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Friday, June 29, 2007
Inflation at 14-mth low, no policy change seen
India's inflation rate fell more than expected to a 14-month low in mid-June, but analysts said on Friday that firm manufactured product prices and data revisions meant the Reserve Bank of India had no room to relax policy now.
Separate data showed the current account balance swung into surplus in the March quarter from a deficit at the end of 2006, helped by Indians overseas sending money home.
The widely tracked wholesale price index rose 4.03 percent in the 12 months to June 16, slowing from an annual rise of 4.28 percent a week earlier and well below a two-year high of 6.69 percent in late January, data showed.
It was lower than a Reuters poll estimate of 4.13 percent.
But analysts said that firm manufactured product prices and data revisions meant the RBI had no room to relax policy now.
"The manufacturing inflation, or core inflation, has still not come off," said Harish Menon, economist at ING Vysya Bank.
"The RBI should pause rather than react to these positive numbers. If the market is looking to go into an easy monetary stance based on these numbers, they would be disappointed."
The annual inflation rate for April 21 was revised up to 6.07 percent from 5.77 percent, with the index for that week revised up to 211.5 points - just 2 points below the preliminary index level as at June 16.
Speaking after the data, RBI governor Yaga Venugopal Reddy reiterated the central bank's aim was to contain inflation to 5 percent in the fiscal year that began in April, and lower it to 4.0 to 4.5 percent in the medium term.
The RBI has raised interest rates five times in the past year, the last time at the end of March, but could now hold its fire when it next reviews policy on July 31 with inflation below its comfort zone of 5 percent.
Finance Minister Palaniappan Chidambaram has said that policy tightening and currency strength had helped moderate inflation, and more rate rises may not be needed if the trend continued.
In its latest forecast, the weather office said monsoon rains in July -- the most crucial month for farm output-- were expected to be 95 percent of the long period average. Analysts say good monsoon rains would result in better crops which in turn could help ease supply pressures and inflation.
The Indian economy, Asia's third-largest, grew 9.4 percent in the fiscal year that ended in March, its highest rate in 18 years and second only to China among major economies.
CURRENT ACCOUNT SURPLUS
The government said its fiscal deficit for April and May, the first two months of the 2007/08 fiscal year, was 621.35 billion rupees ($15.3 billion), or 41.2 percent of the full-year target of 1.51 trillion rupees.
Separate data from the RBI showed the current account swung to surplus of $2.56 billion in the March quarter from a revised deficit of $2.78 billion in the December quarter.
For the 2006/07 fiscal year, India posted a current account deficit of $9.61 billion. While that was wider in dollar terms from a $9.19 billion deficit in 2005/06, the deficit held steady at 1.1 percent as a percentage of gross domestic product.
The balance of payments surplus rose to $20.45 billion in the March quarter from a revised surplus of $7.51 billion in the December quarter. External debt rose by $12.3 billion in the quarter to $155.0 billion at the end of March
Fund Action
Fund Action:
EMCO
Mirae Asset India Discovery Equity Investment sells 78,000 shares at Rs 793/sh
Hindustan Sanitary
Birla MF buys 2.5 lakh shares at Rs 84.50/sh
IOL Broadband
UBS Securities Asia buys 2 lakh shares at Rs 497.78/sh
Saksoft
Ward Ferry Mgmt buys 1.7 lakh shares at Rs 221/sh
Subash Projects & Mktg
Reliance Capital Trustee Co buys 3 lakh shares at Rs 228/sh
Citigroup Global sells 3.2 lakh shares at Rs 228/sh (1% stake)
BEML
ICICI Pru Life Insurance buys 1.8 lakh shares at Rs 1,172/sh
Meghmani Organics
HDFC AMC buys 52.2 lakh shares at Rs 28.30/sh
Sasken Communication
ARISAIG India Fund buys 3.8 lakh shares at Rs 469/sh
Pru ICICI MF buys 4 lakh shares at Rs 470/sh
Intel Capital (Cayman) FDI Account sells 7.9 lakh shares at Rs 470/sh
Shree Ashtavinayak Cine Vision
ILFS Investsmart PMS buys 1 lakh shares at Rs 275/sh
Birla Corporation:
Pru ICICI Trust sells 4.1 lakh shares at Rs 269.40/sh
Kesoram Industries
Pru ICICI MF sells 3 lakh shares at Rs 442.50/sh
Pru ICICI Trust sells 2.3 lakh shares at Rs 447/sh
Sterlite Optical
Reliance Capital Trustee sells 3.2 lakh shares at Rs 234.80/sh
SSKI - Dish TV
SSKI Research report on Dish TV:
Dish TV has reported revenues of Rs 1916 million (against our estimates of Rs 1823 million) on a subscriber base of 1.9 million in FY07. As anticipated of heavy losses in initial years, Dish TV has reported operating loss of Rs 1825 million and net loss of Rs 2523 million, much wider than our estimates of a net loss of Rs 2070 million. Significant part of the bleed comes due to higher pay channel costs, ASP expenses and subsidization of Set Top Boxes. Given the interoperability of content, the only differentiator lies in service standards and subsidies (or Balance Sheet). On both counts, given the emerging competitive environment, Dish TV is unlikely to find the going smooth.
We believe that Indian television distribution is set for digitization. With DTH being less regulated and more organized, we expect DTH to outpace digital cable in near term and become a 16m home market by 2010. While we are positive over the space as also Dish TV's first mover advantage, our concern pertains to intensifying competition. Competition from deeper pocketed players like Reliance ADAG, Bharti, Tatas and Sun would only make it difficult for Dish TV to sustain its share of incremental market (from over 75% now to 32% by 2010E) as also extend the bleed period. Increasing subsidies and customer acquisition cost, besides impending dilution to fund Rs7bn of capex, leave no value for investors. Reiterate Neutral.
IDBI Capital - Garware Offshore Services
IDBI Capital report on Garware Offshore Services:
Summary:
Garware Offshore Services (GOSL), is all set to ride the boom in offshore E&P (Exploration & Production) sector with its expansion plans. The company provides logistics services to offshore oil and gas sector and is planning to increase its fleet size from 6 in FY06 to 14 in FY09.
Going forward, we expect, better charter rates along with increasing fleet size to drive growth for GOSL. Topline is expected to post 64% CAGR over the next 3-years. EBIDTA margin is expected to surge to 65%. Boosting topline and surging margin is expected to lead to robust bottom line performance. PAT is expected to showcase CAGR of 69% in the next 3-years.
The current market price is 10.3x the fully diluted FY08E EPS of Rs.20 and 6.4x the fully diluted FY09E EPS of Rs.32.3. We recommend ‘Buy’ with a target price of Rs 321.
Investment highlights:
Expansion plans
GOSL is betting big on its expansion plans. GOSL is expanding its fleet size from 6 in FY06 to 14 in FY09. The company will be acquiring 2 Platform Supply Vessel (PSV), 3 Anchor Handling Tug cum Supply Vessel (AHTSV) and 2 Accomodation Work Barge (AWB) scheduled to be delivered over the period of next 3-years.
Contracted revenue
GOSL has secured stream of revenues from its long-term contracts. With the fleet expansion and better day rates, revenues from AHTSV’s are expected to post CAGR of 41% over the next 3-years. PSV revenues are expected to showcase CAGR of 74% over the next 3-years. AWBs expected to be delivered in FY09 will earn around US$ 15,500/day. The vessel will produce revenues of around Rs.464m by FY10. GOSL's EBIDTA margins are expected to rise steeply from around 56% in FY06 to 65.7% in FY09.
Tie-up with Havyard
GOSL has signed a Memorandum of Understanding (MoU) with Havyard Leirvik A. S., for sale of ships and designs produced by Havyard group to Indian companies. It is expected to earn revenues in the form of commissions. GOSL is also setting up ‘Workshop Design Center’ as a KPO (Knowledge Process Outsourcing) center in India in collaboration with Havyard Leirvik A. S.
Lower dry docking charges
Dry docking charges are expected to be minimal in next 2-3 years, as all the four AHTSV’s have undergone dry-docking in end 2006. PSV’s are newly built and are expected to require minimal maintenance.
Prabhudas Lilladher - AIA Engineering
Prabhudas Lilladher report on AIA Engineering:
AIA Engineering is a niche player in high-chrome metallurgy products catering to the cement, power and mining segments. It enjoys a 90% market share in the domestic market and 20% in the global market. AIA is increasing its capacity manifold from 65,000 tpa to 265,000 tpa within a span of two years and is poised for substantial growth in the years to come.
For the period FY07-09E, we expect a net profit CAGR of 40.2% on the back of a revenue CAGR of 46.5%. At the ruling price of Rs 1,752, the stock trades at 24.2x and 17.8x FY08E and FY09E earnings of Rs 72.3 and Rs 98.6 respectively. On an EV/EBIDTA basis, the stock is available at 16.4x and 11.4x FY08 and FY09 estimates respectively. We arrive at a DCF based target price of Rs 1,974 per share which discounts FY09 earnings by 20.0x.
Investment Argument
Niche player in a high-growth segment
AIAE is a niche player in the value-added high-chrome metallurgy segment catering to the cement, mining and thermal power industries in grinding and crushing operations. The grinding mill is of utmost importance to the user industries, as reduced efficiency has a significant impact on output. In case of a thermal power plant, lower output of ground coal would lead to reduced heat generation and eventually reduction in electricity produced. In case of a cement plant, lower output leads to substantial increase in power and maintenance cost.
