INTERP BHAGWATPRASAD MANUPRASAD THAKAR B 9627 63.68
7/3/2008 523606 SIKA INTERP RAJASHREE N. MEHTA B 9081 65.07
7/3/2008 523606 SIKA INTERP RAJIV ARORA S 9816 73.17
7/3/2008 523606 SIKA INTERP BHAGWATPRASAD MANUPRASAD THAKAR S 11427 65.60
7/3/2008 523606 SIKA INTERP RAJASHREE N. MEHTA S 9081 70.64
7/3/2008 521180 SUPER SPININ PACIFIC CORPORATE SERVICES LTD S 345740 14.31
7/3/2008 532948 TULSI EXTRU N D NISSAR B 125271 81.61
7/3/2008 532948 TULSI EXTRU N D NISSAR S 125271 81.73
7/3/2008 532156 VAIBHAV GEM PACIFIC CORPORATE SERVICES LTD S 150000 83.00
7/3/2008 519602 VMF SOFT TEC V RAMESH RAJU S 50000 3.33

NSE Bulk Deal Watch - March 7 2008

 Date,Symbol,Security Name,Client Name,Buy/Sell,Quantity Traded,Trade Price / Wght. Avg. Price,Remarks
07-MAR-2008,GSSAMERICA,GSS America Infotech Limi,A K G SECURITIES AND CONSULTANCY LTD.,BUY,70321,477.06,-
07-MAR-2008,GSSAMERICA,GSS America Infotech Limi,B K SHAH AND CO,BUY,372602,470.59,-
07-MAR-2008,GSSAMERICA,GSS America Infotech Limi,BHIMRAJ BOHRA,BUY,218691,472.51,-
07-MAR-2008,GSSAMERICA,GSS America Infotech Limi,CHOKHANI SECURITIES LTD,BUY,68003,473.71,-
07-MAR-2008,GSSAMERICA,GSS America Infotech Limi,CPR CAPITAL SERVICES LTD.,BUY,87973,481.50,-
07-MAR-2008,GSSAMERICA,GSS America Infotech Limi,DINESH MUNJAL,BUY,211981,471.97,-
07-MAR-2008,GSSAMERICA,GSS America Infotech Limi,HARBUX SINGH SIDHU,BUY,367724,472.83,-
07-MAR-2008,GSSAMERICA,GSS America Infotech Limi,JIGNESH SHAH,BUY,105242,484.69,-
07-MAR-2008,GSSAMERICA,GSS America Infotech Limi,JRK CONSULTANTS PVT LTD,BUY,158916,434.16,-
07-MAR-2008,GSSAMERICA,GSS America Infotech Limi,LATIN MANHARLAL SECURITIES PVT. LTD.,BUY,146433,471.34,-
07-MAR-2008,GSSAMERICA,GSS America Infotech Limi,MALLINATH SHARES & STOCK PVT LTD,BUY,80531,470.73,-
07-MAR-2008,GSSAMERICA,GSS America Infotech Limi,MANISH VRAJLAL SARVAIYA,BUY,67148,470.65,-
07-MAR-2008,GSSAMERICA,GSS America Infotech Limi,PACIFIC CORPORATE SERVICES LTD,BUY,100000,504.09,-
07-MAR-2008,GSSAMERICA,GSS America Infotech Limi,PCS SECURITIES LTD,BUY,578,428.85,-
07-MAR-2008,GSSAMERICA,GSS America Infotech Limi,PRASHANT JAYANTILAL PATEL,BUY,435547,476.46,-
07-MAR-2008,GSSAMERICA,GSS America Infotech Limi,R.M. SHARE TRADING PVT LTD,BUY,207998,467.59,-
07-MAR-2008,GSSAMERICA,GSS America Infotech Limi,RADHIKA DIPAN MEHTA,BUY,101321,463.94,-
07-MAR-2008,GSSAMERICA,GSS America Infotech Limi,RUPESH KIRIT DALAL,BUY,84090,478.39,-
07-MAR-2008,GSSAMERICA,GSS America Infotech Limi,SANJAY BHANWARLAL JAIN,BUY,180307,466.77,-
07-MAR-2008,GSSAMERICA,GSS America Infotech Limi,SHAH MADHUBEN AMRUTLAL,BUY,85916,465.43,-
07-MAR-2008,GSSAMERICA,GSS America Infotech Limi,SMB CAPITAL MARKET PVT. LTD.,BUY,69884,462.72,-
07-MAR-2008,GSSAMERICA,GSS America Infotech Limi,TRANSGLOBAL SECURITIES LTD.,BUY,199649,481.76,-
07-MAR-2008,NITCO,Nitco Tiles Limited,PRASAM TRADING & FINANCE P. LTD.,BUY,301633,254.99,-
07-MAR-2008,PHILIPCARB,Phillips Carbon Black,IVORY CONSULTANTS PVT LTD.,BUY,153000,153.00,-
07-MAR-2008,SANGAMIND,Sangam (India) Ltd.,IVORY CONSULTANTS PVT LTD.,BUY,229000,30.75,-
07-MAR-2008,TULSI,Tulsi Extrusions Limited,ADROIT FINANCIAL SERVICES PVT LTD,BUY,210078,82.64,-
07-MAR-2008,TULSI,Tulsi Extrusions Limited,AMBIT SECURITIES BROKING PVT. LTD.,BUY,86720,82.37,-
07-MAR-2008,TULSI,Tulsi Extrusions Limited,CPR CAPITAL SERVICES LTD.,BUY,120232,81.07,-
07-MAR-2008,TULSI,Tulsi Extrusions Limited,NISSAR BROTHERS,BUY,62915,80.63,-
07-MAR-2008,TULSI,Tulsi Extrusions Limited,PASHUPATI CAPITAL SERVICES PVT. LTD.,BUY,114789,81.20,-
07-MAR-2008,TULSI,Tulsi Extrusions Limited,RAJEEV GUPTA,BUY,113095,82.43,-
07-MAR-2008,TULSI,Tulsi Extrusions Limited,RAVI KUMAR,BUY,65311,84.47,-
07-MAR-2008,TULSI,Tulsi Extrusions Limited,TRANSGLOBAL SECURITIES LTD.,BUY,121025,83.80,-
07-MAR-2008,GSSAMERICA,GSS America Infotech Limi,A K G SECURITIES AND CONSULTANCY LTD.,SELL,70321,476.43,-
07-MAR-2008,GSSAMERICA,GSS America Infotech Limi,B K SHAH AND CO,SELL,372587,472.00,-
07-MAR-2008,GSSAMERICA,GSS America Infotech Limi,BHIMRAJ BOHRA,SELL,218691,472.94,-
07-MAR-2008,GSSAMERICA,GSS America Infotech Limi,CHOKHANI SECURITIES LTD,SELL,68003,475.49,-
07-MAR-2008,GSSAMERICA,GSS America Infotech Limi,CPR CAPITAL SERVICES LTD.,SELL,87973,481.66,-
07-MAR-2008,GSSAMERICA,GSS America Infotech Limi,DINESH MUNJAL,SELL,211981,471.63,-
07-MAR-2008,GSSAMERICA,GSS America Infotech Limi,HARBUX SINGH SIDHU,SELL,367724,473.03,-
07-MAR-2008,GSSAMERICA,GSS America Infotech Limi,JIGNESH SHAH,SELL,105242,484.28,-
07-MAR-2008,GSSAMERICA,GSS America Infotech Limi,JRK CONSULTANTS PVT LTD,SELL,25000,497.50,-
07-MAR-2008,GSSAMERICA,GSS America Infotech Limi,LATIN MANHARLAL SECURITIES PVT. LTD.,SELL,146433,471.94,-
07-MAR-2008,GSSAMERICA,GSS America Infotech Limi,MAHAVIR KUMAR RANKA,SELL,85000,504.36,-
07-MAR-2008,GSSAMERICA,GSS America Infotech Limi,MALLINATH SHARES & STOCK PVT LTD,SELL,80531,472.19,-
07-MAR-2008,GSSAMERICA,GSS America Infotech Limi,MANISH VRAJLAL SARVAIYA,SELL,67148,471.46,-
07-MAR-2008,GSSAMERICA,GSS America Infotech Limi,NAGARJUN VALLURIPALLI,SELL,110668,440.08,-
07-MAR-2008,GSSAMERICA,GSS America Infotech Limi,PCS SECURITIES LTD,SELL,90000,431.02,-
07-MAR-2008,GSSAMERICA,GSS America Infotech Limi,PRASHANT JAYANTILAL PATEL,SELL,435547,475.91,-
07-MAR-2008,GSSAMERICA,GSS America Infotech Limi,R.M. SHARE TRADING PVT LTD,SELL,207998,468.68,-
07-MAR-2008,GSSAMERICA,GSS America Infotech Limi,RADHIKA DIPAN MEHTA,SELL,101321,463.59,-
07-MAR-2008,GSSAMERICA,GSS America Infotech Limi,RUPESH KIRIT DALAL,SELL,84090,478.12,-
07-MAR-2008,GSSAMERICA,GSS America Infotech Limi,SANJAY BHANWARLAL JAIN,SELL,180307,467.22,-
07-MAR-2008,GSSAMERICA,GSS America Infotech Limi,SHAH MADHUBEN AMRUTLAL,SELL,85916,492.56,-
07-MAR-2008,GSSAMERICA,GSS America Infotech Limi,SMB CAPITAL MARKET PVT. LTD.,SELL,69884,460.62,-
07-MAR-2008,GSSAMERICA,GSS America Infotech Limi,TRANSGLOBAL SECURITIES LTD.,SELL,199649,482.83,-
07-MAR-2008,NITCO,Nitco Tiles Limited,PRASAM TRADING & FINANCE P. LTD.,SELL,1633,265.00,-
07-MAR-2008,PHILIPCARB,Phillips Carbon Black,PACIFIC CORPORATE SERVICES LTD,SELL,152484,153.00,-
07-MAR-2008,SANGAMIND,Sangam (India) Ltd.,PACIFIC CORPORATE SERVICES LTD,SELL,228743,30.75,-
07-MAR-2008,TULSI,Tulsi Extrusions Limited,ADROIT FINANCIAL SERVICES PVT LTD,SELL,207714,82.62,-
07-MAR-2008,TULSI,Tulsi Extrusions Limited,AMBIT SECURITIES BROKING PVT. LTD.,SELL,86720,81.71,-
07-MAR-2008,TULSI,Tulsi Extrusions Limited,CPR CAPITAL SERVICES LTD.,SELL,120232,81.14,-
07-MAR-2008,TULSI,Tulsi Extrusions Limited,NISSAR BROTHERS,SELL,62915,80.69,-
07-MAR-2008,TULSI,Tulsi Extrusions Limited,PASHUPATI CAPITAL SERVICES PVT. LTD.,SELL,114789,81.13,-
07-MAR-2008,TULSI,Tulsi Extrusions Limited,RAJEEV GUPTA,SELL,113095,81.99,-
07-MAR-2008,TULSI,Tulsi Extrusions Limited,RAVI KUMAR,SELL,65311,84.23,-
07-MAR-2008,TULSI,Tulsi Extrusions Limited,TRANSGLOBAL SECURITIES LTD.,SELL,118525,83.84,-

