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Sunday, November 27, 2011

USD-INR, IT Sector, Metal Sector, HDIL

USD-INR, IT Sector, Metal Sector, HDIL

FDI in Retail - India

FDI in Retail - India

IDFC and L&T Infrastructure Bonds for Tax Saving

Two more infrastructure bonds, which will get you an additional tax deduction of Rs. 20,000 under section 80CCF of the Income-tax Act, are out: IDFC Ltd launched its bond on 21 November and L&T Infrastructure Finance Co. Ltd launched its issue on 24 November. The tax benefit is available only for fiscal 2012.

Just a month back, Power Finance Corp. Ltd and Industrial Finance Corp. of India Ltd launched their infrastructure bonds.

IDFC to issue tax saving infra bonds

Infrastructure Development Finance Company Ltd has announced a Public Issue of long term infrastructure bonds. The fresh issue of Tranche 1 bonds will open for subscription on 21 November, 2011 and close on 16 December, 2011 or ealier as may decided by the Board of the Company. The Tranche 1 bonds are proposed to be listed on National Stock Exchange of India Ltd and BSE Ltd. The bonds will be issued in one or more tranches not exceeding Rs50bn for fiscal 2011-12. The first tranche bonds will carry interest rate of 9% per annum. The bonds will be issued in one or more tranches not exceeding Rs50bn for fiscal 2011-12. The funds raised through the Tranche 1 bonds issue will be utilized towards "Infrastructure bonds" as defined by Reserve bank of India as defined by Reserve Bank of India in the Regulations issued by it from time to time, after meeting the expenditures of and related to the issue.

Pipavav Defence sells strategic stake to US firm

Shares of Pipavav Defence and Offshore Engineering Co. Ltd. rallied on Nov. 22 after the company said that its Board of Directors had approved issue of up to 81,880,000 shares of Rs. 10 each to an international strategic investor in one or more tranches. The shares will be issued to the international strategic investor at a price not less than Rs. 110 per share or price to be determined as per the formula prescribed by market regulator SEBI. The share sale is subject to the approval of the shareholders of the Company and other requisite approvals. The investment will be a long-term strategic investment in the Company. The investor will initially subscribe to 5% of the paid up capital of the company and within specified time will increase its holding up to 10% of the paid-up capital of the company. The investor is a leading and externally reputed global conglomerate with strong interest in the defence sector. The investor will bring in critical technology required for the manufacture of complex and critical equipment, systems required by the armed forces. The investor will have a right to nominate one director on the Board of the company.

ONGC withdraws FPO documents...May file RHP again

State-run oil and gas explorer ONGC has withdrawn its FPO documents filed with market regulator SEBI apparently on the back of weak market conditions, dealing another blow to the Government's disinvestment programme. Last week, an oil ministry official reportedly said that the ONGC FPO may not take place in the year ending March 31. ONGC will file the red herring prospectus (RHP) again if instructed by the Government, Chairman and Managing Director Sudhir Vasudeva said today. "The withdrawal of RHP is technical. The document filed in September had a validity of 90 days and so we have withdrawn it. It is no reflection if the follow-on offer (FPO) is coming or not," he told reporters in New Delhi. "If and when required, we will file it again," Vasudeva said, adding that the timing will have to be decided by the Department of Disinvestment. ONGC had filed the RHP in September for the FPO whereby the Government had planned to sell a 5% stake, or 427.77 million shares, in the company.

GSM operators add 7.12 million users in Oct

A total 7.12mn subscribers have been added to the GSM operators in October compared with 6.52mn additions in the previous month. GSM subscriber base with this in the country stood at 625.41mn on October 31. According to reports, Bharti Airtel in October added 0.94mn users, taking its total subscriber base to 173.73 million. Vodafone Essar notched up 0.92mn new subscribers during the month. Its subscriber base reached 145.91 million in October. Idea Cellular with 1.63mn new users taking its total subscriber base to 101.81mn is added highest during the month. Aircel added 0.48mn customers to take its subscriber base to 60.28mn. Reports stated that BSNL and MTNL added 0.51mn and 34,919 new users, respectively, taking their subscriber base to 91.58mn and 5.36mn. MTS added 7.95mn customers, taking its total customer base to 14.06million. Reliance Communications has not been included in the Cellular Operators Association of India (COAI) data, added reports.