The size of the market for mill internals in cement plants is expected to be around 275, 000 tonnes including China. Demand from the Chinese market stands at about 100,000 tonnes. The company does not have any presence in China. Thus, the total market available stands at 175,000 tonnes.
Industry capex cycle driving growth
Companies in cement, power and mining have announced huge expansion plans. AIA stands to benefit from this expansion, as the grinding mills manufactured by it are critical components in these plants. Industrial capex is expected to have a CAGR of 22% from FY06 to FY10.
AIAE has a market share of 90% in the domestic market for grinding mills and is thus expected to garner a major chunk of the emerging opportunities in related sectors. Most of AIA’s revenue now arises from replacement demand. However, ahead, as new capacities in the sectors start coming up, we could see this proportion changing.
Expanding capacities to cater to huge market
The biggest constraint the company faces in increasing market share is capacity, which is being fully utilized. It aims to increase its global market share to 50% within a span of three years. Currently, almost 55-60% of the global market is controlled by Magotteaux, which has a capacity of 300,000 tonnes. Magotteaux’s global market share has come down from 80% two years ago.
AIA Engineering currently has capacity of 115,000 tpa, which it plans to increase to 165,000 tpa by October 2007 and subsequently to 265,000 tpa by October 2008.
Robust order book
The company has a current order book of Rs 4.2bn, which includes orders only on the current facility. It has not booked any orders for the new facilities that are under commissioning, though it has been receiving a number of queries for the same.
Investment Concerns
Raw material price volatility
The main raw material utilized by the company is chromium. Chromium prices have peaked in the past few months; however, they now have come off their highs and are expected to be stable in the near term. Any increase in the price of chromium would adversely affect the margins of the company, thus hindering the bottom line.
Delay in execution of projects
The company is undertaking huge expansion projects. It plans to increase its capacity over four-fold to 265,000 tpa from 65,000 tpa. The capacities would come up in various phases till October 2008. Any delays in execution of plans might hinder growth of the company and thus have a negative effect on the estimates.
Downturn in industrial capex
Any downturn in the planned industrial capex might affect the growth prospects of the company. However, AIA supplies grinding media to three industries namely cement, mining and thermal power, thereby de-risking its business model from an industrial downturn in any sector. Also, the company generates almost 80% of its revenue from replacement demand, thus reducing its dependence on new capacities. hinder future growth
Financial Overview
Bottom line growing stronger than top line
We expect a bottom-line CAGR of 40.2% and a top-line CAGR of 46.5%. The bottom line is expected to grow faster than the top line due to improved margins from higher volumes, leading to operating leverage.
Q4 FY07 result update
AIA Engineering (AIAE) reported flat revenue for the quarter at Rs 1.7bn, due to capacity constraint. However, the new capacity has now come up and the company has started taking orders on the new facility. The EBIDTA margin improved by 30bp yoy to 23.1%. Net profit increased by 15% yoy to Rs 307m. The order book as on 1st April 2007 stands at Rs 4.2bn, which does not include any orders booked on the new facility.
Valuation
HDFC Sec - Royal Orchid Hotels
HDFC Securities report on Royal Orchid Hotels:
Royal Orchid Hotels, ROHL reported a turnover of Rs 811 million in FY07 and a PAT of Rs 339 million, which were 37% and 58% higher yoy. The healthy topline growth was led by 27% rise in ARRs (Rs 9060) and marginal dip in occupancies.
For the quarter ended March 07, the turnover of Rs 240 million and PAT of Rs 106 million were higher by 25% and 35% yoy, respectively. The topline growth was aided by 25% rise in ARRs (Rs 10,000) without a dip in occupancy.
The consolidated top line rose by 36.2% to Rs. 1137 million, against our estimate of Rs 1101 million, a gap of 3.3%. The net profit stood at Rs 352.57 million, a growth of 53.2% against our estimate of Rs 305 million. Against our EPS estimate of Rs 11.21, the actual EPS stood at Rs 12.95.
ROHL would be managing close to 1000 rooms by Q1FY08 (existing room inventory is 700 rooms) across segments and cities except for Bangalore, thus de-risking the revenue profile. Its asset light approach has helped it attain faster growth and maximize ROE in the industry, which we expect to continue. A balanced capex, strategically positioned “Business Hotels” in growth markets and the strategy of reining in costs (OPMs maintained for 2 years at ~ 50% are the best in the industry) will help it earn rich dividends going forward.
For the reasons discussed below and attractive valuations of - 13.7x & 12.3x FY08E & FY09E, 3% dividend yield and 2.3x P/BV, we re-iterate our OUTPERFORMER rating and value its target price at Rs 245, offering 18% upside from current levels.
Close: All eyes on Tech now ! Can they create history ?
Ups and down in the market for the week with volatile Global cues along with F&O settlement provided a recipe for a vvolatile week and tats what it lived up to its name. Market recovered in the last trading sessions of the week.. Economy and Inflation fear made indices shiver globally and subprime mortgage issues in the US also kept sentiments negative earlier in the week. Fed met yesterday to discuss on interest rate..as expected it kept interest rate unchanged but stated that outlook on economy as more or less the same. Near uncertainly about the US economy remains and the possibility of an interest rate cut in US has diminished. Cement was the real gainer this week as an interview of the FM indicated that he was not for any interference on cement companies. Sugar was up on sops talk from a UP budget but we really cant say. Banking was another winner. Inflation has touched the RBI targets and that is some comfort. The credit demand also seems to be cooling. Rupee was ranged but stiill strong though a spike to Re 41 kindled hopes for the IT sector which were short lived. IT was ranged.too.
Reliance was a bit weak for the week. There were reports which suggested that the value of the gas in the current arrangement would be less by 1/3rd the original estimates which implies a big downside. This was the biggest X factor for the Reliance but now things seem bit difficult for sustained gains unless this uncertainty is done away with. There is now scope for litigation and certainly thats unlikely to be liked.
This month textiles stocks were under pressure.. as strong rupee is expected to have adversely affected the textile exporters. The cotton textile exporters had all along worked on a 5 % margin and the rupee's appreciation nearly 12 % against the US dollar has therefore pushed the exporters in the red. The Govt. is looking to make life a bit easier here.
Tyres saw some interest Rubber prices have cooled off to below Rs.80 / kg. The tyre companies are not likely to lower the prices. However, slowdown from OEM demand is a worry. We are positive on the sector. Apollo, JK, Balkrishna are our picks. Ceat has another reason to be bullish and this stems from its restructuring. These are good investment plays.
Finance Minister is an interview clarified that Govt. never tried to control cement price neither do it intend to do. Monsoon is lean season for cement..however no weakness is witnessed here. Kesoram and Century were the big winners. Actually the reason was ownership transfer of BK Birla group companies to KK Birla group. The Aditya Bilra group would emerge as the largest entity along with Grasim and Ultratech.
Banks were in action and deals. IDBI sold its 2% stake in NSE for Rs.200crs. Bank Of Baroda also sold its 0.9% stake in NSE for Rs.906.5crs to Citi. Govt. made part payment for SBI stake to RBI..part payment will be made today. Inflation is under controls and that is good sign. All ended up.
Jet came out with results and some action was seen here. The management said that the industry is in consolidation mode. After the acquisition of Jet-Sahara, Air India-Indian and Kingfisher-Air Deccan..These three players will have around 80% of market share. Air Deccan has taken lead in leveraging itself by the acquisition. The company has already passed on congestion surcharge to passengers and intends to improve its yield by Rs.500 which means 10% upsides in passenger fare. Others would follow this trend soon. This indicates some confidence in the industry. Jet would encourage Sahara as Jet lite (LCC) to compete Air Deccan. Management also indicated that Sahara would turn profitable by Oct 2007. Air Deccan also changed its strategy. The Rs.1 to Rs.99 tickets now will be used to penetrate the virgin market whereas fares will be normal for regular airline passengers. Sees to be a good strategy but smacks of lesser competition. With consolidation in the industry pricing power would be in the hands of Airlines. We think Spice offers a good proposition.
Opto Circuits has announced a 1:1 bonus. There was a buy report on Opto circuits from a couple of brokerage houses and the stock rallied. However we read some interesting notes on Stents which were not heartening. One talked of a development of the biodegradable stent which won a prize and seems to be the future and there was another about Boston Scientific which is a big player in this. "Boston Scientific's problem with its huge drug-coated stent business has become so severe that the company is looking at selling some of its assets. The stents have been blamed for clotting and heart problems in a number of patients." That?s something to worry about . Opto has some saving grace that it has a stent for restenting earlier stents.. but the risks are high. The company will be spending a bomb to get the USFDA approval. Valuations do not leave too much room here though is electronic sensors business is one which is promising in terms of risk profile.
Zinc prices crashed 4% over the week. Impact of this was seen on Eveready which struggled on the back of lower offtakes. There was a coverage on Eveready by First global recently which talks about the property sale trigger. With Zinc now at $ 3400, the profitability of this company will increase. Zinc at below $ 3000 would have this stock at least double from here. The way we speak it may appear as if this is a reverse play on Zinc . Its not. The company has a distribution network to beat that of Colgate,. It has manufacturing strengths in batteries and a brand that is extremely strong. More efficient torches may appear a threat but the Management does not believe so. The per capita consumption of batteries is still less than one fifth of other countries such as Pakistan informs the management leaving strong scope for growth. The company is working to capitalize this distribution business and benefit from excise free manufacturing of batteries. Long term is good.. but short term stock performance will be dictated by Zinc prices.