Insurance Party Over - Warren Buffet

"It's a certainty that insurance-industry profit margins, including ours, will fall significantly in 2008," Buffet wrote in an annual letter to shareholders. Read in detail all he has to say about his worst deals, his good deals, his currency position and of course his admission that he has been wrong several times in the past.

Following are extracts from his letter to shareholders:

New ways to lose money

Our gain in net worth during 2007 was $12.3 billion, which increased the per-share book value of both our Class A and Class B stock by 11%. Over the last 43 years (that is, since present management took over) book value has grown from $19 to $78,008, a rate of 21.1% compounded annually. Overall, our 76 operating businesses did well last year. The few that had problems were primarily those linked to housing, among them our brick, carpet and real estate brokerage operations. Their setbacks are minor and temporary. Our competitive position in these businesses remains strong, and we have firstclass CEOs who run them right, in good times or bad.

Some major financial institutions have, however, experienced staggering problems because they engaged in the "weakened lending practices" I described in last year's letter. John Stumpf, CEO of Wells Fargo, aptly dissected the recent behavior of many lenders: "It is interesting that the industry has invented new ways to lose money when the old ways seemed to work just fine."

You may recall a 2003 Silicon Valley bumper sticker that implored, "Please, God, Just One More Bubble." Unfortunately, this wish was promptly granted, as just about all Americans came to believe that house prices would forever rise. That conviction made a borrower's income and cash equity seem unimportant to lenders, who shoveled out money, confident that HPA – house price appreciation – would cure all problems. Today, our country is experiencing widespread pain because of that erroneous belief.

As house prices fall, a huge amount of financial folly is being exposed. You only learn who has been swimming naked when the tide goes out – and what we are witnessing at some of our largest financial institutions is an ugly sight.

The party is over

Finally, our insurance business – the cornerstone of Berkshire – had an excellent year. Part of the reason is that we have the best collection of insurance managers in the business – more about them later. But we also were very lucky in 2007, the second year in a row free of major insured catastrophes.

That party is over. It's a certainty that insurance-industry profit margins, including ours, will fall significantly in 2008. Prices are down, and exposures inexorably rise. Even if the U.S. has its third consecutive catastrophe-light year, industry profit margins will probably shrink by four percentage points or so. If the winds roar or the earth trembles, results could be far worse. So be prepared for lower insurance earnings during the next few years.

For the entire 42 years, our compounded annual gain in per-share investments was 27.1%. But the trend has been downward as we increasingly used our available funds to buy operating businesses. For the entire period, the compounded annual gain was 17.8%, with gains accelerating as our focus shifted.

Berkshire's past record can't be duplicated or even approached. Our base of assets and earnings is now far too large for us to make outsized gains in the future. Though we can't come close to duplicating the past, we will do our best to make sure the future is not disappointing.

