Post Market Commentary

The auspicious day of Diwali does not prove to be good for the investors as the market tumbles to close the trading session on a negative territory. The BSE Sensex fell by 151.33 points to close at 18,907.60 and Nifty dropped by 35.5 points to close at 5663.25. On this auspicious day though the market opened with a huge gap but all of a sudden lost the grip and fell to trade in red by pairing most of its initial gains. The global cues are not supportive which led the investors to take wait and watch approach as well as calculated steps in booking their positions. But overall the market breadth was strong as 1797 stocks closed in green while 697 stocks closed in red. The BSE Mid Cap and Small Cap closed higher by 67.85 points and 145.97 points at 8,013.63 and 9,756.88 respectively.

The oil and gas index grew by 40.63 points to close at 11,634.38. Pushing it up are Essar oil (18.55%), HPCL (3.57%), IOCL (2.96%), BPCL (2%) and RPL (1.13%) closed higher.

BSE bankex index dropped by 140.77 points to close at 10,212.42. From the losers pack are Kotak bank (2.33%), ICICI bank (2.19%), HDFC bank (1.36%), SBI (1.01%) and Union bank (0.91%)( closed lower.

BSE Metal index declined by 185.30 points to close at 16,864.22 Pulling it down are Jindal steel (2.36%), SAIL (1.95%), Tata steel (1.31%), JSW Steel (1.30%) and Sterlite (1.20%) closed in red.

The auto index slipped by 21.90 points to close at 5,207.21. Scrips that fell are Tata Motors (1.42%), Bajaj Auto (1.33%), M&M (1.04%), Hero Honda (0.89%) and Maruti Suzuki (0.37%).

The IT index fell by 45.61 points to close at 4,253.25 HCL tech (3.25%), Iflex (2.42%), Wipro (2.07%), Satyam (1.75%) and Infosys (0.72%) closed in negative.

RPL vs Oil Refining and Marketing Companies

How did RPL fare versus all domestic oil refining and marketing companies with regards to their valuations and capacities? This analysis throws up some interesting findings.

RPL has basically higher GRMs (Gross Refining Margins) compared to most other companies. Most of it is because of the latest machineries and technologies that RPL uses, produces estimates of about USD 15-18 per barrel of GRMs versus USD 6 of other companies.

A look at all the oil and marketing companies versus RPL will reveal what is in store. All these are 2010 estimates because RPL will go on-stream in 2010. So the analysis considered 2010 estimates.

The total revenue is close to about Rs 4,74,481 crore for all the oil and marketing companies put together versus Rs 21,908 crore for RPL – these are 2010 estimates.

PAT (profit after tax) for all the other oil and marketing companies is estimated to be close to about Rs 10,416 crore versus 2010 PAT of about Rs 7,424 crore for RPL. PAT is low for all these oil and marketing companies put together on those higher sales is because these companies have lower GRMs.

A look at the refining capacity reveals that RPL will have a refining capacity of close to about 28 million tonnes per annum versus the refining capacity of all the oil refining and marketing companies put together is about 117 million tonnes. That means that RPL has one-fifth the refining capacity of all the oil and marketing companies
put together.

A look at the refining capacity reveals that RPL will have a refining capacity of close to about 28 million tonnes per annum versus the refining capacity of all the oil refining and marketing companies put together is about 117 million tonnes. That means that RPL has one-fifth the refining capacity of all the oil and marketing companies
put together.

Having said that, MCap of all the oil and marketing companies is still lower than RPL. RPL's MCap is about Rs 120,000 crore versus Rs 100,000 crore of all these oil refining and marketing companies.

other estimates value other oil refining companies less aggressively than RPL. Why these companies are conservatively estimated is because of the subsidy burden, which these companies have. The marketing losses that PSUs and other companies have to take have also been considered.

At some point in time, these marketing companies will be profitable. So the lower estimates that have taken on PAT will increase aggressively. Having said, that analysts are not saying that RPL is expensive or the other oil and marketing companies are cheaper at this point in time. They are just giving a comparison between all the other
oil refining and marketing companies versus RPL at this point in time.

RPL's EPS is close to about 16.5 in 2010 versus all the oil refining and marketing companies; it is close to about Rs 202. So one can imagine the difference over there, also price to earnings ratio of RPL in 2010 is estimated about 16.1 versus 9.6 - that is the average price to earnings ratio of 2010 of other oil refining and marketing
companies.

