Banks can reduce lending rates further: Subbarao

Reserve Bank of India Governor D Subbarao said Wednesday there was still scope for banks to reduce lending rates further.

"Given the current economic context, and given the policy initiatives of the RBI, there is considerable scope for banks to reduce lending rates," he said.

This is despite the fact that banks have already reduced lending rates by 50 basis points to 250 basis points which expanded bank credit, he added, while delivering the keynote address on India and the Global Financial Crisis: Four Questions, which was organised by the Karnataka chapter of the Confederation of Indian Industry here.

Subbarao also used the opportunity to point out that the several fiscal stimulus packages formulated by the government, together with monetary accommodation and counter-cyclical measures announced by the central bank, have started showing revival signs.

The RBI brought down the reverse repo rate by 575 basis points from 9 per cent to 3.25 per cent in the last few months, he said. With these measures in place, the RBI expected a growth rate of 6 per cent for 2009-10 and WPI-(wholesale price index) based inflation to reach 4 per cent by March 2010, he said.

"It is true that the Indian economy is slowing and exports have declined, services sector is decelerating, investment demand is on the decline and corporate margins are dented. However, growth moderation is steeper than thought earlier. The cyclical downturn was natural after four years of high growth. But, a growth of 6 per cent is certain," Subbarao said.

He added that India's economic recovery would be swifter and sharper than any other economy. But he was also quick to add that for India to recover the world has to recover. The challenge before the country is to minimise the pain of adjustment.

"We are not a demand-constrained economy. Once confidence is restored, there will be a faster recovery. However, we are a supply-constrained economy. Investment in manufacturing, infrastructure and services sectors needs to increase," the RBI governor added.

Subbarao also said that there were some challenges ahead for India on the path to revival too.

"We should support the drivers of aggregate demand, increase private investment, maintain credit flow and credit quality, restore fiscal consolidation, manage government programming and implement fiscal stimulus vigorously. There is indeed enough money in the system for private demand to pick up," he said.

Further, he said there were some positive features, such as normally functioning financial markets, the decline in inflation, comfortable foreign exchange reserves, a robust rural demand and social safety, an automatic stabiliser, which point to revival.

Scource : Business Standard

Mixed signals from Asia's animal spirits

Is Asia a bouncy, bouncy Tigger? Or, like the proverbial dead cat, are Asian tigers on a merely temporary upward trajectory? Certainly, Asia's tigers and, if you will bear with the zoological references, its canaries, too, have done better recently.

Stock markets have leapt, in some cases by as much as 50 per cent above the depths plumbed after Lehman Brothers vaporised. Net portfolio investment into the region is running at a pace not seen in five years. Yields on Asian bonds have narrowed.

More important than market froth -- who, these days, trusts what the markets have got to say, anyway? -- real economic data have been a bit brighter. That suggests, to those of sunny disposition at least, that the worst may already be over for several Asian economies.

The trends are still turbid. But look at the canaries, those export-reliant economies whose near-death rattles late last year pointed to a collapse in global demand. In the last quarter of 2008, Taiwan suffered export declines of 40 per cent. Shipments are still falling, but more moderately. Although April was bad, the previous period saw month-on-month improvements.

Some of the tigers, too, present a somewhat happier picture, although happiness, in this context, means an economy that is merely contracting rather than one in freefall.

South Korea, whose banks' ability to roll over dollar-denominated debt was being questioned only a few months ago, appears to have groped its way out of the woods. The won is stronger, partly thanks to currency-swap arrangements put in place by the US and Japan.

Seasonally adjusted exports rose sharply in April from March although, in dollar terms, they are still down a fifth against this time last year. South Korea even managed to grow a smidgen (0.1 per cent) in the first quarter of 2009 against the last quarter of 2008. Again, year on year, output is down -- by 4.3 per cent.

Some of the economic cushion is being provided by China. Official figures tell us the world's one remaining growth engine expanded at a rate of 6.1 per cent in the first quarter. That is a far cry from the 13 per cent sprint of 2007. But it will not look too grim if, as many believe, this turns out to be the low point.

Chinese growth is coming courtesy of a massive spending package, much of it on roads, bridges and airports, and thanks to "requests" to state- dominated banks to open the credit sluices. So successful has the command economy been in pumping out money that banks felt obliged to turn off the tap in April for fear of creating an asset bubble.

Once again, the omens are mixed. This week, we learnt that exports from China in April fell 23 per cent, undermining hopes that March's moderate 17 per cent drop marked a bottoming out. On the brighter side, fixed-asset urban investment has leapt 30 per cent from a year earlier. House prices may have stopped falling.

To answer the question posed at the start, some economies, including all-important China's, probably are scraping along the bottom. For many, things are likely to get better from here.

But before we get carried away, we should grasp how much has already been lost. Take Japan. Please. According to estimates from Nikko Citigroup, Japan's economy contracted 9.2 per cent in the year to this April, before beginning the mildest of recoveries. That is nearly a tenth of economic output.

To put it in context, during the misleadingly named "Lost Decade" output in fact grew by a cumulative 15 per cent.

Moreover, expectations of improvement remain largely predicated on that old standby: external demand. This week, a string of Japanese electronics companies, including Casio, Hitachi and Olympus, predicted that sales would recover from October.

They may be right. But Japanese hopes of better days ahead rest firmly on a global recovery. Richard Katz, writing in The Oriental Economist, says: "Until Japan figures out how to shift to domestic demand, a vibrant recovery will have to wait."

That goes for the rest of Asia too. Stephen Roach of Morgan Stanley scoffs at suggestions -- implied by recent market exuberance -- that Asia is braced for a vigorous recovery. The US consumer is sick, he says. Nations that cannot get a self-sustaining recovery going, including China, face the risk of relapse.

Peter Elston, Asia strategist at Aberdeen Asset Management, argues that the region will make the required transition to domestic-led growth, long and painful though the process may be. He expects economies to make progress, partly because they have so far to go.

According to Credit Suisse, for example, China boasts only 0.6km of rail track per citizen, versus 9.3km in (car-loving) America. Beijing can merrily keep spending on productive investments for years.

On the private side, building proper social security systems, a work of years if not decades, should gradually release pent-up consumer demand. Mr Elston says he has no idea what will happen in the next few quarters. But he is confident that in the longer term "Asia will be able to build its own growth [even] without a strong west".

Tigger would be ecstatic. Eeyore would say: "It's going to be a long haul."

Scource : The Financial Times

DLF promoters plan DAL listing in 18-24 months

Plan to use proceeds to halve realtor’s debt. After infusing Rs 3,860 crore into DLF Assets Ltd (DAL) by selling a 9.9 per cent stake in realty major DLF to institutional investors this morning, promoters K P Singh and family plan to list the real estate investment trust in the next 18 to 24 months, Rajiv Singh, vice-chairman of DLF Ltd, said.

The group also plans to nearly halve DLF's debt from Rs 13,958 crore to Rs 7,000 crore by the end of the current financial year by selling around Rs 5,500 crore worth of assets and raising Rs 2,000 crore from the DAL listing, said Singh. Wednesday's divestment will also help reduce DLF's debt by around Rs 1,500 crore since this amount will be given to DAL to repay part of the Rs 4,900 crore it owes the realtor, he added.

DLF's promoters will also use around Rs 2,100 crore of the money from Wednesday's sale to buy out DE Shaw's $400 million investment in DAL that was made in 2007 through optionally convertible preference shares.

DAL is a real estate investment trust wholly owned by the promoters floated to acquire DLF's commercial properties.

DAL had planned to list in Singapore but had to shelve the proposal after the global meltdown.

“Our immediate focus is to integrate DAL with DLF. Its contour will depend upon the reports of the independent committee that was set up by the DLF board to suggest a way forward for integration”, Singh, who is DLF chief K P Singh’s son, said.

DLF’s stake sale, which began late Tuesday night, attracted 35 to 40 buyers, the largest being Capital International, which invested $200 million. HSBC, Fidelity, Euro Pacific Growth Fund and Copthall Mauritius Investment Ltd were the other major buyers through bulk deals on the stock exchange.

Wednesday’s transaction took place at just above Rs 230 per share, 2.6 per cent below yesterday’s closing price and much lower than DLF’s IPO price of Rs 525 a share. Following the announcement, the shares of the company surged 7.89 per cent in early trade.

Meanwhile, DAL is raising Rs 2,000 crore through lease rental discounting (raising debts from banks by mortgaging lease rentals) that will be paid to DLF. After all its repayments, DLF’s total outstanding to DAL will come down to around Rs 1,400 crore.

On the issue of asset sales worth Rs 5,500 crore, Singh said that there was “clear visibility” on realising Rs 3,500 crore and work is in progress for another Rs 2,000 crore.

The company is also aiming to exit some high-cost projects that will release much-needed cash. For instance, the company is looking at exiting the Delhi Convention Centre in Dwarka by returning the land to the Delhi Development Authority. This will help release around Rs 850 crore.

Sources said the company has also approached the Haryana government to refund licence fees of around Rs 900 crore which it has deposited for various projects that were slated to start in near future.

Some basic facts about mutual funds

To invest in mutual funds, you need to first understand what they are, and how they work.

Even more basic is your grasp of stocks and bonds. Very quickly, stocks stand for shares of ownership in a public company, and bonds are money lent to the government or company, on which you receive interest. These are the two most common forms of investment, owned and loaned (real estate and precious metals being examples of others), but we are presently concerned with these instruments, since most mutual funds invest in stocks and/or bonds.

Simply, mutual funds act as intermediaries and facilitate investments in various securities (stocks and bonds). The logical question here would be: why do I need a mutual fund? Why can't I just invest directly?

The mutual fund advantage

Investing in a mutual fund allows you to minimise risk and maximise returns, because it acts as a middle man for a group of investors with a shared and predefined investment objective. If your main objective is security in investment but you don't know how to begin, a mutual fund is one way to go.

Typically, a fund manager will maintain the fund, and since you are one shareholder in the fund, you have the added advantage of easy investment, and lower trading costs.

Who are these fund managers?

Asset management companies (AMCs) approved by the Securities and Exchange Board of India (Sebi) manage the funds by making investments in various types of securities. This means that all recognised AMCs are monitored by higher authorities and stringent regulations, and funds are managed by professionals who have the necessary expertise.

How is your risk minimised?

Typically, investing in a mutual fund means investing in more than one stock. Some fund managers will diversify and spread your investment further by buying a mosaic of stocks and bonds. Investing in a large number of assets, or diversification, means that a loss incurred on one investment is minimised by gains in others.

How are trading costs reduced?

Since the AMC buys and sells large amounts of securities at a time, transaction costs are reduced, and the benefit is extended to the investor, because the average cost of the unit is lowered.