Businesses – The Great, the Good and the Gruesome

Let's take a look at what kind of businesses turn us on. And while we're at it, let's also discuss what we wish to avoid. Charlie and I look for companies that have a) a business we understand; b) favorable long-term economics; c) able and trustworthy management; and d) a sensible price tag. We like to buy the whole business or, if management is our partner, at least 80%. When control-type purchases of quality aren't available, though, we are also happy to simply buy small portions of great businesses by way of stockmarket purchases. It's better to have a part interest in the Hope Diamond than to own all of a rhinestone.

A truly great business must have an enduring "moat" that protects excellent returns on invested capital. The dynamics of capitalism guarantee that competitors will repeatedly assault any business "castle" that is earning high returns. Therefore a formidable barrier such as a company's being the lowcost producer (GEICO, Costco) or possessing a powerful world-wide brand (Coca-Cola, Gillette, American Express) is essential for sustained success. Business history is filled with "Roman Candles," companies whose moats proved illusory and were soon crossed. Our criterion of "enduring" causes us to rule out companies in industries prone to rapid and continuous change. Though capitalism's "creative destruction" is highly beneficial for society, it precludes investment certainty. A moat that must be continuously rebuilt will eventually be no moat at all. Additionally, this criterion eliminates the business whose success depends on having a great manager.

Be fruitful and multiply

Let's look at the prototype of a dream business, our own See's Candy. The boxed-chocolates industry in which it operates is unexciting: Per-capita consumption in the U.S. is extremely low and doesn't grow. Many once-important brands have disappeared, and only three companies have earned more than token profits over the last forty years. Indeed, I believe that See's, though it obtains the bulk of its revenues from only a few states, accounts for nearly half of the entire industry's earnings. At See's, annual sales were 16 million pounds of candy when Blue Chip Stamps purchased the company in 1972. (Charlie and I controlled Blue Chip at the time and later merged it into Berkshire.) Last year See's sold 31 million pounds, a growth rate of only 2% annually. Yet its durable competitive advantage, built by the See's family over a 50-year period, and strengthened subsequently by Chuck Huggins and Brad Kinstler, has produced extraordinary results for Berkshire. We bought See's for $25 million when its sales were $30 million and pre-tax earnings were less than $5 million. The capital then required to conduct the business was $8 million. (Modest seasonal debt was also needed for a few months each year.) Consequently, the company was earning 60% pre-tax on invested capital. Two factors helped to minimize the funds required for operations. First, the product was sold for cash, and that eliminated accounts receivable. Second, the production and distribution cycle was short, which minimized inventories.

Last year See's sales were $383 million, and pre-tax profits were $82 million. The capital now required to run the business is $40 million. This means we have had to reinvest only $32 million since 1972 to handle the modest physical growth – and somewhat immodest financial growth – of the business. In the meantime pre-tax earnings have totaled $1.35 billion. All of that, except for the $32 million, has been sent to Berkshire (or, in the early years, to Blue Chip). After paying corporate taxes on the profits, we have used the rest to buy other attractive businesses. Just as Adam and Eve kick-started an activity that led to six billion humans, See's has given birth to multiple new streams of cash for us. (The biblical command to "be fruitful and multiply" is one we take seriously at Berkshire.)

Confession time….Unforced errors

To begin with, I almost blew the See's purchase. The seller was asking $30 million, and I was adamant about not going above $25 million. Fortunately, he caved. Otherwise I would have balked, and that $1.35 billion would have gone to somebody else. About the time of the See's purchase, Tom Murphy, then running Capital Cities Broadcasting, called and offered me the Dallas-Fort Worth NBC station for $35 million. The station came with the Fort Worth paper that Capital Cities was buying, and under the "cross-ownership" rules Murph had to divest it. I knew that TV stations were See's-like businesses that required virtually no capital investment and had excellent prospects for growth. They were simple to run and showered cash on their owners. Moreover, Murph, then as now, was a close friend, a man I admired as an extraordinary manager and outstanding human being. He knew the television business forward and backward and would not have called me unless he felt a purchase was certain to work. In effect Murph whispered "buy" into my ear. But I didn't listen.

In 2006, the station earned $73 million pre-tax, bringing its total earnings since I turned down the deal to at least $1 billion – almost all available to its owner for other purposes. Moreover, the property now has a capital value of about $800 million. Why did I say "no"? The only explanation is that my brain had gone on vacation and forgot to notify me. (My behavior resembled that of a politician Molly Ivins once described: "If his I.Q. was any lower, you would have to water him twice a day.")

Dexter…the worst deal so far!

Finally, I made an even worse mistake when I said "yes" to Dexter, a shoe business I bought in 1993 for $433 million in Berkshire stock (25,203 shares of A). What I had assessed as durable competitive advantage vanished within a few years. But that's just the beginning: By using Berkshire stock, I compounded this error hugely. That move made the cost to Berkshire shareholders not $400 million, but rather $3.5 billion. In essence, I gave away 1.6% of a wonderful business – one now valued at $220 billion – to buy a worthless business. To date, Dexter is the worst deal that I've made. But I'll make more mistakes in the future – you can bet on that. A line from Bobby Bare's country song explains what too often happens with acquisitions: "I've never gone to bed with an ugly woman, but I've sure woke up with a few."

Insurance

The best anecdote I've heard during the current presidential campaign came from Mitt Romney, who asked his wife, Ann, "When we were young, did you ever in your wildest dreams think I might be president?" To which she replied, "Honey, you weren't in my wildest dreams." When we first entered the property/casualty insurance business in 1967, my wildest dreams did not envision our current operation. To put it charitably, we were a slow starter. But things changed. This metamorphosis has been accomplished by some extraordinary managers.

No start-ups…Ways of measuring value

Overall, we are delighted by the business performance of our investees. In 2007, American Express, Coca-Cola and Procter & Gamble, three of our four largest holdings, increased per-share earnings by 12%, 14% and 14%. The fourth, Wells Fargo, had a small decline in earnings because of the popping of the real estate bubble. Nevertheless, I believe its intrinsic value increased, even if only by a minor amount. In the strange world department, note that American Express and Wells Fargo were both organized by Henry Wells and William Fargo, Amex in 1850 and Wells in 1852. P&G and Coke began business in 1837 and 1886 respectively. Start-ups are not our game. I should emphasize that we do not measure the progress of our investments by what their market prices do during any given year. Rather, we evaluate their performance by the two methods we apply to the businesses we own. The first test is improvement in earnings, with our making due allowance for industry conditions. The second test, more subjective, is whether their "moats" – a metaphor for the superiorities they possess that make life difficult for their competitors – have widened during the year. All of the "big four" scored positively on that test.

Petro China…selling at a worthy price

We made one large sale last year. In 2002 and 2003 Berkshire bought 1.3% of PetroChina for $488 million, a price that valued the entire business at about $37 billion. Charlie and I then felt that the company was worth about $100 billion. By 2007, two factors had materially increased its value: the price of oil had climbed significantly, and PetroChina's management had done a great job in building oil and gas reserves. In the second half of last year, the market value of the company rose to $275 billion, about what we thought it was worth compared to other giant oil companies. So we sold our holdings for $4 billion. A footnote: We paid the IRS tax of $1.2 billion on our PetroChina gain. This sum paid all costs of the U.S. government – defense, social security, you name it – for about four hours.

Dollar…no mystery!