These are just comparisons, analysts are not saying that one thing is cheaper than the other or one thing is more expensive than the other. These are just comparisons between other oil refining and marketing companies and RPL.

OIL COS FY10e

(Rs Cr) Revenue PAT

IOC 2.35 lk 5,205

BPCL 1.02 lk 1,601

HPCL 82,909 1,595

Bongaigaon 5,909 331

Chennai 21, 854 670

MRPL 26,191 1,014

Total 4.74 lk 10,416


OIL COS FY10e

(Rs Cr) Revenue PAT

RPL 51,908 7,424


OIL COS FY10e

(Rs) EPS

IOC 43.70

BPCL 44.30

HPCL 47.10

Bongaigaon 16.60

Chennai 45

MRPL 5.80

Total 202


OIL COS FY10e

(Rs) EPS

RPL 16.50


OIL COS MKT CAP

(Rs Cr)

IOC 55,650

BPCL 10,170

HPCL 8,050

Bongaigaon 1,376

Chennai 4,830

MRPL 13,901

Essar 5,851

Total 99,828


OIL COS MKT CAP

(Rs Cr)

RPL 120,802



OIL COS VALUATIONS

FY10e P/E

IOC 11x

BPCL 7.6x
HPCL 5.0x

Bongaigaon 4.2x

Chennai 7.1x

MRPL 13.8x



Total 9.6x

RPL 16.1x


OIL COS CAPACITY

Refining mtpa

Total ex-RPL 148.97

IOC 60.2

HPCL 13.4

BPCL 22.3

Essar 10.4

ONGC+MRPL 10.4


REFINING CAPACITY

mtpa

RPL 28


ANALYSING RPL

-GRMs higher than most other companies

-Higher GRMS due to latest machineries, better technology

-GRM estimate of $15-17/bbl Vs $6/bbl for others

-RPL refining capacity of 28 mtpa Vs 117 mtpa for others

-Mkt cap of all other refining, mkt cos still lower than RPL

-Subsidy burden hits state run oil refininy companies

-Other oil refining cos have higher profits even after a/c for mktg losses

-RPL will start earning profits in FY2010

-RPL EPS then would be Rs 16.50 Vs Rs 202 of others put together

-FY10 total rev of oil refining cos seen at Rs 4.75 lk cr Vs Rs 21,908 cr of RPL

-FY10 total PAT of oil refining cos seen at Rs 10,416 cr Vs Rs 7,424 cr of RPL


Via Another Group

Our Take

Bubble - when it bursts, people will lose a lot of money

Disclaimer - Don't own RPL

Rakesh Jhunjunwala - cautious, RNRL, RPL don't deserve to run up like this

Q: Last year, you were telling everybody that 15% is great and that we should not expect 50% every year. We have done that again. Are you a bit surprised?

A: I would say I am surprised to some extent by at least the gain of the last one-month. The space and speed has surprised all of us.

Q: Do you think we can do an on core, third time lucky with 50% again or is that being too optimistic?

A: It is time to reflect, we have had a rise from 3,000 to 19,000-20,000. I do not think economic conditions in America are very good. Asian markets there are deteriorating at a fast speed. It is an economy, which is drunk on credit. The credit markets are value effected, so I will not be circumspect at these levels.

We have had such a humongous gain from 3,000 to 19,000-20,000. I think markets are going to consolidate around these levels and would feel more comfortable as an investor.

Q: Would you be cautious here or do you see much higher levels even next year on this base?

A: What makes me uncomfortable is the divergence in valuations. You cannot have Infosys making a 52-week low as their earnings have not come down and they are still growing 15-20%. It is one of India’s best performing investments in time to come. You cannot sustain this kind of divergence in valuations, where you keep giving value to momentum, and you lose all value to value. That would be the first sign of an indication, may be it could happen in a week, ten days, or maybe we are in it. May be it could not happen in the next three months and we could go 20% higher, but I think this is the first indication and we have to be very cautious in this market.

Q: When you say you are cautious, are you cautious because of the excesses that have happened? Is it why you are calling for a correction or have you in the medium-term too become circumspect?
A: There are two-three things internationally especially in America where we are facing large uncertainty. We don’t know how this uncertainty will pan out, what value will the dollar lose, and what disorder it can cause to financial markets. I am extremely bearish on US financial markets and think the sub-prime problem is going to be far larger than what people are imagining. There is a paradigm shift in India. The bull market is very much alive. The factors driving this secular bull market are very much alive and kicking, I have no doubt about it. I am hopeful that five years later we are going to be far higher than where we are today. But the fact remains that we at 19,000 are at 19 times 2009 earnings. There is vast divergence in the valuations of the Sensex or Nifty, you have very narrow group of stocks gaining.