There are three ways in which you will see returns on your investment in a mutual fund:

• Through dividends on stocks and interest on bonds;

• Through capital gains, if the fund sells securities that have increased in price and the fund distributes these gains; and

• By selling your shares when the holdings increase in price.

Mutual funds can either be open-ended or close-ended in nature. With open-ended funds, you can either enter or exit the fund any time during the scheme period, by buying/ selling fund units -- this means a high degree of liquidity. Close-ended funds, as the term implies, means that an exit is possible only when the scheme period is over.

Mutual fund schemes in India are varied and cater to a wide range of requirements and profiles, based on financial position, tolerance to risk, and expectations of returns. Each mutual fund has a specific stated objective.

The fund's objective is laid out in the fund's prospectus, which is the legal document that contains information about the fund, its history, its officers and its performance.

High on risk and high on return are Equity funds. Also known as Growth Schemes, the aim of these schemes is to provide capital appreciation over medium to long term. These schemes normally invest a major part of their fund in equities and are willing to bear short-term decline in value for possible future appreciation.

They may be further classified into Diversified Equity Funds, Mid-Cap Funds, Sector Specific Funds and Tax Savings Funds (ELSS).

Debt funds, or Income Schemes, invest in debt instruments, typically issued by the government, private companies, banks and other financial institutions, and promise low risk and a stable income.

These schemes generally invest in fixed income securities such as bonds and corporate debentures. Capital appreciation in such schemes may be limited. Further classification includes Gilt Funds, Income Funds, MIPs, Short Term Plans and Liquid Funds.

Balanced funds are a mix of both equity and debt funds. They invest in both equities and fixed income securities, providing both growth and stability.

Money Market Schemes promise high liquidity, preservation of capital and a moderate income. These schemes generally invest in safer, short-term instruments, such as treasury bills, certificates of deposit, commercial paper and inter-bank call money.

Tax-saving schemes offer tax rebates to the investors under tax laws. For example, under Sec.88 of the Income Tax Act, contributions made to any Equity Linked Savings Scheme (ELSS) are eligible for rebate.

Index schemes track and emulate the performance of a particular index such as the BSE Sensex. The stocks in these portfolios will mirror those in the Index, as will the percentage of each stock retained. Returns will therefore mirror the movement of the Index.

Finally, a further benefit from investing mutual funds is the 100 per cent income tax exemption on all mutual fund dividends. For Equity Funds, short-term capital gains are taxed at 15 per cent. Long-term capital gains are not applicable.

For Debt Funds, short-term capital gains are taxed as per the slab rates applicable to you. Open-ended funds with equity exposure of more than 65 per cent are exempt from the payment of dividend tax for a period of three years from 1999-2000.

Why techies turn bureaucrats

For a year or so, Kartikeya Misra worked feverishly in the fast-paced New York City for global investment banking and securities firm Goldman Sachs. His work involved strategic acquisitions, financial reengineering, use of metrics to quantify the results and value addition. This kept him busy most of the time, weekends not excluded.

In January 2008, however, he decided to call it quits to focus his energies on preparing for the Indian civil exams. For his effort, he secured 40th rank at the all India level in this year's UPSC exams. He is now awaiting his IAS posting.

Kartikeya, who did his computer science from BITS Pilani and management degree from IIM-Ahmedabad, says: "A corporate job attains monotony over a period of time. There would be less deliverables, particularly to society." The work only helps in personal or company development but not the poor, he reasons.

Kartikeya, who was part of the team that build the India office of Goldman Sachs at Mumbai, used his stint with the investment banker to achieve financial independence before plunging into public service.

He worked there till January 2008 and returned to Hyderabad to prepare for the civil exams. It took him three months preparation for the prelims and another three months to clear the mains in his first attempt.

Kartikeya is not a lone case. There are a few other rankers who too gave up corporate jobs for civil services.

For instance, Sandeep Nanduri, who secured 91st rank in the UPSC, quit his post at Hewlett Packard towards the end of 2006. He sat for the civil exams the following year and got an IRS posting (income tax assistant commissioner). He used the leave provision and bettered his previous rank in the second attempt.

For him, money is not a big thing, thanks to the Sixth Pay Commission. "The satisfaction of serving the masses is great," he says.

Nanduri's work as sales manager at HP involved B2B sales, meeting companies to sell server products, negotiations, taking customer calls, meeting distributors. He did his engineering from a college affiliated to Osmania University and his MBA from IIM-Bangalore. "I have learnt people management at HP," he says about the take away.

C Hima Bindu, a BTech graduate from Visakhapatnam, is another case in point. She was working with TCS at its onsite office at Detroit. She planned it well to ensure that the work and the rigour of the preparation did not suffer and she managed to get into IRS.

"Transparency, discipline and efficiency are the three important aspects that the corporate stint has given to me," says Bindu, adding she did not want to be a stereotype.

M Laya, another BITS Pilani graduate, working with Unitech, a Hyderabad-based software company, managed an IRS posting this year.

Scource : Business Standard

Malvertisements trick web users

Of all web-based attacks, malicious advertisements or malvertisements are the fastest growing and the most difficult to identify. Nowadays, ads are used by all websites to monetise and can be seen on every webpage, which makes them a very soft target for malware authors.

These advertisements can range from 'free games or music players' to 'improving the speed of PCs/laptop' to 'online casinos' which require you to download and install a component on your PC.

It is not uncommon for  websites to have around 20 different domains from which the content is pulled to make up one single web page that a user views.

Compounding the problem is the fact that a single malicious advertisement may only appear once every 1,000 page views or only to viewers from a certain geographic region, thus making it more challenging to detect and eradicate.

"It is one of the most common and cheap ways of spreading malware, second only to spam emails," explained Amuleek Bijral, country manager, India & SAARC, RSA, The Security Division of EMC.

Functions in this scripting language can be misused to redirect the user to a malicious page. As a result, although the host website is itself clean, the ad may redirect the user to a malicious page hosting web attacks.

It might open a backdoor in the user's computer and take out personal information or act as a sleeper-cell that can be used by the malware author as and when required.

More 500 diamond units in Surat resume operations

Slowly but gradually, the diamond-cutting and polishing industry in Surat is regaining its lost sparkle. Around 500 more units in the diamond city have resumed operations in the past month, as a result of which diamond units are looking for workers again.

Last year, some 400,000 diamond workers in Surat lost their jobs owing to the global recession that shattered the state’s Rs 50,000-crore industry.

"Surat had 2,500 to 3,000 diamond-cutting and polishing units operational before Diwali. However, only 1,000 units were able to start operations after the vacation,” said CP Vanani, president, Surat Diamond Association (SDA).

Confirming that 500 units had re-opened this month, he said 1,500 units were now back in business.

Lack of raw material stocks of rough diamonds and an improvement in domestic demand prompted closed units to restart their operations.

"Most of the units that restarted operations after Diwali cleared the raw material stock with them by incurring losses. So there is no stock in the pipeline currently and units are now buying raw material as trading activities pick up," added Pravin Nanavati, former president, SDA.

As a result, trading has also resumed in Mumbai and Surat. "Prices of rough diamonds have surged 20 per cent recently. Though polished diamond prices have not improved as much as those of rough diamond, there is a great deal of optimism that prices of polished diamond would firm up in the days to come," Vanani added, saying he anticipated a pick-up in demand in the days to come.

Ninety per cent of the diamonds cut and polished in Surat are exported. "Recession has not hit India as much as it has impacted the US and other western countries,” said Nanavati.

He pointed out that Indian consumers have started buying diamonds for investment purposes, a change from their earlier habit of buying only diamond jewellery.

The situation is still far from being favourable to the diamond industry. Cutting and polishing units that restarted operations recently are finding it difficult to get workers. All of them are operating with 50 to 60 per cent of their required workforce, since many of those who were laid off shifted to other industries such as textile and agriculture.

Tata group planning to increase the supercomputer’s processing power by at least five times

When it was developed two years ago, the Tata group’s supercomputer, christened Eka, was ranked the fourth fastest in the world by the US-based International Conference for High Performance Computing. It was also ranked the fastest in Asia for High Performance Computing (HPC), networking, storage and analysis.

Since then, with many US companies developing faster supercomputers, Eka was pushed down to 13th position.

The Tata group, however, is not lying low. It is now planning to increase the supercomputer’s processing power by at least five times, under a project titled Eka plus plus (Eka++). The Computational Research Laboratories (CRL) — a subsidiary of the Tata group’s holding company Tata Sons — has already started work on this front.

CRL Head (HPC Engineering and Operations) Seetha Rama Krishna confirmed the development. "This is not an easy task," he added, "since to create this kind of processing power, we need a lot of software and hardware and most importantly compatibility between these varied systems”. He, however, did not divulge the time CRL would take to complete the upgrade of Eka.

"All the software, hardware and processing power will have to mature. Even though we have internal deadlines, I am not at liberty to disclose it," he said. Industry analysts think the project will take at least two to three years to be completed.

The Tata group (read CRL), meanwhile, has already begun offering supercomputing as a service on Eka. Around 40 organisations — from aerospace to automobile and life sciences to manufacturing — rent out Eka’s services. Aviation major Boeing and Tata Motors are among those using the services. Earlier, group company Tata Elxsi used Eka to cut production time for the animation movie Roadside Romeo. Eka helped it reduce time to six months from the 36 to 40 months it would have taken.

Eka — which put India and Tata on the global computing map — uses around 1,800 computing nodes and has a peak performance of 170 teraflops. It has been using the CLOS architecture (which is used for large-capacity switches), with off-the-shelf servers and infiniband interconnect technologies and the Linux operating system.

Will the Eka++ project, though, help the Tata group regain the supercomputer’s lost ranking? It's a difficult call because research and development is taking place all around the world at a fast pace, said industry analysts who did not wish to be identified. Besides, other companies are not resting on their laurels either.

PMS troubles rise on new Sebi rules

The Securities and Exchange Board of India’s (Sebi’s) recent clarification that portfolio management services (PMS) need to operate through individual bank accounts for individual customers is likely to add to the woes of the industry.

The 200-odd players in the PMS business are already suffering, with clients unhappy with heavy losses incurred in the stock market.

Last year Sebi had said that portfolio managers should not hold the securities belonging to the portfolio account in a single demat account but keep them in individual demat accounts.

Recently, Centrum Wealth Managers approaced Sebi to clarity on separate accounts. “We needed a clarification whether segregation would be applicable to bank accounts as well,” said Sriram Venkatasubramanian, head - wealth management, FCH Centrum Wealth Managers.

Sebi replied, “The portfolio manager shall segregate each client’s funds and securities and keep them separately from his own funds and securities.”

This means that clients need to open bank accounts and transfer power of attorney to their portfolio managers.

When PMS players approached clients to update their documents, many discontinued their accounts due to the sharp fall in value. “Many investors reviewed their portfolios and decided to discontinue due to reduction in value and more paperwork,” said Kunj Bansal, senior vice-president, Kotak Portfolio Management.