Austin Engineering the manufacturer of specialty bearings reported good results for the Q4 and FY2006-07. EBITDA margins improved by 400 bps despite higher exports (up 47% for the year). The rupee was strong and that would have bit into margins as well. Valuations and future seems to be good, the only risk in the business is slow down globally and appreciating Rupee could impact on company?s revenues. We are positive on this company and the lack of interest is because of its small size, and hence lack of analyst following. Of course we would have liked the management to be a bit more aggressive given the current opportunities and their skills.
Zen Tech a company into manufacturer of high-end multimedia weapons simulator for security forces. The numbers were fantastic. It makes money only in the last quarter. A large order was being talked off for simulation but that would take another year we guess. Astra Micro continued to rally and also other defense related stocks such as Bharat Electronics. Interesting to note that there had been an offset policy for defense which came in place last year. As per this MNC defense companies have to outsource at least one third of the order from Indian companies. Interesting to read that so far only one offset contract has been awarded: a $55 million deal to buy medium-powered aircraft radar sets from Israel?s Elta, which has agreed to buy one-third of its parts from local firms. Astra is the big one in Radar and there were talks of the order from Elta but nothing got confirmed. HBL Power systems also attempted to enter here. Keep watching we will update you more.
Greenply is another stock which we are bullish on and the stock did well which trade at its all time of 166 levels.
Going ahead we are ending on a positive note and that also is near the all time highs. Can we break that. Well its results time and the tech stocks will be the ones to report. The tech stocks have been the laggards and they will set the tone for the near term. If they positively surprise in terms of guidance then we are headed for new highs. The numbers may be good but its the guidance about the growth and the competitiveness with a strong rupee of course. So its the tech stocks where the hopes will be placed on. The banks have rallied and we dont think that they could do much more from here. Crude at close to $ 70 is certainly something which will have the investors worried. We think markets will be ranged but clearly the ideas will run.
Weekly Stock Ideas
Buy HDFC (1147)
SL 1122 T 1195, 1205
Buy RIL (1701)
SL 1686 T 1744, 1750
Buy GNFC (113)
SL 108 T 120, 123
Buy Voltamp (786)
SL 771 T 820, 825
SL 796 T 845, 851
Weekly Newsletter
Inflation falls to 13-month low
India's inflation, based on the Wholesale Price Index (WPI), declined to a 13-month low in the week ended June 16 on the back of lower prices of food, food products and cereals. The annual point-to-point inflation fell to 4.03% from 4.28% in the previous week, the Commerce & Industry Ministry said. The annual inflation rate was the lowest since the end of April 2006. Analysts had forecast a reading of 4.13%. It was also lower than the 5.5% rate registered during the corresponding week of the previous year. With this, inflation is now close to the lower end of the Reserve Bank of India's (RBI) medium-term target of 4-4.5%. In its annual monetary policy statement, the central bank had said it would like to contain inflation in FY08 close to 5%. As a result, the central bank may hold its key short-term rate unchanged at the next policy meeting on July 31. A pause in the monetary tightening will help bolster economic growth
Infosys, Capgemini shares rise on deal talk
Shares of Infosys Technologies Ltd. climbed as much as 2.5% on Friday amid media reports that the Bangalore-based IT major was planning a bid for Capgemini SA, Europe's largest computer-services company. However, the spokesperson of both the companies denied the rumours that lifted the shares of Capgemini on the Euronext, Paris. Capgemini was a key gainer, on the back of rumours that India's Infosys was mulling a takeover bid. Infosys shares ended at Rs1,929 after touching a high of Rs1975. Infosys shares are down 13.4% this year, compared with a 5.8% rise in the Sensex due to the concerns over rupee appreciation. For FY07, Infosys had revenues of US$3.09bn, while Capgemini clocked a turnover of US$10.3bn in the calendar year 2006. In terms of profitability Infosys is far superior than Capgemini. The operating margin for Infosys is at 27.57% while for Cap Gemini it is at 5.8%.
Within striking distance
I tried so hard
And got so far
But in the end
It doesn't even matter
The month of June has been nothing to write home about for the bulls after a terrific performance in April and May. The week too wasn't all that exciting though there was a big rally on the last day, which helped the key indices end the week with a gain of 1% each. The Sensex failed to scale a new peak as the bulls continue to face stiff resistance every time the 30-share BSE index gets close to the new milestone. The market managed to overcome the volatility on account of the F&O expiry and closed slightly higher.
Immediate concerns over interest rates eased after the Federal Reserve kept its benchmark interest rates unchanged and looks set to do so for the rest of this year. Also, inflation declined to a 13-month low of 4.03%, which lifted the spirits at the end of a dull month for the market. Short covering helped the indices climb after a weak start to the week. F&O expiry was in line with expectations, though concerns remain about high open interest and rising cost of carry.
Cement and Sugar stocks were in the limelight. Capital Goods, Power and Real Estate stocks too were among the gainers. However, IT stocks continued to be a major laggard with nagging concerns over the appreciation of the Rupee. Frontline stocks like ACC, BHEL, Tata Power, SBI, Reliance Energy and L&T were the major gainers in the Sensex. The Sensex climbed by 183 points or 1.3% during the week to close at 14650.51 and the NSE Nifty advanced 66 points or 1.6% to 4318.30.
Sugar stocks were in momentum during the week after Finance Minister P. Chidambaram said the government might announce more sops for the troubled industry. Plus, the Food Ministry said that sugar mills will be allowed to store an additional three million tons of sugar. Balrampur Chini rallied by over 12% to Rs76, Renuka Sugar rose over 8% to Rs652, Sakhti advanced by 7% to Rs88 and Bajaj Hindusthan added 4.8% to Rs169.
Cement stocks were back in flavor after the Finance Minister's statement that the government hasn't asked companies to freeze prices. Prism Cement soared 25% to Rs43, Mangalam Cement rallied by over 16% to Rs159. Among the heavy weights, ACC was up by over 9% to Rs933, Gujarat Ambuja was almost up by 7% to Rs124 and Grasim was up by 5.5% to Rs2636.
IT stocks continued to be sluggish as the rupee recorded its biggest quarterly gain in more than three decades. The Indian currency rose 6.8% in the April to June quarter as the government allowed it to advance to contain inflation. Index heavy weight Infosys lost 1.1% to Rs1929, Wipro was flat at Rs518. However, Satyam gained 1.1% to Rs467.
Capital Goods shares were the major gainers. The BSE Capital Goods index rose by over 5% on the week. BHEL gained by over 6.5% to Rs1538, L&T rose by over 4% to Rs2196, Siemens surged 6.4% to Rs1396 and ABB rallied by over 15% to Rs1095.
Banking stocks continued their good run, led by SBI. The BSE Bankex was up 2.2%. SBI led from the front after its chairman said the bank will conclude a share sale by December and will unlock value by hiving off life insurance and asset management business into a NBFC. The scrip was up 4.6% to Rs1525. HDFC Bank rose nearly by 4% to Rs1146. Others like Yes Bank, IndusInd Bank and Kotak Mahindra Bank were the major gainers among the Mid-Caps.
Sensex set for new peak
The peak seems to have evaded the Sensex a couple of times in the recent past. Given the breakout seen on Friday it could once again be the turn of Index heavyweights to lead the charge? While it now appears that the Sensex may hit a new peak, the big question is will it be able to sustain at higher levels. Any negative news on the global front could take a toll on the local bourses though Indian markets have managed to chart its own path. Crude oil prices have been moving upwards. The benchmark Sensex is less than 100 points away from its lifetime high. Investors will also keep an eye on fund flows, which have been slowing off late.
A lot of speculation and comments will flow in regarding expectations from the quarterly numbers. As always Infosys’ results will kick off the earnings season after a week. Till then expect lackluster markets. Of course, the noise of a new peak and profit booking thereafter will some swings to what would otherwise be a stagnant market.How does advance tax affect market?
Every quarter advance tax numbers of companies are eagerly awaited by equity market players. Most investors take cue from these numbers to plan their investment strategy. ET delves into the importance of advance tax figures and its impact on the stock market.
What is an advance tax?
Like the name suggests companies have to estimate their profits and pay advance tax accordingly. Under the Income Tax Act, companies are required to spread their tax liability through the year namely June, September, December and March. The tax has to be paid by the 15th of the specified month based on the estimated profits that a company is likely to earn during the year.
How is advance tax paid by companies?
Companies have to pay 15% of their total tax in the first quarter, i.e. June 15, of any fiscal year. In the next quarter (September 15), 45% of the total tax needs to paid; followed by 75% by December 15; and finally by March 15, 100% of the estimated tax for the year has to be paid.
How are advance tax figures used by equity market?
Advance tax is an important yardstick for analysing a company's performance. Market players compare advance tax paid by a company during the quarter with that of the corresponding year to understand the performance of that company during the year. Analysts use this figure as a parameter for valuing a particular company.
Why is it that these figures often lead to a jump in share prices?
Advance tax figures along with various other indicators are used as proxy to estimate a company's profits during the given quarter and for the full year. Profits determine the valuation of a company.
If it is felt that a company will declare a higher profit than expected, the market will push up the share price accordingly. Similarly, if it is expected that a company will post lower profit during the period, share price of that company may take a hit.
Does a lower advance tax always show a negative indication for the company?
A lower advance tax shows that the profit will be lower, but the main question is whether the market has factored it in the stock price. If the market gets an indication that a company may post lower profits and if it is already built into the stock price, then the advance tax numbers will just be a reiteration of this figure.
There will be nothing new based on which the stock price will change, and due to this the impact may not be negative. The impact of advance tax has to be considered in tune with market expectations.