Q: Undeservedly are you saying?
A: I will reserve my opinion there. The fact remains that in a true bull market you cannot have quality stocks going to 52-week lows. You can have stocks with no operating income, whose valuations are 100-200 times earnings. The narrowness of the rise, the uncertainty that we are facing, and the speed of the rise, is why I feel the markets need to pause. They need to take a breath and that will give it strength for the long-term rise.

Q: When you speak about a correction, are you speaking about a major sell-off or just about a 10-15% correction? We have seen three of those this year and we are still up 50%.
A: There is a difference between opinion and the empirical evidence of what the screen is telling us. In the last 15-20 days, flows from abroad have considerably slowed down. World markets after the second Fed cut are showing some kind of resistance and weakness. The market is losing breadth and is facing resistance at higher levels. The market should pause and correct, it is more than opinion, as that is what the screen is telling us. We have not had any correction right from 3,000 to 20,000. We have had very severe corrections but they have been related to prices, there has not been any timewise correction. What will really test people’s belief in this market and country will be when the market corrects not so much valuewise but corrects valuewise and timewise. I can’t believe we are going to have a ride from 3,000-40,000-50,000 where investors’ conviction and patience are not going to be tested.

Q: You see this as a likely scenario. Is 16,000 not inconceivable or are you looking at that big a correction?
A: Our last rise was from 14,000 to 20,000, so surely we could carry a 50-60% rise. Things internationally are going to turn far ugly than what people have anticipated. I don’t know valuewise, but timewise we are going in for a good correction. The sheer momentum with which any stock that has some kind of story build around it goes up at unbelievable volumes. I feel the market is ignoring a lot of stocks, these are the first signs of danger. For the whole rise, the market is going to test us timewise and valuewise.

Q: Are you getting the first sense of euphoria creeping into the screen after those 20-25% blowouts that you have seen in the last few weeks?
A: Absolutely, blowing into all kind of stocks. There are some bull and cock story scrips that are seeing tremendous volumes, unbelievable price rises, and nobody wants to talk any sense there. Somebody guesses, spread some story, and advises a buy and investors just go and buy. These are signs, the markets always do that, there is noting surprising about it. But when markets do this, it is time to be alert in my opinion.

Q: Are you surprised that Infosys is hitting a 52-week low while the market hits new highs. Is it a sector write off for you or do you see value there?
A: A bull market does not mean that some stocks just go up and everything else goes down in value. We are in the initial stages of what is going to be a very big, long-term bull market. In the last two-three months, along with international uncertainty we are staring at local elections in the next 6-12 months, which the markets may not like. Don’t forget that the worst mistakes are made in the best of the times.

I don’t agree with this theory that interest rates in America will go down, all problems will be solved, and all assets in the world will inflate. Markets have had a too good and easy this Goldilocks situation. This is a dream run, in the world this has never happened that you reduced interest rates and all ills are over.

You have given USD 2.5 trillion in one-year to people who did not have money to repay. I don’t buy this theory that he will keep reducing interest rates and we will keep buying emerging markets. You can’t take valuations to any level and expect people to keep on buying. Why have flows slowed down in the last two-weeks? Why is China down 5% today? All of Asia and all emerging markets have been weak in the last 10-12 days.

Q: Let me come to another sector which have been one of the pillars of this bull market, telecom. The big pillars like Bharti and even Reliance Communications have started correcting. What do you see for the next one-year for this space, is the best behind them?
A: Some of the dreams of corporate India are now going beyond all reality. Look at the people applying for telecom license, I don’t know what kind of background and qualification they have to go into the telecom business. Someone is doing a broking business and he wants to get into real estate, someone is doing real estate and he wants to get into the telecom business. The way the markets are giving money to public issues, it seems that nobody is even looking at the prospectus or reading it. They are just finding what the prices are in Rajkot and how much is the issue going to be oversubscribed. If you give money Rs 50,000-1 lakh crore or even Rs 10 lakh crore it is not going to be enough because of the way dreams are expanding and the way in which people are getting money, these are all danger signs.