The US dollar weakened further in 2007 against major currencies, and it's no mystery why: Americans like buying products made elsewhere more than the rest of the world likes buying products made in the U.S. Inevitably, that causes America to ship about $2 billion of IOUs and assets daily to the rest of the world. And over time, that puts pressure on the dollar. When the dollar falls, it both makes our products cheaper for foreigners to buy and their products more expensive for U.S. citizens. That's why a falling currency is supposed to cure a trade deficit. Indeed, the U.S. deficit has undoubtedly been tempered by the large drop in the dollar. But ponder this: In 2002 when the Euro averaged 94.6¢, our trade deficit with Germany (the fifth largest of our trading partners) was $36 billion, whereas in 2007, with the Euro averaging $1.37, our deficit with Germany was up to $45 billion. Similarly, the Canadian dollar averaged 64¢ in 2002 and 93¢ in 2007. Yet our trade deficit with Canada rose as well, from $50 billion in 2002 to $64 billion in 2007. So far, at least, a plunging dollar has not done much to bring our trade activity into balance. Our country's weakening currency is not the fault of OPEC, China, etc. Other developed countries rely on imported oil and compete against Chinese imports just as we do.

Brazil…the real thing!

At Berkshire we held only one direct currency position during 2007. That was in – hold your breath – the Brazilian real. Not long ago, swapping dollars for reals would have been unthinkable. After all, during the past century five versions of Brazilian currency have, in effect, turned into confetti. As has been true in many countries whose currencies have periodically withered and died, wealthy Brazilians sometimes stashed large sums in the U.S. to preserve their wealth. Our direct currency positions have yielded $2.3 billion of pre-tax profits over the past five years, and in addition we have profited by holding bonds of U.S. companies that are denominated in other currencies.

At Berkshire, we will attempt to further increase our stream of direct and indirect foreign earnings. Even if we are successful, however, our assets and earnings will always be concentrated in the U.S. Despite our country's many imperfections and unrelenting problems of one sort or another, America's rule of law, market-responsive economic system, and belief in meritocracy are almost certain to produce evergrowing prosperity for its citizens.

Succession...two sure

We have for some time been well-prepared for CEO succession because we have three outstanding internal candidates. The board knows exactly whom it would pick if I were to become unavailable, either because of death or diminishing abilities. And that would still leave the board with two backups. Last year I told you that we would also promptly complete a succession plan for the investment job at Berkshire, and we have indeed now identified four candidates who could succeed me in managing investments. All manage substantial sums currently, and all have indicated a strong interest in coming to Berkshire if called. The board knows the strengths of the four and would expect to hire one or more if the need arises. The candidates are young to middle-aged, well-to-do to rich, and all wish to work for Berkshire for reasons that go beyond compensation. (I've reluctantly discarded the notion of my continuing to manage the portfolio after my death – abandoning my hope to give new meaning to the term "thinking outside the box.")

Matching market value

During the 20th Century, the Dow advanced from 66 to 11,497. This gain, though it appears huge, shrinks to 5.3% when compounded annually. An investor who owned the Dow throughout the century would also have received generous dividends for much of the period, but only about 2% or so in the final years. It was a wonderful century.

Think now about this century. For investors to merely match that 5.3% market-value gain, the Dow – recently below 13,000 – would need to close at about 2,000,000 on December 31, 2099. We are now eight years into this century, and we have racked up less than 2,000 of the 1,988,000 Dow points the market needed to travel in this hundred years to equal the 5.3% of the last. It's amusing that commentators regularly hyperventilate at the prospect of the Dow crossing an even number of thousands, such as 14,000 or 15,000. If they keep reacting that way, a 5.3% annual gain for the century will mean they experience at least 1,986 seizures during the next 92 years. While anything is possible, does anyone really believe this is the most likely outcome?

Dividends continue to run about 2%. Even if stocks were to average the 5.3% annual appreciation of the 1900s, the equity portion of plan assets – allowing for expenses of .5% – would produce no more than 7% or so. And .5% may well understate costs, given the presence of layers of consultants and highpriced managers ("helpers").

Naturally, everyone expects to be above average. And those helpers – bless their hearts – will certainly encourage their clients in this belief. But, as a class, the helper-aided group must be below average.

The reason is simple: 1) Investors, overall, will necessarily earn an average return, minus costs they incur; 2) Passive and index investors, through their very inactivity, will earn that average minus costs that are very low; 3) With that group earning average returns, so must the remaining group – the active investors. But this group will incur high transaction, management, and advisory costs. Therefore, the active investors will have their returns diminished by a far greater percentage than will their inactive brethren. That means that the passive group – the "know-nothings" – must win.

I should mention that people who expect to earn 10% annually from equities during this century – envisioning that 2% of that will come from dividends and 8% from price appreciation – are implicitly forecasting a level of about 24,000,000 on the Dow by 2100. If your adviser talks to you about double digit returns from equities, explain this math to him – not that it will faze him. Many helpers are apparently direct descendants of the queen in Alice in Wonderland, who said: "Why, sometimes I've believed as many as six impossible things before breakfast." Beware the glib helper who fills your head with fantasies while he fills his pockets with fees.

Pension puzzle:

Some companies have pension plans in Europe as well as in the U.S. and, in their accounting, almost all assume that the U.S. plans will earn more than the non-U.S. plans. This discrepancy is puzzling: Why should these companies not put their U.S. managers in charge of the non-U.S. pension assets and let them work their magic on these assets as well? I've never seen this puzzle explained. But the auditors and actuaries who are charged with vetting the return assumptions seem to have no problem with it.

What is no puzzle, however, is why CEOs opt for a high investment assumption: It lets them report higher earnings. And if they are wrong, as I believe they are, the chickens won't come home to roost until long after they retire.

After decades of pushing the envelope – or worse – in its attempt to report the highest number possible for current earnings, Corporate America should ease up. It should listen to my partner, Charlie: "If you've hit three balls out of bounds to the left, aim a little to the right on the next swing."

Whatever pension-cost surprises are in store for shareholders down the road, these jolts will be surpassed many times over by those experienced by taxpayers.

Estimate is sure to be wrong!

Having laid out the failures of an "honor system" in American accounting, I need to point out that this is exactly the system existing at Berkshire for a truly huge balance-sheet item. In every report we make to you, we must guesstimate the loss reserves for our insurance units. If our estimate is wrong, it means that both our balance sheet and our earnings statement will be wrong. So naturally we do our best to make these guesses accurate. Nevertheless, in every report our estimate is sure to be wrong. At yearend 2007, we show an insurance liability of $56 billion that represents our guess as to what we will eventually pay for all loss events that occurred before yearend (except for about $3 billion of the reserve that has been discounted to present value). We know of many thousands of events and have put a dollar value on each that reflects what we believe we will pay, including the associated costs (such as attorney's fees) that we will incur in the payment process. In some cases, among them claims for certain serious injuries covered by worker's compensation, payments will be made for 50 years or more. We also include a large reserve for losses that occurred before yearend but that we have yet to hear about. Sometimes, the insured itself does not know that a loss has occurred. (Think of an embezzlement that remains undiscovered for years.) We sometimes hear about losses from policies that covered our insured many decades ago.