Preference shares norms relaxed
There's some relief for Indian companies wanting to raise funds abroad by issuing non-convertible, optionally convertible or partially convertible preference shares. The Government now says foreign investment in all such preference shares will be treated as equity and not debt if companies have taken verifiable and effective steps prior to April 30. However, companies claiming benefit under this exemption would have to complete the process of issuing the shares and mobilising resources by the end of July. The relaxation is likely to benefit companies that had announced plans to raise money through this route before the new guidelines were introduced. However, they will have to conform to sector-specific FDI caps.
MF investment...SEBI extends deadline for mandatory PAN
Mutual fund (MF) investors have been given a breather as the July deadline for submitting the permanent account number (PAN) mandatory for MF investments has been extended till December 2007. "However, all MF investors will have to compulsorily provide the proof that they have applied for PAN while making MF investment," according to A.P. Kurian, Chairman, Association of Mutual Funds in India (Amfi). In his budget speech, the Finance Minister had made PAN as the sole identification for all securities market transactions above Rs50,000, including MFs. However, fund houses sought an extension of the deadline on concern that it could force small retail investors to shy away from MFs, especially systematic investment plans (SIPs).
FIPB rejects ICICI Bk application on new unit
The Foreign Investment Promotion Board (FIPB) rejected ICICI Bank’s proposal to sell 24% stake in ICICI Financial Services, the holding company for its insurance and asset management ventures, to foreign investors. FIPB rejected the proposal on the grounds that it did not comply with the 26% cap on FDI in insurance ventures. Later on, reports suggested that the FIPB is likely to reconsider its decision in its next meeting scheduled for July 13. FIPB is not likely to consult the Law Ministry on the issue, but might approach the Banking Division and insurance regulator IRDA.
SBI sees share sale by December
State Bank of India (SBI) would hit the market with the proposed capital raising plan as early as December, Chairman Om Prakash Bhatt said. The fund raising move includes issue of preference shares and a possible follow-on public offer, Bhatt said. The bank would finalise the fund raising option a week after the proposed amendments to the SBI Act is cleared by parliament, he said. SBI plans to raise as much as Rs500bn over the next three years to fund future growth in business amid a rapidly expanding economy. The bank would raise Rs150bn in the current financial year and has already raised Rs50bn. SBI's seven associate banks would need additional capital of Rs80bn by 2009, he said. SBI Chairman also said the bank would set up a non banking financial company (NBFC) by consolidating its life insurance and asset management businesses and is also seeking partners to foray into general insurance. The bank will sell up a 10% stake to 3-4 strategic investors for price discovery and would seek to list the NBFC in FY09. On general insurance, SBI will finalise a partner in the next couple of months.
Govt buys RBI stake in SBI
The Government bought the Reserve Bank of India's (RBI) entire 59.7% stake in State Bank of India (SBI) for over Rs350bn on Friday, a day before the central bank closed its annual book of accounts. The Centre picked up 31.43 crore shares of SBI for Rs353.51bn. It did not have to borrow from the market due to buoyant tax collections. The Government had earlier raised Rs50bn outside the scheduled borrowings to part-finance the deal. Finance Minister P. Chidambaram, in his budget speech, had said RBI's stake in SBI would be transferred to the Centre in order to separate ownership and regulatory functions of the central bank. Once the RBI sells its stake, the Government will hold 59.73% stake in SBI. An amendment to the SBI Act is likely to be cleared by parliament during the monsoon session, allowing for a reduction of the government’s stake to 51%.
Bajaj Auto sees flat bike sales in July, Aug
Bajaj Auto Ltd. said that motorcycle sales in the next two months were expected to be flat and would revive only in October after the launch of a new model. The company sold 167,008 bikes in May, a drop of 15% from the year-ago period. It has also cut bike production by 20,000-30,000 units as demand slowed due to high interest rates. Bike sales will rise to more than 200,000 units a month from October, Managing Director Rajiv Bajaj said after launching 220cc Pulsar DTS Fi. The company, which is developing a small four-wheel commercial vehicle, is also toying with the idea of developing a small car, Bajaj said. "We are experimenting on a small car... if we have an interesting concept, then we will like to show it," he said. "It will be a small car, it will be a high-tech car. It will be more like a Pulsar on four wheels."
Air India kicks off cargo operations
Air India has started its cargo operations with two Airbus planes. Civil Aviation Minister Praful Patel kicked off the national carrier's first flights to Europe with the freighters, converted from old A310 passenger planes at a cost of US$16mn. Air India has a share of about 11% of cargo export from the country and 7% share of imports. Prior to the launch of the new Airbus freighters, Air India was carrying cargo in passenger planes. The public sector airline would operate four flights a week to Frankfurt and Paris with the two A310s. The first cargo flight from Mumbai to Frankfurt would have stopovers in Bangalore and in Dammam, Saudi Arabia, it said. India's growing trade has boosted demand for cargo flights. At present, only Blue Dart Express has its own dedicated cargo planes. The rest of the airlines plan to start cargo flights by buying new planes or converting passenger aircraft.
Kesoram spurts on BK Birla succession plan
Shares of diversified cement maker Kesoram Industries Ltd. surged after Basant Kumar Birla surprisingly named Kumar Mangalam Birla as the inheritor of the Kolkata-based firm. Speaking at the AGM of Century Enka in Kolkata, BK Birla suggested that all of his group companies, barring Jay Shree Tea Ltd., would now go to Kumar Mangalam Birla. Kesoram, which was expected to go to veteran industrialist's daughter Manjushree, would also be handed over to Kumar Mangalam Birla. BK Birla has cited Kesoram's big size as the reason for the change oh heart. According to BK Birla's 2001 succession plan, Kesoram was to go to Manjushree, who is currently a Director on the Board of the company. Talking to reports after the AGM, BK Birla said it had not been decided as to which companies would go to Manjushree. Kesoram shares gained more than 18% on the week to end at Rs453.
MICO shares fall below open offer price
Shares of Motor Industries Co. Ltd. (MICO) fell after the revised open offer price announced by the company's German parent left investors disappointed. Robert Bosch, the world's largest auto-parts maker, raised its offer for an additional 20% stake in the Indian arm, to Rs4600 per share from the earlier offer of Rs4000 a share. MICO shares fell below the offer price, which was about 2% lower than the company's closing price of Rs4685.75 on June 26. The stock closed the week at Rs4481.95, down Rs303 or 6.3% from last Friday's close. On April 27, Robert Bosch made an open offer to buy 6,410,292 shares in MICO at Rs4000 a share. It already owns a 60.55% stake in the Bangalore-based company. Robert Bosch wants to increase its stake in MICO to 80.55%.
Cadila, United Phosphorus announce deals
Cadila Healthcare Ltd. on Monday announced that it would acquire Quimica e Farmaceutica Nikkho do Brasil Ltda. (Nikkho), a privately held mid-sized company based in Brazil. The acquisition is being made through Zydus Healthcare Brasil Limitada, the step-down wholly-owned subsidiary of the company. Headquartered in Rio de Janeiro, Nikkho is a profit making company and had sales of US$26mn for the year 2006. The consideration paid represents sales multiple of around one. The Brazilian pharma market is the largest in Latin America at US$8bn. Nikkho currently markets 22 products under 13 different brands. It also has nearly 50 registered brands which are yet to be launched.
United Phosphorus Ltd. said it has acquired the global triphenyltin hydroxide contact fungicide (TPTH) and fenbutatin-oxide miticide (TNTO) businesses from DuPont. The two products are marketed primarily as Super Tin and Vendex, respectively. Triphenyltin hydroxide is a contact fungicide used mainly on potatoes, sugar beets and pecans. Fenbutatin-oxide is one of the largest tin acaricide used on various crops such as citrus and pome fruit. Both the products will strengthen the company's position in the fruit, nut, vegetable and row crop markets, United Phosphorus said. Under this agreement, United Phosphorus and its subsidiaries throughout the world will be selling triphenyltin hydroxide and fenbutatin-oxide and its formulations from October 1. Until then, DuPont will be acting as agent for United Phosphorus and its subsidiaries.
Spice IPO subscribed over 37 times
The IPO of Spice Communications Ltd. was subscribed more than 37 times. The company received bids for 4.25bn shares as against the issue size of 113.11mn shares, latest data available on the Bombay Stock Exchange (BSE) shows. Spice Communications had fixed a price band of Rs41 to Rs46 per share for its maiden public issue. The company would raise Rs57.57bn at the lower end of the price band and Rs63.22bn at the upper end of the price band. The BK Modi Group owns 51% in Spice Communications while Telecom Malaysia holds the balance 49%. Post IPO, their shareholding will be 41% and 39%, respectively.
The Follow-on Public Offering (FPO) of Bharat Earth Movers Ltd. (BEML) was fully subscribed on the first day itself. Majority of the bids came from the Qualified Institutional Buyers (QIBs). This portion of the FPO was subscribed more than two times. Even within this space, there was heavy demand from local financial institutions and mutual funds. The company has set a price band of Rs1,020 to Rs1,090 per share. The issue, which opened for subscription today, would close on July 3.
New listings...Nelcast slips, Meghmani rises
Shares of Nelcast Ltd., a maker of castings and components for commercial vehicles and tractors, closed below the issue price after an initial spurt. The stock opened at Rs252 on the Bombay Stock Exchange (BSE) as against the issue price of Rs219. The scrip finished the week at Rs188.80, after being as high as Rs284.70 and as low as Rs186.50. Nelcast entered the capital market with an IPO of 4.35mn shares. The issue was subscribed seven times.