Q: What is your sense on this whole oil and gas space, especially exploration and refining, and the way the market is valuing some of these stocks?
A: I do not apply my mind at all there. There is surely value in oil refining companies. IOC has got a lot of non-refining and non-marketing income. The market doesn’t want the government to decide what income they will have and whether there is very good yield. Never forget in all this momentum that in 1992 the price of Hindustan Lever was Rs 18.20 whereas the index was 4,300, but in 2003 when the index was 2,900 then HLL was Rs 328. As an investor I found that it is not how high my scrip goes, it is at what level it settles after it goes high. If a stock moves from Rs 100 to Rs 1,000 and comes back to Rs 20, then nobody really gains. But if the stock grows from Rs 100 to Rs 1,000 and then does it stop at Rs 600 or Rs 500, I don’t know.

Q: You were speaking about excesses. Have you found some excesses in any of the stocks which we discussed over the last few weeks?
A: I don’t know what is RNRL business, I am confused and didn’t make any effort to find out also.

Q: But RPL tippled and that has a business?
A: It has a market cap of more than Infosys. I can’t say anything beyond that. I am told it has a market cap of more than the entire refining sector.

Q: Some other ideas?
A: In four years, a share of Great Eastern Shipping has appreciated about 25 times. It was Rs 25, when the management bought back six crore shares, they got all those shares in the range of Rs 5-7.

Q: Will you remain cautious for the next few months or a year?
A: We live in uncertain ages and times. Let us see how this will pan out. We will react to it but let us be prepared. We will react to it as it pans out. I don’t know whether the index will stop at 16,000 or if it may have a bottom there, there may be no correction at all. I have some feelings and am going to react to it as the circumstances arise.

As humans and investors we must have the maturity to realize that we can’t earn the wealth without time passing, without it being tested, and without our conviction being tested. Nobody has earned wealth easily and retained it.

I feel we have had it too good and easy to really last. We are going to be tested. In view of the narrowness, rise of uncertainty in the world financial markets, the fact is that we are going to face an election, and the speed at which we have gone up, the only thing I am saying is be alert and cautious and always be there in the market.

Diwali Picks

Got Diwali Picks ? Let the other visitors know!

Leave a comment of what your picks are and maybe a reason of why one should buy them!

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Grey Market - Mundra, Reliance Power, Empee

Reliance Power -- 60 to 62


Mundra Port & Sez 400 to 440 520 to 540


Empee Distilleries 350 to 400 100 to 110


Edelweiss 725 to 825 725 to 750


Varun Ind. 60 45 to 46


Religare Enterprises 185 280 to 300


Barak Valley Cement 37 to 42 17 to 18


Rathi Bars 35 +/- 1.50 to 2


Allied Computers 12 12 to 13


SVPCL 40 to 45 +/- 2 to 2.50

Diwali Picks - Atul Suri

Fundamental reasons may be right why we might fall

Technically, market may take sharp upmove and see a bigger correction later

Sad part is that participation is bad - among stocks - some stocks haven't moved at all

Upmove limited to some stocks

Nifty might go to 5500 and then sharp upmove

Would be worried

1. If move is limited to few stocks

2. If move doesn't lead to higher top


Market is segmented

Global Markets - US Markets

Asian Indices mostly ended in red

DOW Pre Market is 103 pts down (Currently)

RMF - Sunil Singhania

Investors used to panic when markets used to fall - This time, they have matured. They confident of the economy

Flows stable from retail

Incremental flows in funds. Power Fund getting more flows than ever

ENAM - Manish Chokhani

Not sure of the index, PN clampdown will slow down the money

Subprime may blow up even more in India

Although insurance money might get invested in the next few months

Tread water for a bit

Elections in India, Olympics in India, interesting year ahead

People exiting Large caps will put into midcaps and not necessarily exiting the market

Update

IT might be just of the past glory like HLL

People moving towards local consumption story

The next Sunil Mittal is going to come out of the Infrastructure

RPL and RNRL are the first signs of retail coming and doing funny things

Some of the valuations are not right, sign of froth, lot of people left out and hence this froth

ENAM - Manish Chokhani

Fantastic year, as expected first half of the year was difficult, but picked up later

Markets are becoming Asia centric instead of US Centric

Commodities are doing well

Growth markets of Asia are doing great

This Decade is centered over resources and on Asia like NASDAQ in 90s and Japan in 80s

Momentum in India, real estate, power leading us higher

Market may slip after positive start

A special one-hour trading session to mark the beginning of the New Year Samvat year 2064 is being held today on the bourses. Trading will start at 18:00 IST and end at 19:00 IST. Post closing session will be from 19:10 IST to 19:30 IST.