The new rules will also increase operational cost of PMS.

Scource : Business Standard

DLF exits Dankuni township project

Real estate major DLF has finally exited the troubled Rs 33,000 crore public-private partnership (PPP) township project at Dankuni in Hooghly district of West Bengal.

The state government has paid back about Rs 266 crore to the developer after deducting Rs 5 crore as fee for work done on behalf of DLF, say informed sources.

Spread over 4,840 acres, the Dankuni township was hailed as one of the biggest PPP projects in the country. DLF paid Rs 271 crore to the state government in 2007 after it emerged as the highest bidder, leaving developers like Emaar-MGF, Suncity and Bengal Ambuja behind.

When asked if the company had got back Rs 266 crore from the government, a DLF spokesperson declined to comment. “We do not have anything to say on the matter,” the spokesperson said.

The project has run into trouble from both ends. The Kolkata Metropolitan Development Authority (KMDA), the implementing agency, has been unable to procure even a portion of the land, something it never anticipated. And in 2006, when the idea took shape, DLF was oblivious of the coming economic downturn and its impact on the real estate business.

“There was no clause in the agreement on implementing parties’ obligations if the KMDA fails to obtain land,” said sources.

Dankuni had been a site of simmering tension since panchayat elections last year, when several political outfits and farmers’ lobbies began an agitation over the low compensation being offered for land. While DLF had offered the government a price of Rs 56 lakh an acre, or around Rs 2,700 crore for development rights on the land over 999 years, the land procurement committee for the project offered farmers Rs 7 lakh an acre for fallow land, Rs 12 lakh for multi-crop land and Rs 14 lakh for homesteads. Naturally, this was rejected.

After these problems, DLF suggested that the scale of the project be cut, and offered to develop only 500 acres. But the KMDA’s Vision Document 2025 said 15 growth centres with industrial pockets, which included Dankuni, had to be developed across the state. DLF then asked the government to allow it to exit from the project.

“DLF requested the government to return the initial amount it had paid to the KMDA. The matter was then referred to the state cabinet, which took the decision to give back the money,” said sources.

The West Bengal government, which had stepped up efforts to hold back industrialists after the much-reported exit of Tata Motors’ Nano project, put the blame for the delay on the poor financial condition of DLF.

“DLF’s response has not been very encouraging in executing the project, probably because of the financial crisis. I don't think they will be able to execute the project,” Ashok Bhattacharya, minister for municipal affairs and urban development, had earlier told Business Standard.

It is understood that the state government is now keen on bringing in New Kolkata International Development (NKID), a special purpose vehicle promoted by the Salim group of Indonesia, among others, for the project. NKID is also a joint venture partner in the petroleum, chemicals and petrochemicals investment regions (PCPIR) project in nearby Nayachar.

Further fiscal incentives needed, says Ficci

In order to get the economy back on track, the government should introduce further fiscal incentives to push investment-led growth and encourage consumer spending, said Federation of Indian Chambers of Commerce and Industry (Ficci) in its pre-budget wish list given to the finance ministry.

Re-introduction of investment allowance, continuing tax holiday benefits for housing, telecom, power and incentivising investments in the agriculture sector are some of the recommendations given by Ficci to ramp-up investment.

In a meeting with Revenue Secretary PV Bhide, Ficci President Harsh Pati Singhania stressed the need to maintain fiscal measures to bring back the economy to 8 per cent plus growth rate, said a Ficci release.

The lobby suggested reduction of personal income tax rate to 25 per cent to boost consumer spending that will eventually drive industrial revival. It also suggested that the maximum income tax slab should be pushed upwards to the Rs 10-lakh bench mark. At present, the highest tax slab is at 5 lakh and above.

According to Singhania, it is important that excise duty at 8 per cent and service tax at 10 per cent are continued at least till the next fiscal. Ficci also suggested an immediate implementation of goods and services tax (GST) at 8 per cent.

“The government is serious about getting the economy back on track. It promised to be a positive and fruitful interaction.” said Singhania, after the meeting.

Other premier industry chambers like Confederation of Indian Industries (CII) and PHD chamber did not give their suggestions to the revenue secretary today. The PHD chamber is scheduled to submit its recommendations on Friday.

Citi directors face growing pressure to resign

Citigroup came under growing pressure to overhaul its board on Tuesday after it revealed that two long-serving directors survived a shareholder vote largely thanks to a balloting rule that is due to be scrapped.

The results, revealed in a regulatory filing, prompted dissident investors to call for the ousting of the directors, Michael Armstrong, former chief executive of AT&T, and John Deutch, former head of the Central Intelligence Agency.

"We are calling on them to resign immediately. We believe the vote is a repudiation of their tenure on Citi's board," said Richard Ferlauto, director of pension and benefit policy at the American Federation of State, County and Municipal Employees, one of the unions that had called on Citi to change its board.

Mr Armstrong has been a director of Citi or its predecessors since 1989 and headed its audit and risk management committee in the run-up to the financial crisis. Mr Deutch, who has been on the Citi board since 1996, succeeded Mr Armstrong at the committee's helm.

Citi, which is selling a 34 per cent stake to the government as part of its latest bail-out, has replaced five of its 14 directors including Robert Rubin, former Treasury secretary and has indicated it wants to change one or two more.

The filing showed Mr Armstrong and Mr Deutch received about 2.6m votes in favour of their re-election, about 72 per cent of the total votes.

However, nearly half of the total votes came from brokerages, which usually back management proposals due to a 72-year old rule that allows them to vote on clients' behalf.

The provision, due to be axed by the Securities and Exchange Commission this year, states that brokers who do not receive instructions from clients 10 days before a vote can back management's proposals.

Lynn Turner, a corporate governance expert and former SEC chief accountant, said that without brokers' votes, Mr Armstrong and Mr Deutch would not have been re-elected.

Citi said: "All of our directors received a significant majority of votes cast. It would undermine the principle of majority rule for a director who receives 70 per cent of the vote to resign because 30 per cent voted against him."

The bank declined to comment on the the number of brokers' votes, which rose from 25 per cent of the total last year to 46 per cent this year.

People close to the company said it was impossible to conclude that all brokers' votes had backed the directors.

They added that there was no way of telling that all brokers' votes would have gone against the two directors had clients given detailed instructions to their brokers.

Separately, Citi said it would use up to $5bn of the $45bn in federal aid it received for a new municipal lending programme.

Scource : The Financial Times

Govt to go ahead with Nelp VIII

The government has decided to proceed with the next step of the eighth round of auction of oil and gas blocks under the New Exploration and Licensing Policy (Nelp) and open the data room for prospective bidders on May 20.

“We will open the data room across the world for firms participating in Nelp VIII on May 20,” said V K Sibal, director general at the Directorate General of Hydrocarbons (DGH).

He also said there was no confusion on the issue of tax holiday for production of natural gas.

“The issue on tax is clear and tax will be levied. We are optimistic that we will receive good number of bids. Even without clarity on the issue, we got 80 bids last year,” Sibal added.

Earlier, firms engaged in production of oil and gas were eligible for an income-tax holiday for seven consecutive years. This, however, was changed in the Union Budget of 2008-09, when the finance ministry declared that tax holiday was only for crude oil production and not natural gas.

“We will try to obtain a decision of the (new) government on this (tax) matter. If there’s no decision then we will go ahead with what we have,” said Petroleum Secretary RS Pandey.

Fearing that lack of clarity on taxation would affect participatory interest in Nelp VIII, the Ministry of Petroleum and Natural Gas had deferred the road shows, starting April 20, on India’s biggest auction ever of 70 oil and gas blocks.

The DGH is optimistic that Nelp VIII will see successful round of bidding despite the grim economic situation across the world.

Inflation falls to 0.48%

After increasing for three consecutive weeks, inflation fell to 0.48 per cent for the week ended May 2 against 0.70 per cent in the previous week despite rise in prices of food prices like pulses, cereals and vegetables.

The wholesale price-based index stood at 8.73 per cent during the corresponding week a year ago. This is the ninth week in a row when inflation stood below one per cent.

During the week, prices of fruit declined while those of tea, bajra, pulses, and spices were expensive.

At the same time, prices of jet fuel and bitumen fell.  Among manufactured products, imported edible oil and sugar were expensive. Elsewhere, pesticides were dearer by 33 per cent and benzene by 27 per cent.

How to select the right credit card

Today it is difficult to come across a person who doesn't own a credit card. With the rise in standard of living, banks are coming out with increasing number of cards offering number of innovative features.

While it increases the number of options open to the customers, this innovation can also confuse the person looking to own his first credit card. As a result, it is very important for you to choose the right credit card so that you can get the best out of credit card.

We answer some of your questions on how to select the right credit card for your needs.

What card is ideal for me?

As the features offered by each credit card varies, it is essential for you to understand which features will benefit you a lot. If you are shopping regularly at a particular store, go for a credit card that offers your reward points or cash back or discount when you shop at that store.

Don't select a card that offers you free air miles on usage, if you are not a regular flier. Do you use the credit card to pay your utility bills? Then choose a card that provides you benefits for paying your bills. Besides rewards, also take a look at the interest charged.

If you intend to carry outstanding balances each month, then it is advisable to choose a card offering a low interest rate. But if you can manage to pay off the balance in full at the end of each month, it is advisable for you to go for a card with high interest rate but with low or nil joining and annual fees.

If you are traveler, check out if the card has widespread acceptance.

What are the important features my card should have?

Though cards contain many important features, some are the more important than others. While we all like to be rewarded for using the card, it should not be the sole criterion affecting your decision. Instead here are some essential features to look at when choosing a card.

• Annual/joining fee: While most banks offer entry level credit cards for free, these fees are still levied on the high end credit cards meant for businessmen. If you happen to pay your card balance each month, then these fees will make it expensive for you to use the card. In this case, it makes more sense to opt for the card that doesn't charge any such fees.
• Credit limit: If you are a heavy shopper, always select the card offering you the highest credit limit. It will prevent your card from being rejected due to insufficient credit limit.
• Cash limit: Do you always swipe your card to withdraw cash in case of emergencies? If yes, then you must always take a look at the cash withdrawal limit available on the card.
• Interest rate: Do you always like to carry unpaid balance each month? If yes, then always select a card charging lowest interest rate, as high interest can very easily land you in debt.
• Acceptability: Is your card accepted across wide range of establishments? Is it accepted internationally? While Visa and MasterCard are universally accepted, Diners and American Express have limited acceptability.
• Other charges and penalties: Besides fees and interest, remember the bank also charges you various other fees like late payment fees, cheque bouncing fees, over limit fees etc. Watch out for these fees, as they are very high.
• Quality of service: Not all banks provide the same level of customer service. Check out if the bank offers 24x7 customer service for its credit card customers. This is helpful if you have to report stolen card, check your credit limit or want to discuss any billing problem with the customer service.