Shares of pigments and agrochemicals maker Meghmani Organics Ltd. climbed as much as 79% in their debut on Thursday. But, the stock cooled off a little bit as the initial euphoria faded. The stock opened at Rs33.25 on the BSE as against the issue price of Rs19 per share. The scrip finished the week at Rs26.05 after being as high as Rs34 and as low as Rs25.65. The public issue of Meghmani Organics was subscribed nearly 24 times.
Fed leaves rates steadyAs expected, the US Federal Reserve left its benchmark short-term interest rate static and said it was still worried about inflation. This means that the American central bank will leave rates steady for a while instead of cutting them notwithstanding the sluggish US economy. The central bank decided to hold its target for the key federal funds interest rate at 5.25%. The vote was unanimous. The fed funds rate is the rate at which banks lend each other money overnight. The Fed has held rates steady for the past year after completing an unprecedented series of 17 straight 0.25% rate increases to check inflation. The FOMC said the predominant policy concern remains the risk that inflation will fail to moderate as expected. The Fed committee dropped the phrase "elevated" for describing the core inflation, saying that "readings on core inflation have improved modestly in recent months." But, it added that "a sustained moderation in inflation pressures has yet to be convincingly demonstrated."
China growth to accelerate this year
China's economy may expand at the fastest pace in 12 years in 2007 and inflation will exceed the central bank's target, according to a report by economists at the People's Bank of China research department. Gross Domestic Product (GDP) may grow by 10.8%, said the report published in the Beijing-based China Securities Journal. Consumer prices may rise 3.2%, the fastest pace since 2004 and more than the central bank's 3% cap. The World Bank and the Organization for Economic Co- operation and Development (OECD) expect China's economy to grow 10.4% in 2007. The International Monetary Fund (IMF) and the Asian Development Bank (ADB) forecast a 10% expansion.
Oil prices cross US$70 per barrel
Oil prices rose above the psychologically important level of US$70 per barrel on worries about gasoline supplies in the US. The Nymex crude contract reached as high as US$70.52 and traded above US$70 for several hours - the first time it did so in the past 10 months. This jump was driven by concerns over summer supplies following the release of a weekly US government report that showed gasoline inventories dropped unexpectedly. With most US refineries expected to increase output in the coming months after finishing maintenance, pressure on gasoline was expected to drop. Still, prices could remain high because increased refinery capacity puts greater demands on crude availability.
POSCO talks cooperation with Arcelor Mittal
POSCO of South Korea said it was discussing cooperation with Arcelor Mittal, the world's largest steel maker, but no major progress had been made. "Both sides have discussed cooperation in various ways such as overseas projects and raw material development...But we have made no specific progress and no details have been decided yet," a POSCO official said. The comment came after a Korean newspaper reported that Mittal and POSCO may strike a partnership deal which could remove a potential takeover threat against POSCO. Both companies have talked about possible business cooperation since a senior official at Mittal visited POSCO in February, the official said. "But talk of a strategic alliance between the two companies is not going too far," he added.
GM to sell Allison Transmission
Shares of General Motors (GM) hit a two-year high after the automaker said it had agreed to sell its Allison Transmission commercial and military business to an investment conglomerate and a private equity firm. The sale to Onex Corp. and the Carlyle Group includes seven manufacturing plants in Indianapolis and its global distribution network and sales offices. A production facility in Baltimore, which makes conventional and hybrid transmissions for pickup trucks and SUVs, will remain with GM. The automaker said the deal, expected to close as early as the third quarter of this year pending union and regulatory approval, is part of an effort to raise money and focus on its core business.
iPhone goes on sale
After six months of unprecedented hype, thousands of people will get their hands on the iPhone, the new cell phone from Apple. Short lines of eager customers were camped out at Apple and AT&T stores across the US. The gadget combines the functions of a cell phone, iPod media player and wireless Web browser. Since its unveiling in January, the company's stock is up more than 40% amid expectations that iPhone will become yet another blockbuster product for Apple after Macintosh computers and iPod portable music players. Apple itself has set a target of selling 10 million units worldwide by 2008, gaining roughly a one-per-cent share of the cell phone market. Despite the handset's price tag of US$499 for a four-gigabyte model and $599 for an eight-gigabyte version, on top of a minimum US $59.99-a-month two-year service plan with AT&T Inc., the phone's exclusive carrier, some bullish Wall Street analysts have predicted sales could hit as high as 45 million units in two years.
Short-term Trading Calls
Buy Ambuja Cement with stop loss of Rs 115 for a target of Rs 125/143.
Buy Moser Baer with stop loss of Rs 420 for a target of Rs 525
Buy Mysore Cement with stop loss of Rs 50 for a short-term target of Rs 66.
Buy Lloyds Electric with stop loss of Rs 162 for a short-term target of Rs 195.
Market may scale record high
The market may extend last week's gains following the smooth rollover of positions from the June 2007 series to the July 2007 series in the derivatives segment, and on build-up of fresh positions. The June 2007 derivatives contracts expired on Thursday, 28 June 2007. As per market data, Nifty futures witnessed a rollover of 65% to 70% whereas stock futures saw rollover of around 70% to 73%, to July 2007 series from June 2007 series
Both the Sensex and Nifty are now within striking distance from their all time highs. The benchmark index, BSE Sensex is just about 73 points away from its all-time high of 14,723.88 struck on 9 February 2007. The S&P CNX Nifty is 45 points away from its all time high of 4,362.95 struck on 4 June 2007.
The market will boosted further by the steady progress of monsoon so far.
Also all eyes will be on Q1 June 2007 earnings season which will be kickstarted by IT bellwether Infosys Technologies on 11 July 2007.
Gujarat Mineral Development Corporation, Hikal and Television Eighteen India will announce their March 2007 quarter results in the coming week.
A good news is that inflation is under control. India's wholesale price index rose 4.03% in the 12 months to 16 June 2007, as per latest data released on Friday, 29 June 2007. The annual inflation rate was the lowest since the end of April 2006
Small-cap, mid-cap shares shine
The market edged higher, last week, with most of the gains coming in a single trading session on Friday, 29 June 2007. For a better part of the week, the market was range bound and caution prevailed ahead of Thursday (28 June 2007)’s expiry of June 2007 derivatives contracts. The action was mainly in the small-cap and mid-cap segment, with the BSE Mid-Cap index hitting all time high. BSE Capital Goods index, BSE’s banking sector index Bankex and BSE Consumer Durables Index also scaled all time peaks.
The 30-share BSE Sensex rose 183.15 points or 1.2% to 14,650.51, in the week ended Friday, 29 June 2007. It is Sensex’s second best close. Sensex had struck record closing high of 14,652.09 on 8 February 2007.
The S&P CNX Nifty advanced 66.25 points or 1.55% to settle at record closing high of 4,318.30 in the week ended Friday, 29 June 2007.
The BSE Mid-Cap Index rose 153.33 points or 2.4% to a lifetime closing high of 6,527.03 in the week. The BSE Small-Cap index gained 217.28 points or 2.89% to 7,730.40 in the week.
A rally in two heavyweights L&T and Bhel took BSE Capital Goods index to a lifetime high above 12,000. Strong flow of orders lifted L&T and Bhel. L&T scaled a lifetime high of Rs 2210.10 on 29 June 2007. On the same day, Bhel struck all time high of Rs 1544.
A solid surge in index heavyweight Titan Industries, took BSE Consumer Durables index to a record high.
The market shrugged off weak global markets, with Sensex gaining 20.36 points on Monday, 25 June 2007. China's main stock index plunged 3.68% to 3,941.08, on Monday, hit by worries about government policies to cool the economy and the market, and by big losses in oil refining giant Sinopec.
The barometer index rose 13.36 in lacklustre trade on Tuesday, 26 June 2007. Asian and European markets were subdued on that day.
The market lost ground on Wednesday, 27 June 2007, tracking weak global equities. Sensex lost 70 points. A strengthening of the yen against the US dollar sparked concerns of unwinding of yen carry trades which had propelled stocks in many global markets to record highs in recent days.
A recovery in global markets and short covering in derivatives ahead of expiry of June 2007 derivatives contracts lifted Sensex 74 points on Thursday, 28 June 2007.
Smooth rollover of positions from the June 2007 series to the July 2007 series in the derivatives segment in the previous day boosted the bourses on Friday, 29 June 2007. Sensex jumped 146 points. Data showing a further fall in inflation aided the rally.
Nifty futures witnessed a rollover of 65% to 70% whereas stock futures saw rollover of around 70% to 73%, to July 2007 series from June 2007 series.
Cement shares surged on Thursday, 28 June 2007, after Finance Minister P Chidambaram told a television news channel, after market hours, on Wednesday, 27 June 2007, that there was no freeze on cement price and the government has not tried to control cement prices. He also said that the prices had gone up by a few rupees in south India.
State Bank of India settled at record closing high of Rs 1,525.30 on Friday, 29 June 2007, after its chairman said the bank may sell shares in a follow-on issue this year.
HDFC settled at a record close of Rs 2030.20 on Friday, 29 June 2007 after it said it had made a profit of Rs 380 crore on its investment in back-office firm Intelenet, which it sold last week.
Reliance Petroleum (RPL) scaled a record high on reports the firm hopes to commission its new refinery ahead of schedule by the second quarter of 2008.
Index heavyweight Reliance Industries (RIL) moved in a narrow range in the week. As per reports, the Prime Minister's Office (PMO) has referred the issue of pricing natural gas found off the east coast to a committee of secretaries. The move comes in the wake of differences the petroleum ministry has with the power and fertiliser ministries over the methodology adopted for arriving at the gas price. RIL had made a huge gas find off the east coast.