Global cues are weak. Most of the European markets were in red. US stock index futures slid on Friday, 9 November 2007, as Wachovia Corp, the fourth-largest US bank, disclosed exposure to securities linked to subprime mortgages, heightening investor concern about the impact of the credit crisis. Asian markets ended mixed.

Muhurat trading is traditionally an occasion for an auspicious beginning to the traditional New Near. Investors place token orders and buy stocks for their children, which are held for the long term and sometimes never sold. Traders normally book their intra-day profits, however small they may be.

The wholesale price index rose 2.97% in the 12 months 27 October 2007, below the previous week's rise of 3.02% and its lowest in more than five years, government data released on Thursday, 8 November 2007 showed.

Most of the European markets were trading in red today. France’s CAC 40 (down 1.2% to 5,563.86) and UK’s FTSE 100( down 1.23% to 6,303.60) edged lower. Germany’s DAX (up 0.37% to 7,846.90) edged higher.

Asian markets ended mixed. Hang Seng (up 0.08% at 28,783.41, Taiwan's Taiwan Weighted (up 0.37% at 8,970.92), and South Korea's Seoul Composite (up 0.55% at 1,990.47) edged higher. Nikkei (down 1.19% at 15,583.42) and Singapore's Straits Times (down 2% at 3,599.67) edged lower.

US markets ended weak on Thursday, 8 November 2007 after Federal Reserve Chairman Ben Bernanke said a weak housing market and high oil prices would slow US growth in the fourth quarter and keep it sluggish in early 2008. Dow Jones Industrial Average (DJIA) lost 33.73 points to 13,266.29. Nasdaq Composite shed 52.76 points to 2,696.

National Stock exchange’s (NSE) provisional show that foreign institutional investors (FII) were net sellers of shares worth Rs 1,356.53 crore and domestic institutional investors (DII) were net buyers of shares worth Rs 283.32 crore on Thursday, 8 November 2007.

Samvat 2,063 had been an eventful year. Sensex galloped by a whopping 6,322 points. Though this is the biggest point move in a single year, it's not the highest in terms of percentage gains. The highest percentage gains record belongs to Samvat 2055 (1998-99), when the Sensex rallied 61% from 2,853 to 4,598. In Samvat 2,063 , the index appreciated 49.6% from the 12,736 points it had closed last Diwali. The markets though ended the year on a negative note as the 30-share BSE Sensex ended 230.90 points or 1.20% lower at 19058.93 and the broader S&P CNX Nifty was down 83.6 points or 1.45% at 5698.75 on Thursday, 8 November 2007.

ENAM - Vallabh Bansali

Good to see the gains in the stock market - good gains over the last year

Be cautious when markets are at its peak, its more profitable when one is cautious

7 stocks to buy on Muhurat trading day

7 stocks to buy on Muhurat trading day

Diwali Picks

Diwali Picks

Offtopic - KSE - FIIs continue to pull out

In four trading days of the current week on the Karachi Stock Exchange, foreign investors withdrew around $185 million from equity and $50 million from government bonds.

A senior fund manager, who provided these figures on condition of anonymity, said that the foreign selling flowed out like an avalanche sweeping away more than 5 per cent off the prices of some of the leading banks and insurance companies.

From Monday to Thursday, market capitalisation of insurance and banking sectors declined by 6.5 per cent and 5.2 per cent, respectively.

Figures of possible outflow during the four trading days of mayhem at the market, prompted by political events, varied from analyst to analyst, but most of them thought that it could hardly have been below $160 million.

Since the aggregate foreign portfolio investment stands at $850 million (excluding those in GDRs), the outflow was a substantial 20 per cent of the overseas equity investment, traders said.

“Both Moody’s and S&P have downgraded Pakistan’s credit rating outlook from stable to negative,” says a trader, which could not have lured fund managers to remain in the Pakistani equity market, in spite of its attractive valuations.

Overall, the KSE-100 index shed 491 points during the week. Volatility on Thursday, like the day earlier, was exceptionally high with the index oscillating 311 points between the low and high for the day.