Eicher Motors, Federal Bank

Eicher Motors, Federal Bank

Rupee Implications

Rupee Implications

2G scam...Five corporate honchos get bail

Five India Inc. executives, who are accused in the 2G scam, have been granted bail by the Supreme Court, sending shares of RCOM, Unitech and DB Realty higher in a weak market. The five persons in question are: Sanjay Chandra of Unitech, Swan Telecom director Vinod Goenka and three Reliance-ADAG executives, Gautam Doshi, Hari Nair and Surendra Pipara. A bench comprising Justice GS Singhvi and Justice HL Dattu delivered the order on the bail pleas of five corporate honchos in the 2G case. They are presently lodged in Tihar Jail. The Delhi high court had denied them bail in the 2G case after the CBI opposed it saying that the accused were likely to tamper with the evidence and influence witnesses. The apex court directed the five accused to furnish two sureties of Rs. 5 lakh each. The bail to the five corporate officials has given hope to the other accused in the 2G case, including disgraced former Telecom Minister A. Raja and DMK MP Kanimozhi. On December 1, the Delhi High Court will hear the bail plea of Kanimozhi and four other accused, including Kalaignar TV Managing Director, Sharad Kumar, Director of Cineyug Media & Entertainment, Karim Morani, and Directors of Kusegaon Fruits & Vegetables, Asif Balwa and Rajiv Agarwal. Raja has not filed any application for bail so far. All the 2G accused are facing charges of criminal conspiracy, cheating, forgery and some provisions under the Prevention of Corruption Act, including abatement of offenses. The charges also include criminal breach of trust, which is punishable with imprisonment for life, or imprisonment for a term extending up to 10 years and fine.

High food prices may warrant more RBI action: Subbarao

Further monetary action from the Reserve Bank of India (RBI) cannot be ruled out as it tries to anchor inflation expectations amid persistently high food prices, central bank Governor D. Subbarao said on Tuesday. "The direct role of monetary policy in combating food price pressures is limited, but in the face of sustained high food inflation, monetary action may still be warranted to anchor inflation expectations," Subbarao said at the 25th Annual Conference of the Indian Society of Agricultural Marketing at Hyderabad. The RBI has raised rates 13 times since March 2010 to tame spiraling and sticky inflation largely driven by high food prices. But in its last policy meeting, the RBI hinted that it could hold rates steady in December policy review and maintain status quo if inflation remains within its projected trajectory. A lasting solution to food price pressures lies in a supply response that raises agricultural production and productivity, improves supply chain management and sets the right incentive framework for both producers and consumers, the RBI Governor said. The outlook on food inflation in the short to medium term will be determined by the speed and quality of such a supply response by the Government, he added. Government data released last week showed that India's food inflation rose 10.63% and the fuel inflation surged 15.49% in the year through Nov. 5. On the rupee hitting a new record low today, Subbarao said that the RBI's rupee policy remains the same. "Our (RBI's) policy remains the same, which is to manage volatility in exchange rate and to ensure that exchange rate volatility does not impair macro-economic stability," he said. Subbarao added that exchange rate movement, especially in the last three to four days was driven by global dynamics and the RBI expects reverse adjustment to take place when the European situation resolves itself.

Food inflation hits 9-week low...Fuel inflation steady

Food inflation in India fell sharply in the second week of November to touch its lowest level in nine weeks, and fuel inflation too remained static, data released by the Government showed on Thursday. The drop in food inflation could provide some much-needed breather to the consumers as well as the policymakers. However, one must wait and see if this is a broader trend or just a temporary relief. Food inflation declined to 9.01% in the week ended November 12 from 10.63% in the preceding week, the Commerce & Industry Ministry said today. Food inflation stood at 11.38% in the corresponding week last year. Inflation in the Primary Articles group also fell to 9.08% in the week under review, from 10.39% in the week ended November 5, according to the Commerce Ministry statement. It was at 15.18% in the year-ago period. Inflation in the Fuel & Power group stood at 15.49% in the week ended November 12, unchanged from the previous week, the Government data showed. It was at 10.57% in the comparable week of the previous year. Inflation in the Non-Food Articles space slid to 4.05% in the week under review from 5.33% in the previous week, the Government data showed. It was at 23.64% in the same period a year earlier. Inflation in the Minerals group rose to 18.51% in the week ended November 12 from 18.02% in the week ended November 5, according to the Commerce Ministry data. Inflation in this group stood at 28.87% in the year-ago period.