Rented suits...keep paying

A story I told you some years back illustrates our problem in accurately estimating our loss liability: A fellow was on an important business trip in Europe when his sister called to tell him that their dad had died. Her brother explained that he couldn't get back but said to spare nothing on the funeral, whose cost he would cover. When he returned, his sister told him that the service had been beautiful and presented him with bills totaling $8,000. He paid up but a month later received a bill from the mortuary for $10. He paid that, too – and still another $10 charge he received a month later. When a third $10 invoice was sent to him the following month, the perplexed man called his sister to ask what was going on. "Oh," she replied, "I forgot to tell you. We buried Dad in a rented suit."

At our insurance companies we have an unknown, but most certainly large, number of "rented suits" buried around the world. We try to estimate the bill for them accurately. In ten or twenty years, we will even be able to make a good guess as to how inaccurate our present guess is. But even that guess will be subject to surprises. I personally believe our stated reserves are adequate, but I've been wrong several times in the past.

Global Meltdown and India Subprime worries

Global equity markets tumbled yet again after a key manufacture sector gauge in the US tumbled to a five-year low and concern about the housing and credit market turmoil deepened. A series of economic reports released this week showed no signs of improvement in the US economy. As a result, the Dow Jones dropped 4.3% while the Nasdaq slid 4.8% (excluding Friday's session). In Asia, the Nikkei in Tokyo lost 6% and the Hang Seng slumped 7.5%. The FTSE in London was down 3.1% while the Bovespa in Brazil did relatively better, losing just 0.8% (till Friday). Markets also tanked in India, with the BSE Sensex plunging 9% and the NSE Nifty dived 8.7%.

Citigroup shares tumbled to their lowest level in more than nine years after Merrill Lynch slashed its full-year earnings forecast, citing billions of dollars in subprime-related writedowns and other problems. Citigroup also said it will reduce its mortgage assets by US$45bn over the next 12 months. JP Morgan Chase stated that Swiss bank UBS may have sold its 25 billion Swiss franc (US$24.1bn) prime Alt-A portfolio in a fire sale. JP Morgan also increased its estimate for 2008 write-downs at UBS to 18.5 billion francs from 15 billion francs. Separately, Merrill Lynch also raised its estimate for additional charges for UBS.

Carlyle Capital Corp., the listed credit fund of the private-equity firm Carlyle Group, said it missed margin calls totaling US$37mn from four repo financing counterparties and has received a notice of default from one counterparty. The Amsterdam-listed fund said some of its residential mortgage-backed securities have already been liquidated by lenders and it's possible that additional securities may be liquidated after the latest margin calls. Thornburg Mortgage plunged on bankruptcy fears after the residential mortgage lender said it had failed to meet a US$28mn margin call and is now in default on US$320mn in financing.

The problems for bond insurers such as Ambac and MBIA continued to weigh on investors' mind. The companies need to raise enough capital to maintain their top-tier credit ratings, which will enable them to generate new business. Ambac raised US$1.5bn by selling stock and convertible bonds. If the bond insurers lose their ratings, that could spark another wave of multi-billion writedowns at big global banks like Citigroup and UBS. Markets were also bracing for Friday's US jobs report, which could provide critical signals about the health of the world's biggest economy. The report might also help the Federal Reserve make up its mind on the next move on interest rates later this month.

Shattering the false sense of security that Indian banks are not affected by the subprime mortgage crisis in the US, Minister of State for Finance Pawan Kumar Bansal said that ICICI Bank has suffered a mark-to-market loss of US$264.34mn. This loss is on account of its exposure to credit derivatives and investments as on January 31, Bansal said. The news took the market and analysts by surprise, as Indian banks are believed to be relatively insulated from the losses arising from the housing sector mess in the US. ICICI Bank led other bank shares down on the news.

However, ICICI Bank's joint MD Chanda Kochhar said, "We don't have any direct exposure to subprime. It's not technically a subprime loss." Bansal too added that there was no sign of large-scale credit losses among Indian banks. "So far, no specific instance of significant losses suffered by large financial institutions in India, especially from subprime mortgages in the US, has been noticed," he told the parliament. The figure stated by the minister would be accurate only if the bank sold its securities, which it did not intend to do at present, Kochhar said. Asked about the impact on the bank's profit, she said: "It would be a single-digit number."

Kochhar said ICICI Bank directly held securities with a face value of US$1.6bn, and a subsidiary held securities worth US$0.5bn. "The face value continues to remain the same because there is no default and everybody is paying as per schedule," she said. These securities had a payment schedule of four to four-and-a-half years. "When we recoup it over a four-year period, the benefit will come back to the profit-and-loss account." The bank has suffered only because of the interest rates, Kochhar said. "In general, interest rates have widened in the global economy, and since this is a portfolio of securities you have to mark this to the global interest rates as they move globally. That is the indirect impact," she said.

ICICI Bank has already made provisions for US $90mn and would provide for an additional US $70mn, with US $20mn for subsidiaries included in both sums, Kochhar said. The rest will be set off against the bank's net worth, she added. The bank claimed there is no loss on account of subprime exposure, but the overseas loans given to Indian corporate overseas from the UK and Canada subsidiaries were held as investments as credit derivatives or credit link notes. These have lost market values in the past couple of months because the credit spreads have increased over the past few months.

Market to track global equities

The market might be closely watching the cues from the global markets as fears of more credit-related losses in the global financial sector resurfaced. An expected cut in interest rate by US Federal Reserve at its meeting on 18 March 2008 may provide some support to the markets.

Fed Chairman Ben Bernanke signaled a readiness to cut interest rates again to prevent further damage to the weak US economy, even as he took note of rising inflation risks. Delivering the Fed's semiannual report on the economy to Congress, Bernanke made clear the central bank was worried a deepening housing slump, softening jobs market and tighter credit could dim an already bleak economic outlook.

India's central bank sees the government's 2008/09 budget presented on 29 February 2008 as being in line with growth and price stability objectives, adding it will help to implement a farm debt relief scheme. Governor Yaga Venugopal Reddy will work closely with the government and banks to ensure the farm loan waiver scheme helps farmers, improves credit flow and serves the interests of the banking system, the central bank said in a statement after its board meeting. The budget, announced last Friday, included duty cuts and a hike in the income tax threshold to stimulate consumer demand as well as a $15 billion debt relief scheme for farmers.

With rising inflation Reserve Bank of India (RBI) may not consider to provide liquidity in the market at this point of time by slashing rates specially when markets are reeling under global pressure. India's wholesale price index rose 5.02 % in the 12 months to 23 February 2008, higher than the previous week's rise of 4.89 %, government data showed on Friday. The annual inflation rate was 6.20 % during the corresponding week of the previous year.

The Finance Minister P Chidambaram proposed hike in the short-term capital gains tax on sale of shares to 15% from 10% in Union Budget 2008-09 which he presented to the parliament on Friday, 29 February 2008. The finance minister said securities transaction tax (STT) paid by the taxpayer will be treated like any other deductible expenditure against business income. According to market men the move will affect the liquidity and volumes on stock markets in the short term.

Higher crude oil prices is also a matter of concern. Crude oil prices continued their surge on Thursday 6 March 2008 hitting a new record high of nearly $106 a barrel.