In the absence of credible real-time news about the market from an independent source due to the blackout of private television channels, most healthy and wealthy investors behaved like blind men in a dark room. They had solely to rely on their stockbroker picking up the phone in order to know what the value of scrip at the time was. Until the prayers of the investors were answered and the broker was free to attend to the call, the share may have dived by several rupees leaving trail of losses in its wake.

The rumourmongers could not have had a better time. On Monday, the news of topple at the top, caused a bloodbath at the market with the index showing the heaviest ever single-day decline of 636 points. With the real-time source of news firmly gagged, the denial from Islamabad on Monday moved at the pace of the post office to reach the bourse only after the end of the trading time.

The same evening, the frontline regulator, the Securities and Exchange Commission of Pakistan vowed to ‘investigate’ and bring the rumourmongers to book. Yet, the fact that nothing more had been done until Thursday and given the dismal record of previous investigations, crime and punishment, small investors who lost money could scarcely do more than nurse their wounds.

Trading Calls for the day

Happy Trading .

Markets at a support of 19091 & 19019 levels with resistance at 19669 & 19591 levels .

Buy : RIL

Buy : REL

Buy : JpAsso

Buy : IBullsFinanace bullet

Buy : SKumar

Buy : Primesecurities

Buy : Centextile

Buy : GMRInfra

Dark Horse : ABAN , GeShipping , REL, JpAsso , IBulls , & SBIN

Bullet for the Day : REL & GMRInfra with stop loss

Domestic and International News

Inflation hits 5 1/2 year low

India's inflation, based on the Wholesale Price Index (WPI), fell to nearly five-and-a-half year low in the week ended October 27, the Government said. However, if the impending fuel price hike comes into effect inflation will go up in the coming weeks. Inflation rate slowed to 2.97% in the fourth week of October from 3.02% in the previous week, the Ministry of Commerce and Industry said today. Analysts had forecast a reading of 3.06%. Inflation was 5.35% in the corresponding week of last year.

Govt ups MSS limit as rupee nears 10-yr high

With the rupee within striking distance of touching a 10-year peak and foreign inflows continuing unabated, the Government increased the ceiling for issuing government bonds under the Market Stabilisation Scheme (MSS). The move is designed to help the Reserve Bank of India (RBI) help reign in unbridled foreign capital inflows into the flourishing capital markets. This is the fourth time in FY08 that the MSS ceiling has been hiked and the second time in a month, with the last being in October.

Apr-Oct direct tax collection up 40% yoy

Direct tax collections maintained a growth of over 40% in the first seven months of the current fiscal year, indicating that there is no slowdown in the industrial or economic activity as has been feared in recent times. Net tax collections grew by 43.15% at Rs1.29 trillion. Corporate tax rose by 45.71% to Rs787.85bn. Personal income tax (including FBT, STT and BCTT) grew by 39.39% to Rs498.9bn.

DLF, Sterlite, GMR Infra, RNRL added to MSCI indices

MSCI added 8 new stocks in the MSCI India Index while removing seven. The changes were part of the bi-annual review and will be made as of the close of November 30. Cairn India, DLF, GMR Infra, HCL Tech, NTPC, RNRL, Sterlite Industries and United Spirits are the new additions to the MSCI India Index. The deletions include Ashok Leyland, Asian Paints, Bharat Forge, GSK Pharma, HPCL, Nestle India and Videocon Industries. In addition, MSCI added DLF and Sterlite to the MSCI Emerging Markets (EM) Asia Index.

Mundra Port IPO subscribed nearly 116 times

The IPO of Mundra Port & Special Economic Zone Ltd. was subscribed nearly 116 times as the first ever public issue by a private port closed for subscription. The issue was sold out within just a few minutes of opening the bids on November 1. The company received bids for 4.66bn shares as against the issue size of 40.25mn shares. The QIB portion was subscribed almost 160 times while the HNI category was subscribed 156 times and Retail portion 16 times. The Adani Group company offered shares to local and overseas investors in a range of Rs400 to Rs440 per share.

DoT forms new committee on spectrum allotment

The DoT set up a panel to thrash out new norms for the allocation of radio frequency. The Telecom Engineering Centre (TEC) had recommended tightening the subscriber-linked norms by several times for the existing wireless telecom operators and the DoT had given its 'in-principal' approval to the report. Still, COAI, the body representing GSM companies refused to withdraw its petition from the TDSAT and in fact filed a fresh affidavit in the telecom tribunal against the TEC report.