ONGC, which had witnessed a recovery ahead of Q4 March 2007 results, firmed up shortly after results. The company unveiled its results during trading hours on Monday, 25 June 2007. It reported 13% fall in net profit to Rs 2681.64 crore in Q4 March 2007 compared to a net profit of 3085.89 crore in Q4 March 2006. Total income rose 16.35% to Rs 14575.92 crore in Q4 March 2007 (Rs 12528.23 crore).
IT stocks were range bound. IT bellwether Infosys said during trading hours on Thursday, 28 June 2007, that it will unveil Q1 June 2007 results on 11 July 2007. There were rumours on Thursday 28 June 2007 that Infosys is bidding for Europe’s largest IT services giant Capgemini. Both Infosys Technologies and Capgemini denied the takeover rumours.
Nelcast ended at Rs 206.25 on BSE on Wednesday, 27 June 2007, at a discount of 5.93% over the IPO price of Rs 219 per share. The company had priced its IPO at the top end of the Rs 195 – Rs 219 price band.
Meghmani Organics ended at Rs 26.65 on BSE on Thursday, 28 June 2007, a premium of 40.26% over the IPO price of Rs 19 per share. The company had priced its IPO at the top end of the Rs 17 - Rs 19 price band. Each share has a face value of Re one.
Standard & Poor’s on Wednesday, 27 June 2007, launched S&P Pan Asia Shariah Index, for Islamic investors. The index has a total of 71 companies with an adjusted market capitalisation of $810.83 billion. The index includes 11 Indian companies which include Bharat Heavy Electricals (Bhel), Bharti Airtel, Infosys Technologies, and Reliance Industries among others.
The market regulator Securities and Exchange Board of India (Sebi) on Tuesday, 26 June 2007, extended the deadline for mandatory quoting of Permanent Account Number (PAN) by mutual fund investors till 31 December 2007 provided they give proof of application made for getting PAN.
The Bombay Stock Exchange (BSE) shifted a total of 37 scrips to trade-to-trade segment, with effective from Friday, 29 June 2007. The stocks transferred to trade-to-trade segment include Betala Global Securities, LKP Merchant Financing, Melstar Information Technologies, Oil Country Tubular, Standard Industries, Bright Brothers, Dagger-Forst Tools and Haria Exports, among others.
Industrial Development Bank of India (IDBI), on Thursday, 28 June 2007, sold 9 lakh equity shares constituting 2% of the issued and paid up capital of National Stock Exchange of India (NSE) to foreign investor MS Strategic (Mauritius) for $50 million.
India's wholesale price index rose 4.03% in the 12 months to 16 June 2007, lower than the previous week's increase of 4.28% due to a decline in food and manufactured product prices, government data released on Friday, 29 June 2007, showed. The annual inflation rate was the lowest since the end of April 2006
Finance Minister Palaniappan Chidambaram said on Wednesday, 27 June 2007, that RBI's policy tightening and the rupee currency's strength had helped to moderate inflation to an extent.
Interest rates have reached a peak and are likely to remain stable in the next six months, while real-estate prices could fall up to 10-20% in the next three to four months, HDFC Chairman Deepak Parekh said in the company's general meeting in Mumbai Wednesday, 27 June 2007.
Market ends firm as banking stocks rally
The market reported a solid performance on the back of strong all-round buying even though the other major Asian indices exhibited a subdued trend in the morning trades. The market opened with a huge gap of 85 points at 14590 and rallied quickly to cross the 14600 mark on all-round buying in heavyweight, banking and capital goods stocks. The Sensex touched the day's high at 14663 on the reports that inflation for the week ended June 16 is lower than expected at 4.03% against 4.28% a week ago. The market remained buoyant thereafter and closed the session at 14651, up 146 points. The broad-based Nifty index ended the session at 4318, up 36 points.
The breadth of the market was positive. Of the 2,681 stocks traded on the BSE, 1,484 stocks advanced, 1,107 stocks declined and 90 stocks ended unchanged. Among the sectoral indices the BSE Bankex jumped 2.87% at 8009 followed by the BSE CG index (up 1.89% at 12299), the BSE PSU index (up 1.11% at 6802) and the BSE HC index (up 1.06% at 3806).
Most of the heavyweights ended at higher levels. Among the blue chips, Reliance Energy shot up by 5.78% at Rs614, HDFC Bank soared 4.75% at Rs1,144, ACC surged 3.88% at Rs934, SBI advanced by 3.74% at Rs1,525, HDFC added 3.66% at Rs2,030, BHEL moved up 3.32% at Rs1,538, Cipla scaled up 2.66% at Rs208 and Ranbaxy was up 2.01% at Rs355. Among the laggards, Hindalco dropped 5.21% at Rs160 while, Maruti Udyog, Bharti Airtel, ONGC, Gujarat Ambuja Cement, ITC, HLL and Satyam Computer closed marginally lower.
Banking stocks were in the limelight and closed with strong gains. Oriental Bank jumped 4.83% at Rs226, Punjab National Bank soared 4.77% at Rs540, Kotak Bank surged 4.75% at Rs673, Andhra Bank added 4.74% at Rs86, UTI Bank gained 4.26% at Rs605 and Bank of Baroda advanced by 4.08% at Rs270.
Over 2.62 crore Reliance Natural Resources shares changed hands on the BSE followed by IFCI (1.27 crore shares), Tata Teleservices (97.27 crore shares), Megmani Organics (84.27 lakh shares) and Nagarjuna Fertilizers (78.95 lakh shares).
SBI clocked a turnover of Rs154 crore on the BSE followed by GMR Infrastructure (Rs122 crore), Reliance Industries (Rs120 crore), Reliance Natural Resources (Rs99 crore) and Infosys (Rs91 crore).
Nifty strikes lifetime closing high above 4,300; Sensex at second best close
The market surged today on renewed buying in index pivotals on smooth rollover of positions from the June 2007 series to the July 2007 series in the derivatives segment, and on build-up of fresh positions. The June 2007 derivatives contracts expired on Thursday, 28 June 2007. Data showing a further fall in inflation aided the rally.
Shares from banking, sugar, cement and capital goods sector rose while some profit booking was seen in metal stocks. Among sectoral indices, Bankex, BSE Mid-Cap, BSE Consumer Durables, BSE Capital Goods, all struck lifetime high.
The BSE 30-share Sensex vaulted 145.94 points or 1.01% at 14,650.51. This is the second highest closing for the Sensex. The barometer index had struck record closing high of 14,652.09 on 8 February 2007.
Sensex opened higher at 14,589.52, and surged to strike a high of 14,663.25 at 15:07 IST as buying inetensified towards the close of the trading session. The benchmark hit a low of 14,574.45, at 10:20 IST. The Sensex oscillated in a range of 89 points for the day. A bout of volatility was witnessed in mid-afternoon trade.
The Sensex is just about 73 points away from its all-time high of 14,723.88, which it had struck on 9 February 2007.
The S&P CNX Nifty advanced 36.30 points or 0.85% at 4,318.30. This an all time closing high for the Nifty. It had struck an all time high of 4,362.95 on 4 June 2007. The July 2007 futures settled at 4290.50, a discount of 27.80 points compared to spot closing.
The NSE F&O turnover slumped to Rs 35,463.65 crore as compared to Rs 60,499.60 crore on Thursday, 28 June 2007. The turnover had surged on Thursday on account June 2007 futures expiry
India's wholesale price index rose 4.03% in the 12 months to 16 June 2007, lower than the previous week's increase of 4.28% due to a decline in food and manufactured product prices, government data released today, 29 June 2007, afternoon showed. The annual inflation rate was the lowest since the end of April 2006.
As per market data, Nifty futures witnessed a rollover of 65% to 70% whereas stock futures saw rollover of around 70% to 73%, to July 2007 series from June 2007 series.
The total turnover on BSE amounted to Rs 4817 crore as compared to Rs 4848 crore on Thursday, 28 June 2007.
The market breadth was strong on BSE with 1,496 shares advancing as compared to 1141 that declined. 80 remained unchanged.
The BSE Mid-Cap index struck an all time high of 6,527.48, as buying continued in small and mid-cap stocks. The BSE Mid-Cap index settled 69.03 points or 1.07% higher at 6,527.03.
The BSE Small-Cap Index rose up 68.30 points or 0.89% to 7,730.40.
Among the Sensex pack, 23 advanced while the rest declined.
Reliance Energy (REL) surged 5.63% to Rs 613.25, on 6.81 lakh shares, and it was the top gainer from the Sensex pack. REL’s wholly owned subsidiary Rosa Power Supply, on 26 June 2007 tied up long-term loans of around Rs 2,000 crore for the first stage of its 600 meg watt (MW) power project.
Housing Development Finance Corporation (HDFC) jumped 3.27% to Rs 2022.50, after it received Rs 445 crore for its stake sale in BPO firm Intelenet to Blackstone, which has resulted in a total capital gain of Rs 381 crore on its BPO venture. The stock surged to an all time high of Rs 2039, in intra-day trade.
At its 30th annual general meeting (AGM) held on Wednesday, 27 June 2007, HDFC chairman Deepak Parekh said interest rates had peaked and he expected them to remain stable for some time.