How do I compare these features?

While you can visit the websites of various banks, and go through the details of their various card products, it can be time consuming and inconvenient. Instead you can use the credit card comparison web sites like bankbazaar.com which offer you a snapshot of the various features of different credit cards. It makes your task easy and helps you in taking a faster decision.

Three telecom companies shortlisted for BSNL's Rs 30,000-crore contract

Three telecom companies — Spanco Telesystems and Solutions, TVS Interconnect Systems (a TVS group firm) and Acme Tele Power — have emerged as the front-runners for state-owned Bharat Sanchar Nigam Ltd’s (BSNL) Rs 30,000-crore infrastructure contract. Besides, network services major GTL and power company KEC are in the second and third positions, enabling them to get 25 per cent of the total contract.

“Spanco was the lowest bidder for the west zone, TVS for south, Acme Tele Power for north and east for the passive cellular infrastructure (tower) contract. The telecom ministry has called for a meeting of the L1 players tomorrow, and a final decision on this will come out in a couple of days,” a source close to development said.

BSNL would be spending around Rs 7,500 crore per zone, resulting in a Rs 30,000 crore outlay for all the four zones. This means that in case Spanco and TVS win the bid they would get contract worth Rs 7,500 crore, and Acme Tele Power Rs 15,000 crore of business.

The contract is towards building and maintenance of passive cellular infrastructure including towers, shelters, diesel generators, air-conditioning and associated services, the source added.

When contacted, Spanco Systems Deputy Managing Director Deepak Bhagchandaney confirmed the development and said the company was in final laps of bagging the contract.

“BSNL is a strategic account and apart from bidding for passive infrastructure, we have also put in our bid for the information technology part (billing and software solutions). We are bidding for the north and east zones in IT,” said Bhagchandaney.

TVS Interconnect and Acme Tele Power could not be immediately contacted for comments.

Meanwhile, GTL has emerged as the second lowest bidder (L2) in west and north zones, and the third lowest (L3) in the east zone. KEC is believed to be L2 in the west zone.

Under the BSNL contract, 50 per cent of the total contract will be awarded to L1, while the remaining 50 per cent would be spilt between L2 and L3 bidders. GTL is estimated to get around Rs 5,500 crore worth of business.

When contacted, a GTL official, on condition of anonymity, said the company was comfortably positioned on “both technical and commercial evaluations. However, it is premature to comment on the timing and value of the contracts”.

According to a KEC spokesperson: “We have not won the bid yet.” However, a company source said: “We are one of the final contenders but we have not been officially informed”.

BSNL had earlier called for a 93-million GSM line contract in 2008, and divided the country into four zones. The bidding was divided into four parts — GSM equipment for 2G, GSM equipment for 3G, passive infrastructure and IT.

GSM operators added 9 million users in March

GSM operators in the country added 8.97 million users during April 2009 (excluding Reliance Telecom), after recording the highest mobile subscriber addition of 11.2 million last month.

India’s largest mobile operator Bharti Airtel, on the verge of reaching the milestone of 100 million subscribers, led the subscriber base which hit 297.7 million at the end of April, 3.09 per cent more than 288.76 million in the previous month.

According to TV Ramachandra, director general, Cellular Operators Association of India (COAI), “March was also the month of closing annual accounts, so companies tend to be more aggressive during that month. Therefore, this month, the demand has rationalised.”

Bharti Airtel continued to dominate the market as its user base rose to 96.73 million in April, after it added 2.81 million subscribers. However, with the entry of new operators in the GSM market, the company’s market share marginally declined to 32.49 per cent as compared to 32.57 per cent in the previous month.

Vodafone-Essar added about 2.7 million customers to its total subscriber base, witnessing an increase of 4.03 per cent over March 2009. The company increased its market share to 24.03 per cent as against 23.79 per cent in March this year. The company’s total subscriber base stood 71.5 million at the end of the reporting month.

Meanwhile, the state-owned operators lost market share to the private operators in April after achieving stability in the early months of the year. The market share of Bharat Sanchar Nigam Ltd (BSNL) which operates pan-India operations, except Delhi and Mumbai, stood at 16.03 per cent in April, against 16.19 per cent in the previous month. The company added about 1.03 million subscribers during the month taking its total subscriber base to 47.72 million.

Another state-owned telco, Mahanagar Telephone Nigam Ltd (MTNL), which operates in Delhi and Mumbai, added about 45,000 subscribers to its total base taking it to over 4.2 million. In January 2009, it had added over 92,000 subscribers to its network.

Meanwhile, AV Birla-promoted Idea Cellular (along with Spice Communications) witnessed a rise of 2.59 per cent to its subscriber base as it added about 1.15 million users during March to report a total subscriber base of 44.17 million.

As a result of its expansion into new circles in the country, Aircel Ltd added 1.1 million to its subscriber base, taking it to 19.6 million.

Mixed fortunes for top five MFs in FY09

The fall in the equity markets was to put some pressure on the balance sheets of the top five asset management companies (AMCs) in the country. But, two of them have managed to buck the trend, thanks to the rise in their average assets under management (AAUM).

While Reliance Capital, ICICI Prudential and UTI saw a drop in their profits, Birla Sun Life and HDFC's profits rose.

ICICI Prudential, the third largest fund house in the country, suffered the most. It saw its profits dipping by almost 99 per cent - by Rs 81 crore (Rs 810 million) to just Rs 1 crore (Rs 10 million) - in 2008-09. In the last financial year, it had posted profits of Rs 82 crore (Rs 82 million).

Both Reliance Capital and UTI Mutual Fund's profits fell by 16 per cent. Reliance Capital Asset Management Company, the largest mutual fund with average assets under management (AAUM) of Rs 80,963 crore (March-end), has seen its profit after tax (PAT) decline by 16 per cent, from Rs 150 crore (Rs 1.5 billion) in FY08 to Rs 126 crore (Rs 1.26 billion).

Sundeep Sikka, chief executive officer, Reliance Capital AMC, said: "The decrease in profit is due to bad market situation, as the net asset values have eroded during this period. We have high exposure to equity."

According to sources, UTI Mutual Fund's PAT has fallen from Rs 145 crore (Rs 1.45 billion) to Rs 122 crore (Rs 1.22 billion) in FY09. That is a decrease of 16 per cent compared to the last financial year. All three fund houses also showed a fall in their AAUM.

However, two fund houses showed a growth in profits. HDFC Mutual Fund, which manages Rs 57,956.44 crore (at the end of March) and is the second largest player, registered a profit before tax (PBT) of Rs 276.78 crore (Rs 2.76 billion) compared with Rs 240.33 crore (Rs 2.40 billion) in FY08. That is, a rise of Rs 36.45 crore (Rs 364.5 million). During the year, its AAUM rose by Rs 13,183 crore (Rs 131.84 billion).

Birla Sun Life AMC's, the fifth largest mutual fund, PAT was at Rs 7.9 crore (Rs 79 million) from Rs 2.8 crore (Rs 28 million) in the previous financial year. That is, a rise by Rs 5.1 crore (Rs 51 million). The fund house's AAUM rose by Rs 11,190 crore (Rs 111.90 billion) in FY09.

Anil Kumar, chief executive officer, Birla Sun Life Mutual Fund, said, "We have strengthened our distribution and reach. We also launched innovative products, which were well received by the market. These have helped us improve our cost efficiency and the resultant profitability."

Market experts said both new fund offers and existing funds did not attract any significant money. Worse still, money from systematic investment plans, which were a regular source of inflows, also dried up by 20-25 per cent during the year.

Instead, the money moved into short-term debt funds where the income is much less compared to equity funds. For instance, fund houses charge around 1-1.25 per cent in equity funds whereas they get around 0.30-0.50 per cent in short-term funds.

Further, industry watchers said that during the October crisis, when the mutual fund industry lost over Rs 90,000 crore (Rs 900 billion) in a single month due to redemption in liquid scheme, many fund houses were forced to borrow at exorbitant rates (as high as 40 per cent) to pay investors.

"Though the fund houses paid back investors, they were unable to charge the expenses to the scheme because it would have led to fall in the net asset values and more redemption pressure. So, the expenses were transferred to the AMC's balance sheet," said an industry expert.

Scource : Business Standard

3i India arm of private equity fund, planning to invest $50-60 mn this year

3i India, the indian arm of private equity fund 3i, is planning to invest $50-60 million (about Rs 300 crore) in various sectors this year.

“We would ideally like to put in $100-150 million (up to Rs 750 crore) this year but $50-60 million should materialise,” said Mahesh Chhabria, Partner at 3i India.

The investment would be made across sectors like retail and distribution companies, logistics, back-end retail, education, water and waste management. The average deal size would be in the range of $30-35 million. The private equity fund would invest the money out of its growth fund.

It has an infrastructure fund, India Infrastructure Fund, with a corpus of $1.2 billion (about Rs 6,000 crore) in association with India Infrastructure Finance Company. The fund has already deployed $500 million across road and port projects.

3i's India portfolio is valued at $920 million. Its portfolio includes companies such as OOH Media, Vijai Electricals, Nimbus Communications, International Tractors, UFO Moviez and International Cars & Motors. The fund looks to acquire minority stakes in companies out of its growth capital fund.

It recently offloaded 80 per cent of its stake in Mundra Port and Special Economic Zone for Rs165.33 crore through the open market. It continues to hold 0.36 per cent stake in the firm.

According to sources, 3i India would look at exiting some of its investments in companies such as Nimbus Communications and ITL through IPO route in 2010.

"The deal pipeline has revived. I see lot of deals getting completed and announced in the later part of this year -- post the July- August period. More money will be put in to work next year. There is still a gap between valuations in public and private markets," added Chhabria.

The 3i group in March announced its results wherein its net asset value more than halved and the company reported a record £2.2 billion loss. The UK-based firm is coming up with an underwritten rights issue to raise £700 million ($1.05 billion) and reduce the company's debt.

3i's total assets under management have slipped to £8.02 billion from £9.79 billion in the previous year.

It has recently set up a buyout team in India under Saurabh Shah, which will focus on large scale acquisitions. The investment would come from its global buyout fund Euro fund V, which has a corpus of $5 billion (about Rs 25,000 crore).

“India is emerging as a market for buyouts and that's why we have shown seriousness in that space. The recession has triggered chances of more buyout deals as people would exit non-core assets. One will see a wave of transactions beginning to happen," added Chhabria.

Microsoft Windows 7 to be available by Dec 2009

Microsoft will release its new client operating system (OS) – Windows 7 – by this December 2009. The software giant had previously announced that the new software would not be ready until 2010. Windows Vista, Microsoft's current operating system launched in November 2006, was criticised for being a memory hogger and incompatible with some pre-Vista hardware and software.