ONGC eyeing stake in two Sudan blocks

In an attempt to increase the share of overseas business, ONGC is interested in acquiring over 30% stake in two more oil & gas exploration blocks in Sudan, officials from the two countries said. "Besides the three blocks ONGC already has in Sudan, it has shown interest in two more blocks. The doors are open for Indian investment in Sudan," Sudanese Oil Minister Awad Ahmed al-Jaz said in New Delhi.

Bajaj Auto buys 14.5% in KTM

Bajaj Auto acquired a 14.5% stake in Austria's KTM Power Sports AG as part of a wide-ranging co-operation between the two companies. KTM is providing the know-how for the joint development of a water-cooled 4-stroke engines (125-cc and 250-cc). With this, KTM will foray into street motorcycles while Bajaj Auto will also get a new platform for new products.

October car sales up 14.6% yoy

India's auto landscape presented a mixed picture as far as volume for October is concerned. Passenger car sales last month rose by 14.6% to 105,878 units. Total passenger vehicle sales higher by 16.7% to 138,504 units. Total sales of commercial vehicles (CV) grew by 12% to 43,645 units in October. Total two-wheeler sales fell by 3.7% to 793,420 units with bike sales down 6.7% at 657,874 units. But, sales of scooters rose by 16.6% and that of mopeds gained 22.2%.

RIL discovers more gas in KG basin

Reliance Industries Ltd. (RIL) said it met with yet another success in KG-OSN-2001/1 (KG-III-5) located in the Krishna offshore basin in the east coast of India. The well (KGIII5-P1) is the second gas discovery in the Miocene clastics reservoir in the Krishna basin. This shallow water block, with an area of 1100 sq. kms, was awarded to RIL under biding round of NELP-III. RIL holds 100% participating interest in this block.

Glenmark Pharma unveils business recast

Glenmark Pharmaceuticals announced plans to reorganize its businesses into Specialty and Generics. The new generic entity called Glenmark Generics will be a wholly owned subsidiary of the company and will be listed on the Indian stock exchanges by the first quarter of the fiscal year 2008-09. Terrance Coughlin, currently President API and US Generics, will take over the role of the CEO while Glenn Saldanha will function as the Chairman of Glenmark Generics.

Viacom, Network18 formally announce Indian JV

Viacom and Network18 - through its group company Global Broadcast News (GBN) - completed formalities for their 50:50 joint venture in India - Viacom 18 Media. The two companies had announced their plans in May. Viacom18 will include television, film and digital media content across numerous brands as well as consumer products. The JV will be managed by a six-member Board with equal representation by Viacom and Network18.

Amtek Auto acquires UK based Triplex-Ketlon

Amtek Auto said it has acquired UK-based automotive precision machining company Triplex-Ketlon Group for an undisclosed sum. At revenues of US$152mn per annum, Triplex-Ketlon is one of UK's large but independent precision machining companies. Triplex-Ketlon has a very strong customer base that includes names like Perkins, Land Rover, Honda, Ford, TRW, JCB, Toyota, Dana Spicer, Honeywell among others.

Sterlite eyeing 10,000MW power capacity

Sterlite Industries said it intends to participate in coal-based thermal power projects and other ancillary activities. These projects are expected to include ultra mega power projects or other projects announced by the Government or any state and / or PSU and other projects independently developed by Sterlite Energy aggregating to an installed capacity of up to 10,000 MW in the next five years.

MS announces US$3.7bn subprime hit

Morgan Stanley joined Merrill Lynch and Citigroup in booking losses on subprime mortgage-related assets and said the outlook for credit markets is bleaker than in September. The No.2 US securities firm by market value after Goldman Sachs said it lost US$3.7bn in the two months through Oct. 31. Prices for securities linked to home loans to risky borrowers sank further than traders expected, cutting Q4 earnings by US$2.5bn. The figure may change by the end of the month.

Citi chief Prince steps down

The subprime turbulence in the US led to another big casualty on Wall Street in the form of Citigroup CEO Charles Prince, as the markets wonder how much poison is still left in the system. The exit came after the largest US bank warned of additional writedowns of as much as US$11bn on subprime mortgages and related securities, on top of more than US$6bn of charges reported for the third quarter.

GM unveils US$39bn loss

General Motors (GM) said it had lost US$39bn during the third quarter, largely because of a huge charge to write down deferred tax credits, but also because of a deeper-than-expected loss in its operations. GM shares fell more than 5% on the news of the loss as well as the company’s forecast for continued sluggish auto sales into 2008, the year that GM said its turnaround plan would be fully carried out. The big loss was in contrast to a profit of US$497mn, or 88 cents a share, in the period a year earlier, excluding special items. But, GM officials said the overhaul effort was still on track and would continue to show results.