Foreign institutional investors (FIIs) were net buyers of shares worth Rs 1,733.30 crore in the month of February 2008. They were net sellers of shares worth Rs 12,702.90 crore in calendar 2008, till 4 March 2008. Mutual funds bought shares worth Rs 513.90 crore in the month of February 2008.

Budget blues, global sell-off rattle bourses

Stock prices were battered last week tracking weak global markets which in turn were hit by US recession worries. The sentiment was also hit by a hike in short term capital gains tax and alternation of tax treatment of securities transaction in Union Budget 2008-09 announced on Friday, 29 February 2008. Sensex fell in 3 out of 4 trading sessions of the week. The market remained closed on Thursday, 6 March 2008, on account of Mahashivratri.

The BSE Sensex slumped 1,603.20 points or 9.12% to 15,975.52 in the week ended Friday, 7 March 2008. S&P CNX Nifty declined 451.9 points or 8.65% to 4,771.60 in the week.

The BSE Mid-Cap index fell 876 points or 11.4% to 6,804.39 in the week. The BSE Small-Cap index slumped 1,218.95 points or 12.66% to 8,409.18.

Foreign institutional investors (FIIs) were net buyers of shares worth Rs 1,733.30 crore in the month of February 2008. They were net sellers of shares worth Rs 12,702.90 crore in calendar 2008, till 4 March 2008. Mutual funds bought shares worth Rs 513.90 crore in the month of February 2008.

The key benchmark indices witnessed an unabated selling pressure across sectors, mirroring weakness in the global stock markets as BSE Sensex tumbled 900.84 points or 5.12% to 16,677.88 on Monday, 3 January 2008, registering its second biggest single day point loss on a closing basis. It was also Sensex's second biggest single day fall in percentage terms. 26 out of 30 stocks from the Sensex pack were in the red. Even the mid-and small-cap stocks tumbled, as reflected in the poor market breadth. Banking, power and realty stocks plummeted. A global sell-off was triggered after weak US data on Friday, 29 February 2008, and a record loss of insurer American International Group Inc. fuelled worries that there are more write-downs to come.

The key indices drifted lower for a third consecutive session hit by Budget blues as Sensex lost 337.99 points or 2.03% at 16,339.89 on Tuesday, 4 March 2008. Banking and realty stocks were worst hit in the trade. Auto stocks bucked the bearish trend. 19 out of 30 stocks from the Sensex pack were in the red. The market breadth was extremely weak.

Snapping a four-day losing streak, the key benchmark indices surged in late trade as BSE Sensex ended rising 202.19 points or 1.24% at 16,542.08 on Wednesday, 5 March 2008. Volatility was high. Index heavyweight Reliance Industries witnessed an upward momentum at the fag end of the trade. Software stocks were the flavor of the day. Banking, realty and power stocks dropped. The market breadth was weak. European markets, which opened after Indian market, were in the green. Asian markets, which open before the Indian markets, were mixed.

A surge in inflation, weak global cues and political concerns dampened the investor sentiments as share prices declined sharply, with Sensex declining 566.56 points or 3.42% to 15,975.52 on Friday, 7 March 2008. All the sectoral indices on BSE were in the red. Reliance Energy was the biggest loser from the Sensex pack. Banking stocks tumbled. European markets, which opened after Indian market, were weak. Mid-caps and small-caps were the worst affected as reflected in the extremely weak market breadth.

India's second largest power utility by revenue Reliance Energy plunged 18.99% to Rs 1270. The company's board on Wednesday, 5 March 2008 approved buy back of shares worth up to Rs 2,000 crore at a maximum price of Rs 1600 per share

India's largest oil refiner by market capitalisation Reliance Industries fell 8.52% to Rs 2,248.80 . Reports on 5 March 2008 suggested that its unit Reliance Retail has signed a joint venture with Pearle Europe for the launch of a chain of optical stores in India. Pearle Europe, a subsidiary of HAL Investments, operates 2,200 optical retail stores in 21 countries across Europe and the Middle East.

India's largest IT exporter by sales Tata Consultancy Services fell 3.15% to Rs 846.75. The company announced on 5 March 2008 the launch of its strategic business unit to meet the technology needs of small and medium businesses.

India's largest car maker by sales Maruti Suzuki India rose 7.6% to Rs 933,15. Reacting to the cut in excise duty, the company after market hours on Friday, 29 February 2008 announced cut in prices of some models. Maruti cut prices of all its small car models, ranging from Rs 6,500 on Maruti 800 to Rs 18,030 on the Swift diesel model.

Maruti Suzuki India's total vehicles sales rose 1.30% to 63,822 units in February 2008 over February 2007. The company's domestic sales were almost flat at 59,311 while export went up by 15% at 4,511 in February 2008 over February 2007. Sales of Maruti 800 model slipped 3.5% to 5,747 in February 2008 over February 2007.

India's largest power generation firm by sales National Thermal Power Corporation declined 8.5% to Rs 184.80. Reports on 5 March 2008 suggested it had tied up with Indonesian company Sugico Graha for coastal ultra mega power projects for which government may invite bids in future.

India's largest engineering firm by revenue Larsen & Toubro fell 15.18% to Rs 2,988.20. The company announced on 5 March 2008 it bagged three orders for transmission line projects totaling Rs 458 crore.

India's largest tractormaker by sales Mahindra & Mahindra dropped 4.01% to Rs 665.05 . The company said on 5 March 2008 it has successfully closed acquisition of an Italian based auto designing company G.R.Grafica Ricerca Design S.r.l through its subsidiary.

India's largest private sector bank by net profit ICICI Bank declined 18.17% to Rs 892.75 . The bank clarified that it has no material direct or indirect exposure to US sub-prime credit. ICICI Bank clarified to media reports which stated that the bank has lost $264 million till 31 January 2008 due to subprime crisis. The bank said there will be no significant deterioration in actual credit quality of the underlying investment. The bank said that due to widening of credit spreads in the international markets, it suffered negative mark-to-market impact on the credit derivatives and fixed income investment portfolios and overseas banking subsidiaries.

India's second largest motorcyclemaker by sales Bajaj Auto declined 17.15% to Rs 1,889.15. The company has reduced the prices of two-wheelers following the government cut excise duty on two-wheelers to 12% from 16% in Union Budget 2008-09.

India's biggest power equipment maker by sales Bharat Heavy Electricals lost 11.23% to Rs 2,025.75. The company won two large orders totalling 2,968 crore.

Infosys (down 7.37% to Rs 1,432.80), Wipro (down 4.51% to Rs 415.05), ONGC (down 5.65% to Rs 955.20) were other losers from Sensex pack.

National Stock Exchange (NSE) said trading in long term options on its main 50-share index, the S&P CNX Nifty began from Monday, 3 March 2008. The long term options contracts are now expected to deepen the market further, the NSE said in a statement issued late on Monday. Before the introduction of these contracts, options had a maximum tenure of 3 months. The exchange said active trading was observed in the three quarterly expiries of June 2008, September 2008 and December 2008. Total traded turnover for Monday in the long term options was Rs 150 crore at 5,223 contracts.