Microsoft also plans to unveil Windows Azure, a cloud services operating system developed on open platform that supports both Microsoft and non-Microsoft languages and environments, by en 2009. Azure provides developers with on-demand compute and storage to host, scale and manage web applications on the Internet through Microsoft’s data centres.

Incidentally, when it launched Vista in 2006, Microsoft said it was “The Most Significant Product Launch in Microsoft's History.” Vista could never match its billing, amply evident from the fact that most people still prefer to run Windows XP on their computers.

So should one upgrade to Windows 7 when it's released? Much depends on who you are? Initial feedback on the internet suggests that those personal users still running XP (who are in the majority) will find moving up to 7 an uphill task.

Small business users without the support of an IT department also need to be careful when taking this leap.

Enterprise users are typically said to be a cautious lot and normally wait for the first service pack to appear before committing to changing operating systems. However, a couple of surveys on the net appear to suggest that they will leap enthusiastically to the new OS. One study goes as far as to suggest that of 80 IT decision makers at enterprises with more than 1000 employees questioned, 50 per cent planned to upgrade to Windows 7 as soon as it is available.

As for Windows 7 on netbooks, it's not easy to push the system the way you push a desktop since you will need more random access memory (RAM). Windows 7 takes some 7.5GB of disk space, so netbook users need to factor this. It may be advisable to wait for Windows 7 netbooks to arrive on the scene as some of these may hopefully sport 2GB of RAM.

BSE Bulk Deals to Watch - May 13 2009

Deal Date Scrip Code Company Client Name Deal Type * Quantity Price **
13/5/2009 512149 AVANCE TECHN VIHANGIDSHAH B 109270 11.95
13/5/2009 512149 AVANCE TECHN ROOPALJINESHSHAH B 100000 11.95
13/5/2009 512149 AVANCE TECHN JASMINSBAJORIYA S 50020 11.95
13/5/2009 512149 AVANCE TECHN BAKULRAMNIKLALPAREKH S 49250 11.95
13/5/2009 512149 AVANCE TECHN DEVANG MASTER S 110000 11.95
13/5/2009 531590 BILPOWER LT MONEY MATTERS (INDIA) PRIVATE LIMITED B 55000 89.26
13/5/2009 531590 BILPOWER LT SAPATRISHI PROPERTIES PVT LTD S 66171 89.25
13/5/2009 517001 BIRLA POWER JMP SECURITIES PVT LTD B 3166713 3.25
13/5/2009 517001 BIRLA POWER JMP SECURITIES PVT LTD S 3135881 3.22
13/5/2009 500147 CMI FPE ALPHA GRAPHIC INDIA LTD B 29500 244.40
13/5/2009 500147 CMI FPE JANAKCHIMANLALTHACKER S 29500 244.40
13/5/2009 526987 COMMIT CAP S PK GOYAL B 96706 6.68
13/5/2009 526987 COMMIT CAP S SRECKO INDHAN LIMITED S 100000 6.68
13/5/2009 532868 DLF LTD DEUTSCHE SECURITIES MAURITIUS LIMITED B 16255364 230.00
13/5/2009 532868 DLF LTD EURO PACIFIC GROWTH FUND B 31565967 230.00
13/5/2009 532868 DLF LTD COPTHALL MAURITIUS INVESTMENT LIMITED B 20067375 230.00
13/5/2009 532868 DLF LTD CAPITAL RESEARCH MGMT. CO. A/C EURO PACIFIC GROWTH FUND B 23684033 230.00
13/5/2009 532868 DLF LTD KAVITA SINGH S 10400000 230.00
13/5/2009 532868 DLF LTD KAVITA SINGH S 10400000 230.00
13/5/2009 532868 DLF LTD SIDHANT HOUSING AND DEVELOPMENT COMPANY S 26500000 230.01
13/5/2009 532868 DLF LTD RAJDHANI INVESTMENTS AND AGENCIES PRIVATE LIMITED S 46000000 230.01
13/5/2009 532868 DLF LTD SIDHANT HOUSING DEVELOPMENT COMPANY S 45500000 230.00
13/5/2009 532868 DLF LTD BULAND CONSULTANTS INVESTMENT PVT LIMITED S 27000000 230.00
13/5/2009 530407 EPIC ENERGY ASHOKPAMANI S 50000 27.73
13/5/2009 502223 EXCEL GLASSE ANILKABRA B 198000 2.01
13/5/2009 502223 EXCEL GLASSE IL AND FS FINANCIAL SERVICES LIMITED S 200000 2.01
13/5/2009 532022 FILAT FASH VANNA TRADINGCO PVTLTD B 33300 89.81
13/5/2009 532873 HOUSING DEV GENUINE STOCK BROKERS PVT. LTD. B 1871853 182.33
13/5/2009 532873 HOUSING DEV GENUINE STOCK BROKERS PVT. LTD. S 1871853 182.46
13/5/2009 530643 INFOTREK SYS BRIJKISHORKISHANGOPALSONI B 50000 11.41
13/5/2009 530643 INFOTREK SYS B K SONI HUF B 40000 11.41
13/5/2009 530643 INFOTREK SYS SARITA ANANDKUMAR GUPTA B 20000 11.41
13/5/2009 530643 INFOTREK SYS SARITA ANANDKUMAR GUPTA S 20000 11.41
13/5/2009 530643 INFOTREK SYS MAGNA UMBRELLA FUND PLC S 102085 11.41
13/5/2009 517063 JETKING INFO BINDU B. SHARMA B 37901 145.38
13/5/2009 517063 JETKING INFO KULDIP KUMAR SHARMA B 38215 148.07
13/5/2009 517063 JETKING INFO KULDIP KUMAR SHARMA S 38215 145.38
13/5/2009 517063 JETKING INFO BINDU B. SHARMA S 37901 148.08
13/5/2009 500304 NIIT LTD BIRLA SUN LIFE INSURANCE CO LTD B 1400000 30.00
13/5/2009 500304 NIIT LTD MORGAN STANLEY MAURITIUS COMPANY LIMITED S 945387 30.02
13/5/2009 531996 ODYSSEY CORP BHROSEMAND COMMODITIES PVT. LTD. B 36000 22.50
13/5/2009 512048 SPLASH MEDIA REKHA BHANDARI S 7014 47.10
13/5/2009 532890 TAKE SOLUT PASSPORT INDIA INVESTMENT (MAURITIUS) LIMITED B 5700000 24.40
13/5/2009 532890 TAKE SOLUT GALLEON INTERNATIONAL MASTER FUND SPC LTD NSRPSP S 5300000 24.40
13/5/2009 531390 UPSURGE INVS KIRIT V DAVE S 70000 5.50
13/5/2009 532765 USHER AGRO DRB SECURITIES PVT LTD B 250000 33.26
13/5/2009 532765 USHER AGRO EPOCH SYNTHETICS PVT LTD S 250000 33.26
13/5/2009 503349 VICTORIA MIL HARSUKHBHAI P DEGAMA B 700 1279.14
13/5/2009 503349 VICTORIA MIL HARSUKHBHAI P DEGAMA S 700 1235.14
13/5/2009 514470 WINSOME TEXT VIMALRAMNARAYANTOSHNIWAL B 30000 34.00
13/5/2009 514470 WINSOME TEXT UMESH SHYAMRAO KHESE S 30000 34.00

NSE Bulk Deals to Watch - May 13 2009

Date,Symbol,Security Name,Client Name,Buy/Sell,Quantity Traded,Trade Price / Wght. Avg. Price,Remarks
13-MAY-2009,ADLABSFILM,Adlabs Films Limited,PARWATI CAPITAL MARKET PRIVATE LIMITED,BUY,331288,253.34,-
13-MAY-2009,ADLABSFILM,Adlabs Films Limited,PRB SECURITIES PRIVATE LTD.,BUY,292423,254.74,-
13-MAY-2009,BILPOWER,Bilpower Limited,MONEY MATTERS (INDIA) PVT.LTD,BUY,55000,89.25,-
13-MAY-2009,BIRLAPOWER,Birla Power Solutions Ltd,ADROIT FINANCIAL SERVICES PRIVATE LIMITED,BUY,5125714,3.12,-
13-MAY-2009,BIRLAPOWER,Birla Power Solutions Ltd,JMP SECURITIES PVT LTD,BUY,3151205,3.14,-
13-MAY-2009,HDIL,Housing Development and I,GENUINE STOCK BROKERS PVT LTD,BUY,1861432,183.01,-
13-MAY-2009,WWIL,Wire and Wireless (India),ADROIT FINANCIAL SERVICES PRIVATE LIMITED,BUY,1265227,15.60,-
13-MAY-2009,ADLABSFILM,Adlabs Films Limited,PARWATI CAPITAL MARKET PRIVATE LIMITED,SELL,322291,251.99,-
13-MAY-2009,ADLABSFILM,Adlabs Films Limited,PRB SECURITIES PRIVATE LTD.,SELL,272623,252.87,-
13-MAY-2009,BILPOWER,Bilpower Limited,SAPATRISHI PROPERTIES PVT LTD,SELL,58310,89.28,-
13-MAY-2009,BIRLAPOWER,Birla Power Solutions Ltd,ADROIT FINANCIAL SERVICES PRIVATE LIMITED,SELL,4925826,3.17,-
13-MAY-2009,BIRLAPOWER,Birla Power Solutions Ltd,JMP SECURITIES PVT LTD,SELL,1513518,3.18,-
13-MAY-2009,DSKULKARNI,DS Kulkarni Dev. Ltd.,CITIGROUP GLOBAL MKTS MAURITIUS PVT LTD- SELL CODE,SELL,207472,32.82,-
13-MAY-2009,HDIL,Housing Development and I,GENUINE STOCK BROKERS PVT LTD,SELL,1861431,183.10,-
13-MAY-2009,SALORAINTL,Salora International Ltd.,MERRILL LYNCH CAPITAL MARKETS ESPANA S.A. SVB,SELL,51315,31.44,-
13-MAY-2009,SUZLON,Suzlon Energy Limited,RAMBHABEN UKABHAI TANTI,SELL,30000000,77.06,-
13-MAY-2009,WWIL,Wire and Wireless (India),ADROIT FINANCIAL SERVICES PRIVATE LIMITED,SELL,1244170,15.57,-