State-run banking major State Bank of India (SBI) vaulted 3.89% to Rs 1527.50, after striking an all time high of Rs 1531 in intra-day trade. The stock is buzzing on reports that it is planning to launch a private equity fund with a corpus of $1 billion (Rs 4100 crore). SBI also informed BSE today, that the entire shareholding of Reserve Bank of India (RBI) aggregating 31.43 crore equity shares of Rs 10 each in the bank was transferred to the Central Government on 29 June 2007.
Banking shares rallied today after data showing fall in inflation. The BSE Bankex surged 2.9% at 8,009.94, after striking an all time high of 8,019.27. It was the top gainer from the sectoral indices on BSE. HDFC Bank (up 4.39% to Rs 1140.25), ICICI Bank (up 1.18% to Rs 954), Canara Bank (up 4.11% to Rs 271), Bank of Baroda (up 4.35% to Rs 270.95), Union Bank (up 2.72% to Rs 132), Bank of India (up 3.91% to Rs 234), Federal Bank (up 2.74% to Rs 302), and UTI Bank (up 4.26% to Rs 605) gained.
Bank shares were also boosted by reports that the Reserve bank of India has allowed banks to undertake pension fund management business through their subsidiaries. Only profitable and credible banks with have net worth of not less than Rs 500 crore, capital adequacy ratio of more than 11% and return on assets of not less than 0.6% to undertake the business, can enter into the business of pension fund management. Besides this, the banks venturing into pension fund management need to ensure that they have net non-performing assets of less than 3%.
Bhel (up 3.50% to Rs 1541) and L&T (up 1.49% to Rs 2186), advanced from the capital goods pack. The BSE Capital Goods Index was up 1.9% at 12,299.36. It struck an all time high of 12,329.20.
Cement shares rallied for the second straight day as buying continued after the Finance Minister P Chidambaram told a television news channel, after market hours, on Wednesday, 27 June 2007, that there was no freeze on cement price and the government has not tried to control cement prices. He also said prices had gone up by a few rupees in south India.
Cement major ACC (up 3.58% to Rs 931.05), and Grasim (up 0.32% to Rs 2632) advanced.
Pharma shares, Cipla (up 3.92% to Rs 211), Dr Reddy’s Laboratories (up 0.10% to Rs 655.45), and Ranbaxy Laboratories (up 2.17% to Rs 355.50), edged higher.
Aluminum and copper major Hindalco Industries slipped throughout the day, as selling continued. It lost 5.25% at Rs 160.10, on 13.74 lakh shares. It was the top loser among the Sensex constituents.
Other shares from the metal pack, Nalco (down 0.42% to Rs 259), Sail (down 0.34% to Rs 131), declined while Tata Steel (up 0.83% to Rs 598), and JSW Steel (up 1.32% to Rs 608.10), edged higher. The BSE Metal Index closed at 10,605, down 0.28%, and was the only loser among the sectoral indices on BSE.
Auto major Maruti Udyog lost 1.05% to Rs 742 while telecom services provider Bharti Airtel slipped 0.98% to Rs 834.50.
Index heavyweight Reliance Industries was up 0.46% to Rs 1700, on 7.01 lakh shares. It moved in a range of Rs 1689.05 –1711.50
Infosys Technologies rose 0.22% to Rs 1930.10 on rumours that it is mulling a bid to buy Europe’s largest IT services giant, Capgemini. Both Infosys Technologies and Capgemini have denied the takeover rumours, though the Capgemini stock surged on Thursday, 28 June 2007, boosted by this rumour. Infosys Technologies will announce its first quarter June 2007 results on 11 July 2007.
Satyam Computers ended flat at Rs 468.30 while Wipro (up 0.36% to Rs 517) and TCS (up 1.43% to Rs 1153) edged higher. The BSE IT Index settled with agin of 0.60% to 4,870.73.
The BSE Consumer Durables index also struck all time high of 4,280.52, before settling 3.39 points higher at 4,250.65. Lloyd Electric (up 2.57% to Rs 181.35), and Rajesh Exports (up 0.62% to Rs 532.90) rose.
Shares from the sugar pack rallied for the second straight day, as buying continued after the Finance Minister told a TV channel on Wednesday, 27 June 2007, that more sops will be given to the sugar sector if required. Bajaj Hindusthan (up 8.39% to Rs 169.30), Sakthi Sugars (up 10% to Rs 88.20), Balrampur Chini Mills (up 13.27% to Rs 76.40) and Shree Renuka Sugars (up 9.26% to Rs 651) surged.
Wendt India was up 5% to Rs 797.75 after the machine tool accessories maker said Winterthur Technologies AG has indirectly acquired 40.02% of the company from parent, Wendt GmbH Germany. The company made the announcement before trading hours today, 29 June 2007.
Indian state-run lender IDBI rose 5.64% to Rs 119, after it said on Thursday, 28 June 2007, after market hours that it had sold 2% stake in the National Stock Exchange of India (NSE) to MS Strategic (Mauritius) for $50 million, after receiving the necessary approvals.
Sun TV Network jumped 4.69% to Rs 1,599 on reporting a 310.9% rise in net profit in Q4 March 2007 to Rs 118.86 crore as compared to Rs 28.93 crore in Q4 March 2006. Sales spurted 382.2% to Rs379.04 crore (Rs 78.60 crore). Net profit jumped 106.42% to Rs 268.82 crore in the year ended March 2007 (FY 2007) as against Rs 130.23 crore in FY 2006. Sales advanced 110.29% to Rs 676.95 crore (Rs 321.91 crore). The results were announced after market hours on Thursday 28 June 2007.
Along with the Q4 results, Sun TV Network also informed stock exchanges that the register of members & share transfer books will remain closed from 28 July 2007 to 6 August 2007 (both days inclusive) for the purpose of payment of final dividend, stock split, bonus issue.
GMR Industries was locked at the 5% upper circuit of Rs 170.35 at 14:05 IST, following the company's decision to set up an integrated sugar complex with a capacity of 2500 tonnes per day (tcd), expandable to 3500 tcd, in Srikakulam district, Andhra Pradesh. The company made the announcement during trading hours today, 29 June 2007.
ICI (India) declined 3.13% to Rs 531 on turning ex-dividend, for a huge dividend of Rs 27 per share. The company, on 16 May 2007 had announced dividend of Rs 27 per share, which included a one-off special dividend of Rs 20 a share.
GMR Infrastructure rose 5.59% to Rs 747.90, ahead of its Q4 March 2007 and FY 2007 results which are scheduled tomorrow, 30 June 2007.
LIC Housing Finance rose 5.95% to Rs 206.40 on reports that the company is evaluating plans to float its own venture fund focusing on the realty sector. LIC Housing has already invested Rs 50 crore in Kotak Realty Fund and Rs 10 crore in CIG Realty Fund. The proposed new fund would focus on financing projects such as shopping malls and special economic zones.
TVS Motor Company plunged 5.50% to Rs 61 after the two-wheeler maker reported 69% fall in net profit in Q4 March 2007 to Rs 9.05 crore as against Rs 29.09 crore during the previous quarter ended March 2006. Sales moved up 9.60% to Rs 919.88 crore in Q4 March 2007 (Rs 839.27 crore). The net profit dropped 43.08% to Rs 66.60 crore in the year ended March 2007 as against Rs 117.00 crore during the year ended March 2006. Sales jumped 19.17% to Rs 3854.96 crore in FY 2007 (Rs 3234.96 crore). The company declared the Q4 results after market hours yesterday, 28 June 2007.
Kesoram Industries rose 4.34% to Rs 454.40 on media reports that the diversified firm plans to spend Rs 1200 crore in FY 2008 to set up tyre and cement plants.
Suzlon Energy gained 0.76% to Rs 1489. Suzlon Energy announced today 29 June 2007, during market hours said that Suzlon Wind Energy Corporation, the USA, the step-down subsidiary of the company has extended its contract with PPM Energy of Portland, Oregon, USA to add 300 mega watt (MW). The original agreement calls for delivery of 300 MW of turbine capacity in 2008 and 100 MW of capacity in 2009, but now has been extended to include an additional 300 MW in 2009 for a total of 700 MW over two years.
Banco Products (India) slipped 1.80% to Rs 319.50 after the company recommended issue of bonus shares in the ratio of one equity share for every one share held. The announcement was made after market hours on Thursday, 28 June 2007.
Asian stocks were mixed today, 29 June 2007, after the US Federal Reserve left US interest rates unchanged. The yen weakened against the dollar. Japan's Nikkei surged 1.15% at 18,138.36 and Straits Times rose 0.28% at 3,548.20. However, Taiwan's Taiwan Weighted (down 0.11% at 8,883.21), Seoul Composite (down 0.47% at 1,743.60) and Hong Kong's Hang Seng (down 0.75% to 21,772.73) slipped.
China’s Shanghai Composite slumped 2.39% to 3,820.70
Most of the European markets were trading weak.
US stocks finished flat on Friday, 29 June 2007, after the Federal Reserve said the economy appeared to be growing at a moderate pace. The Fed, however, repeated its worries about inflation. The Dow Jones industrial average lost 5.45 points, or 0.04%, to 13,422.28. Broader stock indicators finished mixed. The S&P 500 index slipped 0.63 points, or 0.04%, to 1,505.71, and the Nasdaq Composite rose 3.02 points, or 0.12%, to 2,608.37.