Finance Minister P Chidambaram said on 5 March 2008, foreign institutional investors (FIIs) were not behind the recent volatility in stock markets. The ups and downs in the stock markets depend on the changing perceptions of investors - domestic and overseas, retail and institutional - about the economy, the sector and the company, he said while replying to supplementaries during Question Hour in the Rajya Sabha.

Inflation in still a threat because of high food prices, the Chidambaram said on Monday, 3 March 2008. Inflation based on wholesale prices hit 4.89% in mid-February, 2008, the highest in more than eight months and just below the central bank's target of 5% for the fiscal year ending 31 March 2008.

India's exports rose 20.5% in January 2008 from a year earlier to $13.14 billion, data released by the government showed. Imports rose an annual 63.6% to $22.5 billion in January 2008. The trade deficit for January 2008 widened to $9.36 billion, compared with $2.85 billion in the same month a year earlier. The trade deficit was $67.41 billion in the ten months of the current fiscal year.

The basket of crude oil that Indian refiners buy hit a fresh all-time high of $97.16 a barrel on Friday, 29 February 2008. This was the highest for the current fiscal. The Indian crude oil basket averaged $92.37 a barrel in February 2008 against $89.52 in January 2008. On Friday, the price of New York crude touched a fresh high of $103.05 a barrel. The soaring global crude prices have an impact on the profitability of the domestic oil marketing companies (OMCs), as they sell petroleum products below the cost price.

Finance Minister P Chidambaram said he expects the economy to grow 8.8% plus in the 2008/09 fiscal year. Chidambaram said an investment boom in was continuing but a sluggish farm sector was hurting overall growth.

Prime minister Manmohan Singh on 5 March 2008 said the proposed Rs 60000 crore farm loan waiver scheme announced in Union Budget 2008-09, would provide relief to farmers and clean up balance sheets of banks. The debt relief scheme will be completed by June 2008, Singh said in parliament. Singh also said the government was seeking a broadest possible consensus on Indo-US nuclear deal.

Securities and Exchange Board of India (Sebi) slashed fees by 50-80% on filing of offer document for public issues, rights issues and mutual funds. The rationalisation of fee structure will be effective 1 April, 2008. The decision was taken a Sebi board meet.

Finance Minister (FM) P Chidambaram said on Thursday, 6 March 2008, that the Rs 60000-crore farm loan waiver package announced in Union Budget 2008-09 will strengthen the banking sector. The banking sector will be compensated in a way that the banks will not be constrained at all, Chidambaram told reporters after a meeting of the board of the Reserve Bank of India (RBI) on Thursday 6 March 2008.

Inflation based on the wholesale price index rose 5.02% in the 12 months to 23 February 2008, higher than the previous week's rise of 4.89%, government data showed on Friday, 7 March 2008. The annual inflation rate was 6.20% during the corresponding week of the previous year.

Sensex plummets 567 points

The southbound journey continued for another session as a slump in global indices and concerns of recession in the USA made investors nervous, triggering a major sell-off. The Sensex resumed on a bearish note at 16,212, down 330 points, tracking weak global cues and accumulated more losses by afternoon as selling intensified amid reality, power, banking and capital goods stocks. The Sensex plummeted over 852 points to touch the day's low of 15,690. However, buying in late trades helped the Sensex recover some losses and close the session down 567 points at 15,976. The broad based Nifty closed at 4,772, down 150 points.

All the sectoral indices were mauled and declined by 2-6% each. The BSE Realty index was the major loser and crashed by 6.64% followed by the BSE Power index (down 5.57%), the BSE Bankex index (down 4.92%), the BSE CG index (down 4.52%) and the BSE Auto index (down 4.44%). The BSE second-rung benchmark indices the BSE mid-cap index and the BSE small-cap index tanked by over 4% each.

The breadth of the market was heavily skewed in favor of losers. Of the 2,709 stocks traded on the BSE, 2,382 stocks declined, 297 stocks advanced and 30 stocks ended unchanged. Except Reliance Communications, HUL and Bharti Airtel all the stocks in the Sensex ended at lower levels. Among the major losers Reliance Energy crashed by 12.98% at Rs1,270, Bajaj Auto plunged by 11.23% at Rs1,889, ICICI Bank slumped by 7.04% at Rs893, L&T crumbled by 6.64% at Rs2,988, Hindalco plummeted by 5.79% at Rs196, NTPC dropped 5.06% at Rs185, HDFC shed 4.57% at Rs2,629 and M&M tanked 4.52% at Rs665. However, Reliance Communications bucked the trend and gained 2.99% at Rs543, while HUL and Bharti Airtel gained marginally.

Over 2.19 crore RNRL shares changed hands on the BSE followed by GSS America (1.39 crore shares), Ispat Industries (1.24 crore shares), Reliance Petroleum (1.05 crore shares) and Tata Teleservices (88 lakh shares).

Valuewise, GSS America registered a turnover of Rs657 crore on the BSE followed by Reliance Industries (Rs286 crore), RNRL (Rs239 crore), Reliance Communications (Rs230 crore) and Reliance Energy (Rs229 crore).

Sensex at 6-month closing low

A surge in inflation, weak global cues and political concerns dampened the investor sentiments today as share prices declined sharply. All the sectoral indices on BSE were in the red. Reliance Energy was the biggest loser from the Sensex pack. Banking stocks tumbled. European markets, which opened after Indian market, were weak.

The 30-share BSE Sensex plunged 566.56 points or 3.42% at 15,975.52, its lowest closing since 18 September 2007. The index had shaved off 852.16 points at the session's low of 15,689.92, hit in afternoon trade.

The broader CNX S&P Nifty was down 149.80 points or 3.04% at 4771.60.

BSE clocked a turnover of Rs 5599 crore as against Rs 5,363.43 crore on Wednesday, 5 March 2008.

Mid-caps and small-caps were the worst affected as reflected in the extremely weak market breadth. The market was closed on Thursday, 6 March 2008 on account of Mahashivratri.

Inflation based on the wholesale price index rose 5.02% in the 12 months to 23 February 2008, higher than the previous week's rise of 4.89%, government data showed on Friday, 7 March 2008. The annual inflation rate was 6.20% during the corresponding week of the previous year.

Asian markets, which open before the Indian market, tumbled as investors sold riskier assets due to dented confidence in the health of the US economy. US stocks tumbled on Thursday after a series of fresh jolts to credit markets and lackluster retail sales compounded worries the economy is near recession. The main catalyst for the move was news that Thornburg Mortgage Inc, a mortgage lender, was in default after failing to meet creditor demands for more upfront cash.

Adding to concerns about the financial sector, a Dutch-listed affiliate of private equity firm Carlyle Group said it has not been able to meet some margin calls and has received a notice of default. A report showing that US mortgage foreclosures hit a record high in late 2007 added to the gloom.

Besides the setback in Asian markets, concerns on the political front also weighed on the market after the Communist Party of India-Marxists (CPM) on Thursday, 6 March 2008, renewed its threat on the United Progressive Alliance (UPA) government saying that the ruling coalition's future depended on how it took the call on pursuing the Indo-US nuclear deal.

CPM General Secretary Prakash Karat wrote to External Affairs Minister Pranab Mukherjee asking him to convene a meeting of the Left-UPA committee on the deal before 15 March 2008 to discuss the contentious issue. The future of the government depends on the decision they will take, an article in CPM's mouthpiece, People's Democracy, said.