Post Session Commentary - May 13 2009

The Indian market closed the volatile session on negative note due to the profit booking after strong rally in previous session. Benchmark indices plunged on the back of huge selling witnessed during the trading. Investors were cautious on political uncertainty as polling for 15th Lok Sabha to conclude today, but there is no clear picture of who would form the next government. Mixed US Index futures also contributed to the uncertainty.
The market opened above the previous close while turned volatile and slipped into negative soon after start. The US stock markets closed in mixed on Tuesday as investors bought healthcare and energy stocks. The domestic bourses turned volatile tracking mixed cues from the markets all over the world. Besides concerns for result of Lok Sabha election this weekend also fueled to the uncertainty. However, market tried to recover during final trading but was unable to sustain the momentum and slipped again to end the day with losses. Market ignored some positive sentiments from Asian stocks and continued to trade weak till end. BSE Sensex fell below 12,050 level and NSE Nifty below 3,650. From sectoral front, all indices ended in red barring Consumer Durables stocks. Besides, Metal, IT, FMCG, PSU, Oil & Gas and Bank stocks contributed to most of the selling pressure. Mid Cap and Small Cap stocks also remained out of favour.
Among the Sensex pack 22 stocks ended in red territory and 8 in green. The market breadth indicating the overall health of the market remained negative as 1336 stocks closed in red while 1154 stocks closed in green and 91 stocks remained unchanged in BSE.
The BSE Sensex closed lower by 138.38 points at 12,019.65 and NSE Nifty ended down by 45.85 points at 3,635.25. BSE Mid Caps and Small Caps closed with losses of 4.79 and 20.50 points at 3,741.45 and 4,220.21 respectively. The BSE Sensex touched intraday high of 12,256.43 and intraday low of 11,934.44.
Losers from the BSE Sensex pack are Tata Steel (3.67%), Sterlite Industries (3.46%), ONGC Ltd (3.44%), JP Associates (2.90%), Maruti Suzuki (2.67%), SBI (2.57%), M&M Ltd (2.40%), TCS Ltd (2.36%), RCom (2.22%), HDFC Bank (2.22%) and ITC Ltd (1.85%).
Gainers from the BSE Sensex pack are ACC Ltd (3.37%), HDFC (3.03%), Grasim Industries (1.83%), Ranbaxy Lab (1.05%), Hindalco (0.92%) and Tata Motors (0.52%).
On the global markets front the Asian markets which opened before the Indian market, ended mostly up with rise in oil companies on stronger crude prices. However, investors remained cautious as a huge spring rally showed signs of weakness. Shanghai Composite, Nikkei 225, Straits Times and Seoul Composite index ended higher by 45.59, 41.88, 7.16 and 11.01 points at 2,663.77, 9,340.49, 2,185.29 and 1,414.52 respectively. However, Hang Seng lost 94.02 points at 17,059.62.
European markets which opened after the Indian market are trading in mixed as a drop in banking shares overshadowed gains in defensive stocks. In Frankfurt the DAX index is trading higher by 5.12 points at 4,859.23 whereas in London FTSE 100 is trading down by 17.02 points at 4,408.52.
The BSE Metal index dropped by (2.07 %) or 165.53 points at 7,812.99, on profit taking. Scrips that lost are Gujarat NRE C (3.85%), Welspan Gujarat SR (3.71%), Tata Steel (3.67%), Sterltie Industries (3.46%) and Akruti City (2.95%).
The BSE IT stocks decreased by (1.56%) or 44.13 points to close at 2,792.64 on US government plans to scrap tax incentives that encourage American firms to ship jobs overseas. Major losers are NIIT Ltd (6.07%), HCL Tech (3.90%), Financ Tech (3.38%), Aptech Ltd (2.93%) and TCS Ltd (2.36%).
The BSE FMCG index lost (1.54%) or 32.27 points to close at 2,059.42. Main losers are United Brew (3.75%), Tata Tea (2.36%), Nestle Ltd (2.18%) and Colgate Palm (2.03%).
The BSE PSU index ended lower by (1.47%) or 90.03 points at 6,016.45. Losers are St Trade Corp (5.30%), Neyveli LIG (5.02%), RECL Ltd (4.31%), ONGC Ltd (3.44%) and UCO Bank (3.03%).
The BSE Oil & Gas index also ended lower by (1.39%) or 120.38 points at 8,539.81. ONGC Ltd (3.44%), Essar Oil Ltd (2.84%), Cairn Ind (1.90%), RNRL (1.88%) and Reliance (1.04%) ended in negative territory.
The BSE Bank index lost (1.14%) or 71.29 points to close at 6,179.39. Main losers are Indus Ind Bank (3.67%), Karnataka Bank (2.61%), SBI (2.57%), Bank of India (2.56%) and HDFC Bank (2.22%).
Tata Consultancy Services lost 2.36%. The company announced that it has been selected to deliver TT transformation and support services to Volkswagen Group UK Ltd in a five year contract.
ONGC ended lower by 3.44%. The company has chalked out an investment plan of Rs.6,000 crore to invest in Western and Eastern Offshore fields to raise output in this fiscal.
DLF dropped by 1.59%. Company’ss promoters sold 9.9% stake or 168 million shares via block deal to institutional investors. DLF said the funds will be used for contractual obligation to DAL (DLF Assets) and for buying out DE Shaw stake in DAL.
Tata Steel tumbled 3.67%. The company plans to prepay more than £200 million (about Rs 1,500 crore at current exchange rates) of the non-recourse debt that it took to acquire Anglo-Dutch steel major Corus in 2007.
Piramal Life Sciences Limited advanced by 4.99%. The company has received regulatory approval by Drug Controller General of India (DCGI) for the initiation of two phase-l/ll combination studies of its cancer molecule P276 for pancreatic and head and neck cancer.
Educomp Solutions Ltd gained 2.01% as the company is seeking shareholders approval to hive off two divisions.

Sensex sheds 240 points from the day's high on fears of a fractured mandate in election