Oil held steady around $70 for the third session on Friday, 29 June 2007 as the market remained focused on falling US gasoline inventories and a decline in crude stocks in a key delivery point in the world's largest consumer. US crude rose 5 cents to $69.62 a barrel
Chidambaram - London Business School
Following is the text of the address made by the Finance Minister, Shri P. Chidambaram at the London Business School today:
"I thank you for the invitation to address the faculty and students of the London Business School. Nestled amidst colleges and universities that date back many centuries, you are one of the younger schools in Britain. You were founded only in 1965, yet your school has carved out a special position for itself. No frequent business traveler would consider his itinerary or his education complete until he pays a visit to your school. I suppose it helps that you are a business school in a world that is increasingly driven by the desire to create wealth. I suppose it also helps that you are situated in London, the undisputed financial capital of the world.
I can say with confidence that if each one of you does a diligent search you will find that you have an India connection - a great grandfather who was in His or Her Majesty's service in India or an aunt who had taught in a mission school or worked in a mission hospital in a remote Indian town or a family member who had adorned the bench of a High Court in India or a cricketer cousin who has just returned after waging battle with Rahul Dravid & Co.
Those connections are memorable and we value them. However, the new connections that are being forged between the United Kingdom and India are more significant and will have an enduring impact on the lives a billion Indians.
I am not a remarkable storyteller, but I have a remarkable story to tell. I accepted your invitation in order to share with you the India growth story, especially the story of the challenge of building infrastructure for the future. As long as the Indian economy was growing at a miserable rate of 3.5 per cent or a sedate pace of 5.5 per cent, the infrastructure in India was not regarded as a major problem. We could live with low speed trains and two lane roads; we could rely, grudgingly, on land telephone lines; we could do with a single airline, a single telephone service provider and a single automobile company making a single model of a car. The infrastructure was inefficient but not inadequate; it was creaking but not cracking.
A high growth rate has changed all that. Since India embarked upon economic reforms and liberalization in 1991, we have witnessed a secular rise in the annual rate of growth. The average rate of growth in the four years beginning 2003-04 has been 8.6 percent; in the last two financial years the growth rates have been 9.0 per cent and 9.4 per cent. The robust growth rate has exposed the grave inadequacies in the infrastructure sectors. It is now widely acknowledged that the state of the infrastructure is a drag on the economy, perhaps by as much as 1 to 2 per cent a year.
The growth rate of GDP that we have recorded is not an accident. It is the result of well-designed and well-articulated policies. We remain firmly committed to fiscal prudence. Our tax rates are moderate and stable. We actively promote investment in the private and public sectors. We encourage both domestic and foreign investment. And above all, we value our engagement with the countries of the world and we are determined to reap the benefits of an open and competitive economy. We take pride in the fact that we are the fastest growing free market democracy. According to a report by Goldman Sachs, among Brazil, Russia, India and China, India will record the fastest rate of growth over the next 30 to 50 years.
The challenge before India is how to sustain the high rate of growth.
If there is one economic factor that will determine success or failure in this behalf, it is infrastructure.
It is now widely acknowledged that there exist strong linkages between infrastructure on the one hand and economic growth and poverty alleviation on the other. Not only will good quality infrastructure give a fillip to economic growth, robust economic growth will, in turn, make investment in infrastructure projects more attractive and rewarding.
According to some perceptive commentators, India is strong on institutional infrastructure but weak on physical infrastructure. In my view, this is indeed the position and, I may add, India fares poorly on social infrastructure as well. To illustrate, we have done a splendid job of putting in place constitutional and legal institutions such as an elected Parliament, an independent judiciary, a strong supreme audit organization, regulatory authorities with vast powers for various sectors, a free and vocal media, and many other bodies that characterize a vibrant civil society. Where we have not succeeded to the same extent is in building world class roads and railways, airports and seaports, and power and telecommunication systems. We have also not succeeded in ensuring adequate and good quality services in education, health care, water supply and sanitation.
Rural infrastructure is poor and requires to be built. The need is more investment. Urban infrastructure was built many years ago, but it is crumbling. The need here is more investment and better governance.
The challenge of infrastructure is huge; the requirement of funds is humungous. It has been estimated that during the Eleventh five year plan period (2007 to 2012), we would need to invest over US$320 billion in the infrastructure alone. This number includes US$130 billion for power, US$ 66 billion for railways, US$49 billion for national highways, US$11 billion for seaports and US$ 9 billion for civil aviation. The Committee on Infrastructure Financing that submitted its report in May 2007 has already advised that the target for infrastructure investment should be revised from US$ 320 billion to US$384 billion at 2005-06 prices, which is equivalent to US$ 475 billion at current prices. I can say with confidence that no country than India needs and no country than India can absorb so much funds for the infrastructure sector.
The Approach Paper to the Eleventh Five Year plan states that: "....the total resources required to correct the infrastructure deficit exceed the capacity of the public sector. The strategy for infrastructure development must therefore encourage public private partnerships wherever possible. However the PPP strategy must be based on principles which ensure that PPPs are seen to be in the public interest in the sense of achieving additional supply at reasonable cost. PPPs must serve to put private resources into public projects and not the other way around."
We have identified the key issues in infrastructure development. They are: (i) the legal and regulatory framework; (ii) affordability of service; (iii) quality of service; and (iv) the financing mechanism.
The last issue - financing - is perhaps the one that interests you most and, therefore, let me dwell on that for a minute.
How does India hope to obtain this level of investment? As I said earlier, we intend to find the resources through public investment, private investment and public private partnerships. Savings and investment, as proportions of GDP, have been on the rise during the last five years. In 2005-06, the savings ratio estimated at 32.4 per cent and the investment ratio was estimated at 33.8 per cent. While we do not yet have the ratios for 2006-07, we have an estimate of Gross Domestic Capital Formation (GDCF) in that year. The number stands at 35.1 per cent, which is an increase of 1.3 percentage points over the previous year. By inference, therefore, it is possible to conclude that the savings and investment ratios for 2006-07 ought to have increased by about 1.3 percentage points. We believe that at the end of 2006-07 the investment to GDP ratio stood at 35 per cent. By any measure, that is an impressive number. Our endeavour will be to channelize a significant proportion of that investment into the infrastructure sector.
Gross Capital Formation in Infrastructure (GCFI) in 2006-07 was estimated at 4.6 per cent of GDP. Our endeavour will be to raise that proportion to at least 8 per cent. Given an economy of the size of US$1 trillion - and which is growing -- an 8 per cent GCFI will yield a minimum of US$80 billion a year and, over a five year period, it would be possible to find a minimum of US$400 billion for the infrastructure sector.
Within India, a large part of the resources will be found through the budgets of the Central and State governments. Tax revenues are buoyant and it is possible to make larger allocations. Governments can also borrow within the limits imposed by the fiscal responsibility laws. We have taken measures to broaden and deepen the debt market, and this will result in greater diversification of risk and would ensure that the quantum of finances increases substantially. Large amounts of money are parked in insurance and pension funds, and these could be used for infrastructure financing of long tenor.
There is help from other sources too. Multilateral institutions continue to support our efforts. Between 1986 and 2006, the Asian Development Bank has funded the transport sector to the tune of US$4.96 billion, the energy sector to the extent of US$4.25 billion and the urban infrastructure sector in a sum of US$1.76 billion. Over the last five years, the World Bank has committed US$4.7 billion to the transport sector, US$1.38 to the urban water sector and US$0.5 billion to the energy sector.
Recently, Citigroup and Blackstone have joined hands with two Indian companies, IDFC and IIFCL, to launch jointly a US$5 billion India Infrastructure Initiative. US$2 billion will be made available for equity investment and US$3 billion in the form of long term debt to fund infrastructure projects in India.
Bilateral support is also forthcoming. The Delhi-Mumbai and Delhi-Kolkata dedicated freight corridors that will be built by the Indian railways has received strong technological and financial support from the Government of Japan.
Arithmetic, however, will not automatically translate into achievement. My purpose in giving these numbers is to demonstrate that finding the finances for the infrastructure sector is well within the realm of possibility.
The real challenge lies beyond the resources: we need to look for innovative mechanisms and instruments to channelise the funds into the infrastructure projects. We have taken several initiatives in this behalf. We offer viability gap funding for projects that would otherwise be considered not commercially viable and hence not bankable. It will be in the nature of a capital subsidy. In order to promote public private partnerships, we have an exclusive mechanism to appraise the proposals, invite bids from prospective developers, make the public contribution in the form of grant or loan or tax incentives, and assist in taking the project to financial closure. We have established the India Infrastructure Finance Company to raise low cost resources and lend or co-lend to infrastructure projects, especially projects that have a long gestation period and need long term financing. We have also persuaded the Reserve Bank of India to lend US$5 billion from the foreign exchange reserves to the IIFCL to enable IIFCL to on-lend to infrastructure projects for their capital expenditure. These and other innovative measures under consideration will ensure the flow of funds to the infrastructure sector.
I believe I have given you a flavour of our ambitious plans. Success will depend upon the ability to clear the roadblocks and implement the projects without time or cost overruns. Large projects face issues concerning land acquisition and rehabilitation and resettlement of displaced families. Some projects may have an adverse impact on the environment and their design may need to be modified. Above all, we need to build capacity in the implementing agencies to be able to resolve the problems that they may encounter and push towards successful completion of the projects. I marvel at what China has accomplished in the last two decades in the infrastructure sector and wonder if there are any lessons that India can learn from China!
Ladies and Gentlemen! A country that aspires to have an economy that will be the third or the second largest in the world must have world class infrastructure. The drumbeats of infrastructure are getting louder in India and the rumble is felt and heard all over the country. The desire for world class infrastructure is not driven by government alone; increasingly it is demand-driven and community-driven. I am confident that within the next ten years we will succeed in putting in place infrastructure in India that is equal to the best in the world."
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