Meanwhile, Foreign minister Pranab Mukherjee told a news weekly that a minority government cannot sign a major international agreement because of the risks involved. Calling it a compulsion, he said a minority government "need not and should not" sign a major agreement like this.

The BSE Mid-Cap index was down 4.35% at 6,804.39, while the BSE Small-Cap was down 4.55% at 8,409.18. Both these indices underperformed the Sensex.

The market breadth was extremely weak: on BSE, 295 advanced as compared to 2384 that declined. 31 stocks remained unchanged.

Nifty March 2008 futures were at 4706, a discount of 65.60 points as compared to spot closing of 4771.60.

The NSE's futures & options (F&O) segment turnover was Rs 38712.25 crore, which was higher than Rs 33581.65 crore on Wednesday, 5 March 2008.

India's largest private sector bank by assets ICICI Bank slipped 7.04% to Rs 892.75. Reports on Tuesday suggested that ICICI has taken a hit of $264.34 million through its exposure to US subprime home loans market. However, ICICI Bank's Joint Managing Director Chanda Kochhar clarified that ICICI Bank may have to provide for another $50 million of investment losses in this quarter on top of $70 million already provided for in Q3 December 2007. The write off will be due to its investments being marked to market rather than provisioning for a subprime loss as many large international banks have done.

India's largest private sector firm by market capitalization and oil refiner Reliance Industries (RIL) lost 1.92% to Rs 2248.80.

Among the other Sensex losers were Reliance Energy (down 12.98% at Rs 1270), Bajaj Auto (down 11.23% at Rs 1889.15), Larsen & Toubro (down 6.64% at Rs 2988.20), Hindalco Industries (down 5.79% at Rs 196.05), NTPC (down 5.06% at Rs 184.80) and Housing Development Finance Corporation (down 4.57% at Rs 2629.35).

The BSE Bankex fell 4.92% at 8,477.46. It underperformed the Sensex. Yes Bank (down 11.46% at Rs 179.95), Kotak Mahindra Bank (down 7.06% at Rs 631), Union Bank of India (down 6.87% at Rs 142.40), Axis Bank (down 6.58% at Rs 840.10), Centurion Bank of Punjab (down 6.52% at Rs 41.55) and State Bank of India (down 0.67% at Rs 1,841.80), slipped.

The BSE Power index fell 5.57% at 3,155.16. It underperformed the Sensex. GVK Power & Infrastructure (down 10.89% at Rs 36), Torrent Power (down 10.35% at Rs 116.50), Reliance Power (down 10.11% at Rs 338.20), Areva T&D (down 6.13% at Rs 1,746.05), Tata Power (down 5.09% at Rs 1,136.30) and Power Grid Corporation of India (down 5.12% at Rs 99.10), edged lower.

The BSE Realty index fell 6.64% at 7,782.38. It underperformed the Sensex. Housing Development & Infrastructure (down 12.93% at Rs 618.45), Unitech (down 9.90% at Rs 281.60), Sobha Developers (down 8.91% at Rs 720.70), Puravankara Projects (down 7.60% at Rs 271.10), Indiabulls Real Estate (down 5.13% at Rs 515.75), Omaxe (down 4.15% at Rs 212.40) and DLF (down 3.47% at Rs 657.70), tumbled.

The BSE IT index fell 3.04% at 3,638.44. It outperformed the Sensex. Financial Technologies (down 6.65% at Rs 1,798.10), Wipro (down 3.64% at Rs 415.05), TCS (down 3.20% at Rs 846.75), Infosys Technologies (down 2.85% at Rs 1,432.80), and Satyam Computer (down 2.32% at Rs 423.75), slipped.

Seamec soared 4.01% to Rs 154.25 on bagging an order worth $19 million from Sime Darby Engineering Sdn. Bhd., Qatar for charter hire and diving operations for a period of six months with option for extension.

Punj Lloyd declined 7.06% to Rs 304.15 even as the company said its consortium has bagged an order worth $500 million from Petronas Carigali Sdn Bhd, Malaysia for Sabah Sarawak gas pipeline project.

Rolta India lost 2.20% to Rs 286.15, having recovered from session's low of Rs 275.35 after the company said foreign funds FMR LLC and FIL have acquired a further 0.13% stake in the company to raise their total holding to 5.04%.

GSS America Infotech clocked the highest turnover of Rs 657.72 crore on BSE. Reliance Industries (Rs 286.84 crore), Reliance Natural Resources (Rs 239.27 crore), Reliance Communication (Rs 230.46 crore) and Reliance Energy (Rs 229.38), were the other turnover toppers on BSE in that order.

Reliance Natural Resources recorded the highest volume of 2.19 crore shares on BSE. GSS America Infotech (1.39 crore shares), Ispat Industries (1.24 crore shares), Reliance Petroleum (1.05 crore shares) and Tata Teleservices (88 lakh shares), were the other volume toppers on BSE in that order.

In Europe, key indices in UK, Germany and France were down by 0.93% to 1.20%.

Asian markets were trading weak today, 7 March 2008. Key indices in Hong Kong, China, Singapore, Taiwan, Japan and South Korea were down by 1.39% to 3.60%.

US markets slumped to 18-month low on Thursday, 6 March 2008 as credit concerns rattled the market and lacklustre retail sales compounded worries about the economy. Home foreclosures climbing to record levels triggered further sell-off.

The Dow Jones industrial average plunged 214.60 points, or 1.75%, to 12,040.39. The Standard & Poor's 500 index slipped 29.36 points, or 2.20%, to 1,304.34, and the Nasdaq Composite index fell 52.31 points, or 2.30%, to 2,220.50.

Traders, domestic funds and some foreign institutional investors (FIIs) are likely to be hit by a hike in short term capital gains tax on sale of shares to 15% from 10%, which amounts to a massive 50% hike in the tax rate, in Union Budget 2008-09 announced on Friday, 29 February 2008.

The change in tax treatment of the Securities Transaction Tax (STT) in the budget, meanwhile, may impact arbitrage volumes on the bourses. STT will now be treated like any other deductible expenditure against business income for the assesse. This is against the current practice whereby an assesse gets 100% rebate for STT paid against the tax liability for the year. A fall in arbitrage will result in decline in liquidity on the bourses.

The Indian economy is currently witnessing a moderation in growth from a solid growth last year mainly due to sluggish consumption growth. Concerns also remain about possible spike in inflation. Analysts reckon that the finance minister (FM) has targeted these two areas in Union Budget 2008-09, which he unveiled on Friday, 29 February 2008.

FM seeks to revive consumption growth through higher disposable income in the hands of the middle class through remit in personal income tax slabs, which will result in substantial tax saving for individual tax payers. Analysts also reckon that the implementation of the Sixth Pay Commission, which will result in hike in salaries of government employees, will aid consumption growth. The Sixth Pay Commission was constituted in October 2006 to recommend comprehensive changes in salary structure of the government employees.

The measures aimed at inflation control include a major fillip to agricultural and irrigation sector to boost farm production, across the board cut in Cenvat to 14% from 16% and specific excise duty cuts.