Weekly Stock Picks - Nov 27 2011

Buy Indian Hotels

Buy Educomp

Buy Bharti Airtel

Buy Mcdowell

Buy Tata Steel

Ratan Tata successor - Cyrus Pallonji Mistry is unanimous choice

The wait is finally over. Cyrus Pallonji Mistry is all set to succeed Ratan Tata at the top job in Tata Sons. The selection committee has unanimously recommended Mistry's name. Cyrus Mistry was a director of Tata Sons and Tata Elxsi (India) and graduated from the Imperial College, London with a BE in civil engineering. He also holds a masters degree in management from the London Business School, and is a fellow of the Institution of Civil Engineers. Cyrus Mistry, 43, was named deputy chairman of Tata Sons yesterday and will succeed Ratan Tata when he retires in December 2012. Cyrus Mistry's father Pallonji Mistry is the biggest shareholder in Tata Sons with a stake of 18%. Pallonji Mistry has been a director of Tata Sons since 2006. Forbes & Co. is part of the multi-billion dollar Shapoorji Pallonji Group. Cyrus Mistry’s elder brother Shapoor Mistry is Chairman of Forbes & Co. Pallonji Mistry's daughter and Cyrus Mistry's sister is married to Ratan Tata's half-brother Noel Tata, who was also in contention for Tata group Chairman's post. In August 2010, the Tata group named a five-person panel, which included Cyrus Mistry himself, to look for a successor to Ratan Tata. The panel met 18 times, and when Cyrus Mistry became a candidate for the top position in the Tata group conglomerate, he excluded himself from deliberations. Cyrus Mistry will be the sixth chairman of the 143-year-old group, and just the second non-Tata chief. The Tata group was founded as a textile business in 1868 by Ratan Tata's great-grandfather, Jamsetji Tata. Tata Sons holds the bulk of shares in key companies, and trusts endowed by the Tata family own 66% of Tata Sons.

Weekly Newsletter - Nov 27 2011

The undercurrent will remain weak as long as European leaders find a common ground as far as finding a lasting solution to the debt crisis is concerned. Right now they seem to be struggling in containing the financial malaise amid fears of it spreading to the core of the eurozone. At the same time, other developed economies like the US, Japan and the UK are also having their own set of problems.

Govt opens door to foreign retailers...Approves 51% FDI in multi-brand retail

The Union Cabinet on Thursday approved a proposal to allow foreign giants like Wal-Mart to enter multi-brand retail in the country. But the Centre’s move has drawn criticism from various opposition parties. In fact, even UPA allies like Trinamool Congress and DMK are apparently against the decision. In this context, Friday’s parliament session will be interesting after three days of near wash-out. The Cabinet has cleared up to 51% foreign direct investment (FDI) in multi-brand retail, and up to 100% FDI in single brand retail. At present, the Government allows up to 51% FDI in single brand retail, up to 100% in cash and carry (wholesale) business. FDI is not allowed in multi-brand retail currently. The Finance Ministry reportedly gave its consent to the draft Cabinet note on opening the multi-brand retail to foreign investment. The Department of Industrial Policy and Promotion (DIPP) had earlier circulated a draft Cabinet note to seek inter-ministerial views on the issue. Shares of retail companies like Pantaloon Retail, Provogue India and Shoppers Stop rose are yesterday on reports that the Union Cabinet will take up a proposal on allowing FDI in multi-brand retail besides considering increasing the FDI limit in single brand retail. The policy will allow foreign retailers to set up shop only in cities with a population of more than 10 lakh as per the 2011 Census. There are 55 such cities in India currently. Foreign investors will be required to invest up 50% of total FDI in back-end infrastructure, excluding the land cost and rentals. Retailers will need to source at least 30% of manufactured/processed products from small industries, excluding agricultural items. The Government has also retained the first right on sourcing agricultural produce. In terms of single-brand retail, the Government has made 30% sourcing from SMEs mandatory once the FDI limit exceeds 51%.

India Strategy - Nov 27 2011

India Strategy - Nov 27 2011

Auto, cement stocks could be in focus ahead of monthly sales data

Investors may continue to avoid riskier assets as ongoing debt crisis in Europe as well as the slowing global economy has hurt sentiments. However, bargain hunting cannot be ruled out after recent sell-off in stock prices. Investors will closely monitor foreign funds' activity. Foreign institutional investors (FIIs) have been heavy sellers in domestic equities recently. Weak corporate earnings, slowing economic growth and a faltering rupee remain a cause for concern.

The government unveils Q2 September 2011 gross domestic product (GDP) data on Wednesday, 30 November 2011. The economy expanded 7.7% in Q1 June 2011 from a year earlier, helped by strong growth in the services sector.

Market may remain weak

The markets continued their southbound journey for the fourth straight week. The Sensex registered a fresh two-year low at 15,479 - down 900 points for the week. The BSE benchmark index witnessed some recovery towards the end of the week, and finished with a loss of 512 points at 15,859.

In the process, it has plunged 11 per cent (1,947 points) in the last four straight weeks.