Fears of a fractured mandate in the parliamentary election pulled the market lower in what was a highly volatile trading session
. Volatility in index heavyweight Reliance Industries and banking and IT stocks caused volatility in the key benchmark indices. The BSE 30-share Sensex lost 138.38 points or 1.14%, off close to 240 points from the day's high and up close to 80 points from the day's low.
The BSE Sensex swung near the psychological 12,000 mark throughout the day. The barometer index settled above the 12,000 level
Even as the Sensex edged lower, select non-Sensex stocks surged. One among the prominent gainers was two wheeler major Bajaj Auto which jumped 7.4% to Rs 737.80
The market was volatile. The BSE Sensex dropped in early trade on profit taking after a firm opening triggered by gains in Asian stocks. The market recovered later in choppy trade with the Sensex regaining positive territory on firm Asian stocks. However, the recovery proved short-lived as the barometer index once again slipped into the red. The market extended losses in early afternoon trade on political uncertainty as no political party appeared likely to emerge as a clear in parliamentary elections.
The market cut losses later. The market surged to hit fresh intraday high in mid-afternoon trade. A sudden sell-off pulled the market lower later.
Volatility may remain high in the near futures ahead of the formation of the next government at the Centre. Pre-election surveys have pointed to a hung parliament, raising the prospect of a repeat of 1996 when the new administration collapsed after just 13 days.
Speculation that the Bharatiya Janata Party (BJP)-led National Democratic Alliance (NDA) is gaining in the elections triggered a solid surge on the domestic bourses on Tuesday, 12 May 2009. The BSE 30-share Sensex jumped 475.04 points or 4.07% to 12,158.03, its highest closing since 3 October 2008.
Before Tuesday's rebound, fears of a fractured mandate in the parliamentary polls had triggered a 3.58% fall in the BSE Sensex in two trading sessions to 11,682.99 on 8 May 2009 from 12,116.94 on 7 May 2009. The month-long parliamentary elections that began on 16 April 2009, concluded today, 13 May 2009.
The major news channels will start telecasting the exit poll results in a short while from now. The counting of votes takes place on Saturday, 16 May 2009. A party/alliance needs 272 seats in the 543-member parliament to claim power at the Centre.
With election for the final phase over just a while back, the ban on exit polls has been lifted - the Election Commission had put a ban on all exit polls in the country till the final phase elections are over. Major news channels such as CNN-IBN, TimesNOW, Star News, Aaj Tak, India TV and NDTV India are all set to telecast the exit polls today, based on their own permutations and combinations.
Indian stocks have risen sharply in the past two months on hopes the worst of the global economic recession may be over. From a 3-year closing low of 8,160.40 on 9 March 2009, the Sensex jumped 3,997.63 points or 48.98% to 12,158.03 on Tuesday, 12 May 2009, its biggest closing in more than 7 months.
Heavy buying by foreign funds aided the rally. Foreign funds are aggressively buying Indian stocks. As per the provisional figures on NSE, foreign funds bought shares worth Rs 452.18 crore on Tuesday, 12 May 2009. FII inflow in May 2009 totaled Rs 4,692.70 crore (till 11 May 2009). FII inflow in calendar year 2009 totaled Rs 5,405.50 crore (till 11 May 2009).
European shares fell in choppy trade on Wednesday after the release of Bank of England's quarterly inflation Report in which it predicted British economy will shrink sharply in the coming months. Key benchmark indices in Germany, France and UK were down by between 1.17% to 1.74%.
The Bank of England (BoE) in its quarterly inflation report said its view on 2009 economic output is worse than in its February 2009 report, due to lower-than-expected activity in the first quarter. It could take longer for bank lending to return to normal than previously assumed, the BoE said. It also increased its estimate on inflation in the medium term, though it still sees CPI below its 2% target.
Most Asian stocks rose today 13 May 2009 on signs the global economic slowdown may be fading, with Nissan Motor powering ahead in Tokyo on hopes for an earnings turnaround. Key benchmark indices in China, Japan, South Korea, Singapore and Taiwan rose by between 0.33% to 1.74%. Hong Kong's Hang Seng fell 0.55%.
China's industrial production grew at a lower-than-expected rate of 7.3% in April 2009 as electricity output fell and exports tumbled. Industrial production had risen 8.3% in March 2009.
China's retail sales continued to expand at a rapid pace, data showed Wednesday. Retail sales rose 14.8% in April 2009 from a year earlier and in line with March 2009's 14.7% rise, according to data released by the National Bureau of Statistics. Expectations were for a rise between 14.5% and 15%. In the first four months of the year, retail sales were up 15%, a pace of growth unchanged from the first three months of the year.
The growth in retail sales adds to evidence that the Chinese government's 4 trillion yuan ($586 billion) stimulus plan is buoying domestic growth, while the global recession takes a toll on exports and related industries. Institutions with at least 80 billion yuan of assets in the past year will be allowed to set up financing companies to provide consumers with loans for buying appliances and other goods, according to draft rules issued by China Banking Regulatory Commission yesterday, 12 May 2009. Loans for cars and property are barred.
Trading in US index futures indicated Dow could fall 64 points in early trade on Wednesday, 13 May 2009.
Profit taking pulled US stocks lower for most of the session on Tuesday 12 May 2009. But markets picked up in the second half and finished mixed despite a lack of positive catalysts. Consumer and health care stocks rose, though weakness in technology and banks prevented larger gains. The Dow gained 50.34 points, or 0.6%, to 8,469.11. The S&P 500 index slipped 0.89 points, or 0.1%, to 908.35 and the Nasdaq fell 15.32 points, or 0.9%, to 1,715.92.
US foreclosure filings hit a record in April 2009, affecting one in every 374 housing units, and bank repossessions in particular may spike in the next few months, RealtyTrac reported today, 13 May 2009
Closer home, India's industrial output fell a steeper-than-expected 2.3% in March 2009 over March 2008, its third fall in four months government data showed on Tuesday. The manufacturing segment shrank by 3.3%. Mining rose by a modest 0.4% and electricity output climbed by a decent 6.3%. However, data showing a strong growth in consumer durables production in March 2009 reinforced expectations of a recovery of the economy. Production of consumer durables jumped 8.3% in March 2009 as compared to a 2% decline in March 2008.
The industrial production figure for February 2009 was revised to a 0.7% drop from a preliminary estimate of a 1.2% decline.
Meanwhile, initial estimates showed that India's exports dropped 33% to $10.7 billion in April 2009. Imports fell a sharper 35% to $16 billion in April 2009 on the back of low oil prices, falling exports and a deceleration in manufacturing activity and investment.
The BSE 30-share Sensex lost 138.38 points or 1.14% to 12,019.65. The Sensex rose 98.40 points at the day's high of 12,256.43 in mid-afternoon trade. At the day's low of 11,934.44, the Sensex fell 223.59 points in early afternoon trade.
The S&P CNX Nifty fell 45.85 points or 1.25% to 3,635.25. Nifty May 2009 futures were at 3629, at a discount of 6.25 points as compared to the spot closing of 3635.25. Turnover in NSE's futures & options (F&O) segment surged to Rs 64035.11 crore from Rs 53677.79 crore on Tuesday, 12 May 2009.
BSE clocked a turnover of Rs 9767 crore much higher than Rs 4,943.62 crore on Tuesday, 12 May 2009, thanks to a large block deal in DLF.
The market breadth, indicating the overall health of the market, was negative. The breadth swung between positive and negative zone in the second half of the trading session. On BSE, 1,166 shares rose as compared with 1,351 that fell. A total of 59 shares remained unchanged.
From the 30 share Sensex pack, 22 stocks fell and rest gained.
From 9,647.31 on 31 December 2008, the BSE Sensex has risen 2,372.34 points or 24.59% in calendar year 2009.
The BSE Mid-Cap index fell 0.13% and the BSE Small-Cap index slipped 0.48%. However, both these indices underperformed the Sensex.
The BSE Consumer Durables index (up 0.09%), the BSE Healthcare index (down 0.45%), the BSE Auto index (down 0.46%), the BSE Capital Goods index (down 0.56%), the BSE TECk index (down 0.85%), the BSE Realty index (down 0.96%), the BSE Power index (down 0.98%), outperformed the Sensex.
The BSE Bankex fell 1.14% and matched the performance of benchmark index BSE Sensex.
The BSE Metal index (down 2.07%), the BSE IT index (down 1.56%), the BSE FMCG index (down 1.54%), the BSE PSU index (down 1.47%), the BSE Oil & Gas index (down 1.39%), underperfomed the Sensex.
India's largest private sector firm by market capitalisation and oil refiner Reliance Industries (RIL) fell 1.04% to Rs 1937.90 on profit taking after a recent surge. The stock was volatile. It hit the high of Rs 1,975 and a low of Rs 1,907.10. Analysts expect strong growth in bottom line in coming quarters from sale of gas which it started pumping last month from its deep-sea field off the east coast.
Ratnagiri Gas & Power, which supplies electricity to the western Indian state of Maharashtra, on Friday, 8 May 2009, agreed to buy natural gas from an offshore field operated by Reliance Industries.
Outsourcing focussed IT stocks fell in choppy trade on US government plans to scrap tax incentives that encourage American firms to ship jobs overseas. India's second largest software services exporter by sales Infosys was down 1.51% to Rs 1,573.85. The stock hit a high of Rs 1,598.80 and a low of Rs 1,558. Its American depository receipt (ADR) rose 2.58% on Tuesday.
India's largest software services exporter by sales TCS was down 2.36% to Rs 622.45. The stock hit a high of Rs 645 and a low of Rs 617. TCS said today it has been selected for a five-year IT services contract for auto maker Volkswagen group's operations in the United Kingdom.
India's third largest software services exporter by sales Wipro was down 0.13% to Rs 374.75. The stock hit a high of Rs 390.95 and a low of Rs 365.50. Its ADR rose 6.05% on Tuesday.
Analysts, however, feel that US government's plan to scrap tax incentives that encourages American firms to ship jobs overseas is unlikely to dent business for Indian outsourcers. On 4 May 2009, US president Barack Obama announced plans to reduce tax breaks for US-based multinationals shipping jobs to places like India. Instead, the tax incentives would now go to those creating jobs inside the US, in places like the Buffalo city, New York.
Currently, US businesses that invest overseas can take an immediate tax deduction for expenses supporting their overseas investments. They can also defer the payment of US taxes on the profits they make from such investments. But, now the Obama Administration wants to ensure that companies do not receive deductions for expenses supporting their offshore investments until they pay tax on their offshore profits. This is intended to dis-incentivise US companies from retaining profits abroad.
Infosys said the proposal, if implemented, was unlikely to reverse the outsourcing of a gamut of services by US firms to Indian companies. "The current proposal, as we understand, is to close corporate tax loopholes on US multinational corporations and crack down on their overseas tax havens," the company said in a statement. "We do not believe that it has anything to do with IT outsourcing done by US corporations.", Infosys said.
The Indian rupee was weak amid choppy trade. The rupee was at 49.64 per dollar, below its previous close of 49.26/28. A weak rupee boosts revenues of IT firms in rupee terms as IT companies earn a lion's share of revenue from exports.
Bank stocks fell in volatile trade on profit taking after a recent rally. India's biggest bank in terms of branch network State Bank of India was down 2.57% to Rs 1,262.15. The stock hit a high of Rs 1,309 and a low of Rs 1,255. SBI reported a forecast-beating 45.6% rise in net profit to Rs 2742.31 crore on a 34.6% increase in operating income to Rs 22060.61 crore in Q4 March 2009 over Q4 March 2008. Profit was boosted after gains from trading trebled and loan demand soared as borrowers scrambled for funds in a slowing economy. The bank announced the results on Saturday, 9 May 2009.
India's largest private sector bank by net profit ICICI Bank was down 1.61% to Rs 549.65. The stock hit a high of Rs 567.80 and a low of Rs 541.50.. Its American depository receipt (ADR) rose 3.88% on Tuesday, 12 May 2009.
India's second largest private sector bank by operating income HDFC Bank was down 2.21% to Rs 1,163.30. The stock hit a high of Rs 1,199 and a low of Rs 1,147. Its ADR fell 0.27% on Tuesday.
India's biggest dedicated housing finance firm by operating income HDFC rose 3.03%.
Metal stocks fell even as copper climbed for a second day in Asia as investors deemed April 2009's record Chinese imports a sign of improving demand in the world's top metals consumer. Tata Steel, Steel Authority of India, Sterlite Industries, National Aluminum Company, fell by between 2.95% to 3.67%.
China's purchases of copper and copper products reached a record 399,833 metric tons last month, compared with 374,957 tons in March 2009. Still, a deepening slump in the nation's exports, which declined 22.6% in April 2009 over April 2008, capped the metal's gains.
FMCG stocks fell on profit taking after they rose recently triggered by expectations of a surge in sales due to forecast of a good monsoon this year. ITC, Tata Tea, Nestle India, Dabur India, Britannia Industries fell by between 0.01% to 2.36%. FMCG firms derive a substantial revenue from rural markets.
India's largest FMCG major by sales Hindustan Unilever fell 1.51% as it reported a lower-than-expected rise of 3.68% in net profit to Rs 394.99 crore on a 6% rise in sales to Rs 3988.33 crore in Q4 March 2009 over Q4 March 2008. Profit fell short of expectations mainly due to provision for retirements and restructuring costs. The company announced the result on Sunday, 10 May 2009.
Realty stocks fell on profit taking after recent surge. Unitech, Omaxe, Akruti City fell by between 0.53% to 3.24%.
DLF fell 1.59% to Rs 232.50 after two block deals of 8.4 crore shares each were struck at an average price of Rs 233.50 a piece whereby the founders sold 16.8 crore shares, or nearly 10% of the firm's equity.
Before trading started, promoters of DLF had informed the stock exchanged today, 13 May 2009, that they will offload 16.8 crore shares, or nearly 10% of the firm's equity. DLF promoters said the funds raised through the share sale would be used to infuse capital in its property trust DLF Assets (DAL) and also to purchase private equity D.E. Shaw's stake in DAL. DE Shaw had invested $400 million in DAL in 2007 and is due to exit by the end of the month under an agreement.
Capital goods stocks fell on profit taking after a recently strong rally. India's biggest engineering & construction firm by revenue Larsen & Toubro (L&T), last month, lost 1.01%. L&T on 16 April 2009 said the company expects its order inflow to grow by 25-35% in the year ending March 2010 (FY 2010).
Bharat Heavy Electricals, Gammon India, Praj Industries, Areva T&D, fell by between 0.29% to 4.3%.
Suzlon Energy fell 5.07% to Rs 76.75 after about 3 crore shares, or 2% of its equity changed hands in a single block deal at Rs 82 a share on the National Stock Exchange.
Some healthcare stocks fell on profit taking after they rose recently as most of the healthcare firms reported better than expected Q4 March 2009 result. Dr Reddy's Laboratories, Piramal HealthCare, Biocon, Glenmark Pharmaceuticals, Sun Pharmaceutical Industries fell by between 0.85% to 3.67%.
Telecom stocks fell on recent reports the telecom regulator has notified mobile number portability (MNP) from September 2009. Reliance Communications and Idea Cellular, fell by between 1.32% to 2.22%, on fears that mobile users will hop service providers at a faster rate when MNP is introduced. Once MNP comes in force, it could force GSM operators to increase capital expenditure to improve service quality in the top-tier telecom zones in a bid to retain existing users.
But, India's largest telecom services provider by sales Bharti Airtel rose 0.35% after the company added 2.81 million mobile users in April 2009, taking total customers base to 96.7 million.
DLF clocked the highest volume of 17.98 crore shares on BSE. Cals Refineries (2.44 crore shares), Unitech (2.22 crore shares), Suzlon Energy (2.17 crore shares) and Birla Power Solutions (1.74 crore shares) were the other volume toppers in that order.
DLF clocked the highest turnover of Rs 4,1531.15 crore on BSE. Reliance Industries (Rs 284.08 crore), Reliance Capital (Rs 267.96 crore), ICICI Bank (Rs 256.81 crore) and Housing Development & Infrastructure (Rs 244.42 crore) were the other turnover toppers in that order.