Time Warner CEO Parsons to resign

Time Warner, under pressure from investors to wring more profit from its AOL division and cable unit, named Jeffrey Bewkes new CEO, succeeding Richard Parsons as the head of the world's largest media company. The company posted a higher quarterly profit, matching expectations, on more subscribers to its package of digital cable services and strong box office results for the latest "Harry Potter" film.

PetroChina m-cap tops US$1 trillion

PetroChina became the first company in the world to have a market value of US$1 trillion after its shares almost tripled in Shanghai debut. The strong listing gave the Beijing-based state-owned oil company a market value that is more than ExxonMobil and GE combined and double that of the US-based rival's US$488bn. But, a large number of PetroChina shares are held by its state-owned parent and classed as non-traded.

Alibaba.com makes dazzling debut

Shares of Alibaba.com, which operates China's largest e-commerce web site, nearly tripled in their Hong Kong debut after raising US$1.5bn in one of the biggest IPOs by a Chinese Internet company. That gave Alibaba.com a market value of US$25.7bn, closing in on Yahoo Japan as Asia's biggest Internet company. The stock was four times more expensive than Google relative to earnings, and also traded at higher multiples than other Chinese Internet companies.

Google unveils mobile strategy

Internet giant Google revealed its plan to enter the mobile phone industry by developing software to make it as easy to access the web on a cell phone as on a computer. The company announced the new strategy that it will work with 33 other companies including mobile phone makers Motorola and Samsung. Google is focusing its efforts on a new platform called Android that relies on openly available computer codes accessible to all programmers.

ArcelorMittal to buy 28% in China Oriental

ArcelorMittal entered into an agreement to acquire a 28% stake in China Oriental Group Co. Ltd. from Smart Triumph Corporation and Chen Ningning for US$647mn. ArcelorMittal became the second largest shareholder of the Chinese company. The company is listed in Hong Kong and manufactures steel products such as billets, strips, H-beams, cold rolled and galvanized strip. For the year 2006, the group reported revenues of US$1.3bn and EBITDA of US$225mn.

Top News for the Week

Crude, gold hit new peak as dollar falls

Crude oil rose above US$98 per barrel and gold touched a new 27-year peak after the dollar declined to a new record low versus the euro amid nagging worries about the health of the US economy. A weak dollar makes commodities denominated in the US currency attractive as a natural hedge. The cost of buying these commodities falls for buyers who pay in non-dollar currencies. The dollar slumped to a new life-time low against the euro after Chinese officials indicated that the country could shift some of it's huge US$1.43 trillion foreign exchange reserves in response to a falling greenback.

Govt defers fuel price hike

With Diwali just a couple of days away and a political consensus nowhere in sight, the Government deferred a plan to effect a marginal hike in retail prices of petrol and diesel. Petroleum Minister Murli Deora said the Government would decide next week on ways to stem the losses of public sector oil marketing companies (OMCs) reeling under the burden of record high crude prices. "We are considering various alternatives, including duty restructuring and increase in prices," Deora said. "I cannot say 100%, but we will try to resolve it next week," he said.

Indiainfoline - Diwali Picks

The year 2007 has been another spectacular one for India with its growth story accepted globally. The Sensex touched the 20K mark backed by surging liquidity and we believe that the party is far from over. With India on a strong fundamental footing, there is little risk to growth (most risks external in nature). Equities will continue to mirror India ’s economic prowess and we have handpicked 15 companies that will spice up your portfolio on the eve of Diwali.

Sector	Company	Target (Rs)	Upside (%)
Breweries	Radico Khaitan	223	33
Construction	Patel Engineering	1,017	42
Construction	Punj Lloyd	770	50
Consumer	Voltas	265	28
Engineering	Greaves Cotton	435	32
Logistics	Gati	144	33
Media	Deccan Chronicle	248	31
Metals	Sesa Goa	4,350	25
Oil Allied Services	Alphageo	873	46
Power	Bharat Bijlee	4,455	30
Power	Genus Power Infra	818	30
Power	Indo Tech	854	30
Retail	Pantaloon Retail	874	35
Software	Allied Digital	618	41
Software	3i Infotech	240	82