Commonwealth Games to boost tourism in India

With India to host the Commonwealth Games next year, hoteliers in the country are rushing to make the most of the likely spurt in tourist traffic by providing new rooms, leading to a boom in development, global consultancy firm Deloitte has said. "In 2010, India will host the Commonwealth Games for the first time, and hoteliers here will be hoping to emulate the success of Melbourne, which was the host in 2006," it said in a report, 'Hospitality Vision-Global Performance Review'.         
"International and domestic hotel chains are rushing to maximise India's potential by providing new rooms, leading to a boom in development. Mumbai and Delhi are expected to see an influx of new rooms in 2009, with 305 added to New Delhi's inventory, while Mumbai will see 1,158 rooms enter the market," it added.         
The report said the economic slowdown and Mumbai's terror attacks of last November notwithstanding, India will make a mark as a preferred tourist destination globally.         
"There have also been bombings in several Indian cities (tourist hubs such as Jaipur, Bangalore and Ahmedabad), including the outrage in Mumbai, where terrorists targetted the tourism icon, the Taj Mahal Palace Hotel. These events may deter visitors in the short-term, but tourists quickly come back and their presence helps the healing process," it said.
Although Asia-Pacific will not escape the general slowdown, robust economies in China and India make them better placed than other regions, Deloitte said.         
"There are predictions that international visitor arrivals will more than double by the end of 2010. China and India will continue to make their mark, both regionally and globally."         
Citing a survey by World Travel and Tourism Council (WTCC), the report said that between now and 2018, India will be a tourism hotspot followed by China, Libya and Vietnam.         
"The world's fastest growing tourism destinations over the next decade will be India, China, Libya and Vietnam."         
Cautioning that 2009 will be challenging for hoteliers and only the fittest will survive, Deloitte said, "Hotels will need to focus on value for money more than ever before."         
Occupancy in hotels was down by 14 per cent throughout 2008, but average room rates rose 4.5 per cent to $257.         
The report said while it may be tempting to slash room rates to bring in business, the move could be damaging as it takes average room rates much longer to recover than occupancy levels.         
"Tempting though it is to slash room rates to bring in business, this is not a long-term solution, as it takes average room rates much longer to recover than occupancy levels," Deloitte said.
The glimmer of hope, however, could be the reduction in airfares through low global oil prices - $35 a barrel in February 2009 compared to $147 last July, it added.         
Deloitte's India Head for Tourism, Hospitality and Leisure, P R Srinivas, told PTI that while the swine flu scare may have been the latest dampener to the global tourism scenario, traffic to India has not been drastically affected.         
"Not really very much as there have been very few suspected cases of swine flu in India. The European and Trans-Atlantic traffic has been drastically affected," Srinivas said.

Scource : Business Standard

IT-BPO: Is it the end of a dream run?

India's software and IT enabled services industry has had a dream run till now, capturing by 2008 a 51 per cent share of the global market for sourcing of technology and business services. But it now faces the biggest challenge of its lifetime.
The world around the Indian IT-BPO industry is rapidly changing and it will have to transform itself extensively even to stay where it is.

IT-BPO exports grew at a compound annual rate of 31.6 per cent in the boom years 2004-08. But the rate fell to 16 per cent last year (2008-09) and is likely to be in single digit in the current year.
While the slowdown so far is the result of the global economic crisis, the future of the industry has been plunged into uncertainty by the Obama effect which has created an openly hostile political atmosphere towards offshoring in the US, the world's biggest market for offshore vendors. So you cannot even say that it will be business as usual once recovery comes.

Nasscom, the industry body, has over the years been using the strategy consultancy McKinsey to give it a vision and roadmap, periodically updated. The first report, written when exports clocked $4 billion in 1998, laid out the target of $50 billion annual exports in a decade, by 2008.
This goal seemed impossible initially but over the years became a sort of pole star, to guide and to inspire. The goal was missed marginally, exports touching $ 47 billion in 2008-09. The second goal, $60 billion in exports by 2010, is likely to be missed by 3-4 quarters. And now McKinsey has laid out a third scenario, of the shape of things to come by 2020.

The latest McKinsey report (executive summary) points out that Indian IT's business model, till now centred on delivering a one-time labour arbitrage based on an offshore centric model, is critically dependent on on-site rates being three to four times offshore rates.
Till now banking, finance and insurance, telecommunications, manufacturing and retail have been among the important verticals. But in the new scenario emerging, most of the growth will come from newer verticals like energy efficiency, climate change, healthcare and mobile applications. The new geographies will be the BRIC countries and new customers, small and medium businesses and individuals who will use more and more of IT.

The addressable global market will grow from the current $500 billion to around $1.5-1.6 trillion in 2020. But 80 per cent of the incremental growth in business, $800 billion, will come from new verticals, geographies and customer segments.
This will be more than the present core business which will then likely account for $700 billion. Thus in 12 years, Indian IT will have to transform itself successfully to live and survive in a substantially new business world.

Remote infrastructure management will grow and be an important part of the business, as will automation and process standardisation which will shrink the value of the current core business.
This will shake the foundations of what is now bread and butter for Indian software companies' application development and maintenance. Today software services companies are in business importantly because legacy systems malfunction all the time and have to be fixed on a continuing basis.
But when applications take less human effort to develop, courtesy productivity improvement via automation, and systems become less prone to breakdown because of process improvements, today's average software engineer has to contemplate what happened to yesterdays car repair mechanic.

The latest Nasscom-McKinsey report spells these changes through several scenarios. The worst case is the one in which the Obama factor constrains global demand for technology and business services as offshoring is curbed.
It projects a global outsourcing industry of $275 billion in 2020, in which India accounts for $125 billion with market share going down to 45 per cent from the current (2008) figure of 51 per cent. This implies a CAGR of 10 per cent, hugely down from the 33 per cent achieved in recent years.

But assuming that this does not happen, the likely scenario is Indian exports of $175 billion, a market share of around 40 per cent and a CAGR of 13 per cent. Implicit in this is a loss of competitiveness through inability to fill the emerging skills gap, among other things, with countries like China, the Philippines and Eastern Europe becoming the new challengers.
But if India does retain its competitiveness at present levels then, according to the third scenario, exports are likely to be $225 billion, implying a global market share of 50 per cent (same as now) and a CAGR of 15.5 per cent.
And the best possible scenario is one in which India innovates to acquire new capabilities, thus becoming more competitive than now, and achieves exports of $310 billion, implying a market share of around 57 per cent and a CAGR of 18.6 per cent (still way below the last peak).

Though such specific figures can and do go awry, they provide a framework for the various players and stakeholders to anchor individual business plans and agendas for action.
A lot can be done to remain fighting fit and going by the record of the industry, a lot will be done. With the level of enterprise and innovative spirit embedded in the industry, there is a fighting chance that, having come this far, it will be able to transform itself the right way. A subsequent column will look at the agenda for action outlined by the Nasscom-McKinsey report.

Scource : Business Standard

India's GDP can grow at 8%: Reddy

A 9-10 per cent economic growth rate for India is not sustainable without creating necessary infrastructure like power, ports and roads, warns former Reserve Bank Governor Y V Reddy.

"You should run at a speed that would strengthen your muscles and if you run too fast it will affect your health," Reddy said, adding that ideally India should grow at eight per cent plus from 2011.

"There is a general perception that the economy has the potential to grow at 8-10 per cent but my own feeling is that India can grow at eight per cent plus from 2011," Reddy told PTI in a telephonic interview.

For the economy to grow higher than eight plus per cent, "we do not have the level of infrastructure and elasticity in supply," Reddy said, adding this meant it might lead to overheating of the economy.

On full capital account convertibility (CAC), Reddy said the global financial meltdown has endorsed India's view point that the migration to CAC should be "careful, calibrated and appropriate with an option to roll back whenever required."

The recent global crisis and the East-Asian currency meltdown in late 90s have clearly established the prescription for "rabid" capital account convertibility was not appropriate, the former RBI Governor said.

"There is a definite feeling that every country must be cautious about capital account liberalisation...we can not afford full capital account liberalisation before we are concomitant with other conditions."

Drawing lessons from the financial turmoil, Reddy said that it was not enough for central banks to concentrate merely on price stability but they also need to focus on financial stability.

As far as the country's banking and financial systems are concerned, Reddy said India and Canada are among the few markets which had the resilience to withstand the downturn.

"There is no vulnerability as such...However, there can be indirect effects. The indirect effects can be as part of export-related slowdown and demand," Reddy said.

The RBI had taken corrective measures when the credit off-take shot up in the banking industry, which, in turn, has helped the system to face the difficult times, said Reddy, who stepped down in September 2008 after a five-year stint at the helm of India's central bank.

FinMin backs Sebi demand to access phone call data

The finance ministry has backed the capital market regulator's request to give it more powers to access transcripts of telephone conversations and related information. This is aimed at strengthening the Securities and Exchange Board of India's powers to investigate market-related offences.

The ministry has requested the Department of Telecommunications to allow Sebi to join 10 other agencies that look into telecom companies' operations and books. These include the local police, Central Bureau of Investigations, Enforcement Directorate, Special Frauds Investigation Cell, Economic offences Wing, Intelligence Bureau, Income-Tax (Enforcement), Ministry of Defence, and Research & Analysis Wing.

The move to include Sebi in DoT's list of inquiry and enforcement authorities would also enable Sebi to summon for call data records from licensed service providers, apart from giving it the power of inquiry and enforcement.

Sources close to the development told Business Standard that Sebi, which is mandated to protect the interest of investors and regulate the securities market, often needs to conduct market surveillance to detect and prevent manipulations. This is to maintain orderly conduct and integrity in the securities market.

"For the purpose of prompt surveillance and effective investigations, examination of various documents including telephone records of suspected persons are crucial to establish the role of market manipulators, especially in insider trading cases," added the source.

Sources, however, said some officials in the home ministry and DoT are against empowering Sebi to scrutinise companies' records as the EoW already has the power to look into such offences.

The finance ministry has, however, argued that since Sebi has the same powers as given to a civil court under the Code of Civil Procedure for inspection of documents of any person involved in market manipulations, there should be no problems in giving it the necessary powers.

Recently, Sebi accessed phone records for its investigations in the Pyramid Saimira case and decided to debar one of the large investors of the company for manipulating the stock price.

Most telecom operators by law are required to maintain voluminous records of calls made on their network but the records can only be accessed by a few agencies.

"Sebi has been experiencing that telecom companies are not forthcoming with cyber information in the form of telephonic transcripts or other information sought by while discharging its functions of enquiry and enforcement," the finance ministry added.

Scource : Business Standard