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Friday, May 29, 2009
Daily News Roundup- May 29 2009
Petroleum consultant Gaffney, Cline & Associates has confirmed the presence of oil & gas in two offshore blocks in Reliance’s KG basin-D3 and D9. (BL)
Suzlon Energy has successfully renegotiated financial covenants and amended key terms of the bank loan facilities it had taken for acquiring REpower Systems AG and Hansen Transmission. (BS)
Aditya Birla Group may not buy L&T stake in Ultratech Cement. (ET)
Tata Motors may have to infuse funds to bridge JLR pension gap. (ET)
R-Power in talks with Australian mining firm BHP Billiton and Rio Tinto for setting up a coal mining joint venture. (ET)
Tata Motors has concluded an agreement for amending its bridge loan, extending the final maturity of US$1bn by 18 months upto December 31st, 2010. (BL)
JSW Steel plans to raise US$1bn via QIP and a FCCB issue. (BS)
Datacom and Sistema Shyam Teleservices have short listed Wipro, Tech Mahindra and IBM for an IT outsourcing contract worth US$150mn each. (ET)
The 1,000MW NTPC-Simhadri Unit III will be ready by Nov 2010. (BS)
SAIL plans to nearly double it capital expenditure to Rs100bn in FY10. (BL)
Satyam may downsize overseas operations and terminate lease contracts. (BL)
Aditya Birla Group Company to set up 10mn tons captive port at Chudamani. (BS)
Novartis has revised the open-offer price for its shares to Rs450 from Rs351 to buy back an additional stake of up to 39%.(BS)
Finance Ministry mulls special audit of Satyam accounts. (FE)
US FDA to review Ranbaxy corrective plan. (FE)
Government to allow UBI, Dena Bank and Bank of Maharashtra to tap market to boost their capital base. (ET)
Dewan Housing Finance Corporation (DHFL) is planning to issue non-convertible debentures (NCDs) worth up to Rs10bn in July to meet its credit disbursal targets for the current financial year. (BS)
Spice Group is diversifying into financial services with plans to start businesses which will deal with asset reconstruction, remittances, over-the-counter exchange and fixed income products. (BS)
The consortium led by GMR Infrastructure Ltd has won the 181km Hyderabad-Vijayawada highway project to be executed on a BOT basis. (BL)
Coromandel Fertilisers Ltd has signed a JV with Soquimich European Holdings BV, Netherlands, a subsidiary of SQM, Chile, for setting up 15,000 tons water soluble fertilisers plant at Kakinada in Andhra Pradesh. (BL)
Siemens Ltd plans to invest Rs2.7bn to triple capacity of its steam turbine manufacturing facility in Vadodara, Gujarat. (BL)
Religare to acquire Maharashi Housing Development Finance Corporation to foray into home finance business. (ET)
Ericsson bags order worth US$500mn from Unitech Wireless to supply and manage all network equipments for its three telecom circles. (ET)
Government of India raised Rs150bn (US$3.14bn) by selling four bonds maturing between 2016 and 2035. (BS)
SEBI plans to extend the facility of internet trading in securities on exchanges by enabling use of wireless technology. (BS)
The annual wholesale inflation rate remained unchanged at 0.61% for the week ended May 16. (BL)
Moody’s has toned down its pessimism on India by retaining a stable outlook. (ET)
Government has decided not to apply an area limit of 5,000 hectares for SEZ if two or more such zones are merged. (ET)
Dis-May…bears run for cover!
Great things are not done by impulse, but by a series of small things brought together.
With ~28% gain in the May F&O series, the bulls seem to have managed their impulse for quite some time now. The rollover to June was around 58%, which is relatively less.
The outlook at start is expected to be positive though FIIs were net sellers to the tune of Rs7.29bn. Moody’s meanwhile has toned down its pessimism on India by retaining a stable outlook. Hold on to your horses as the GDP numbers for March will be announced today. Expectations are the growth in March quarter may have been the slowest with the economy expanding a little over 5%. Should it disappoint, some profit taking could be seen.
The cues from the global markets show no concerns for the day. The US market ended higher after the government’s recent debt auction saw healthy demand. The Treasury Department said it received $58.7 billion worth of bids for the $26 billion in 7-year notes offered Thursday.
Meanwhile, Government of India raised Rs150bn by selling four bonds maturing between 2016 and 2035.
The Dow Jones industrial average (INDU) rose 103 points, or 1.2% while the broader S&P 500 (SPX) added 14 points, or 1.5%. The Nasdaq composite (COMP) gained 1.2%, adding 20 points.
Asian stocks were mixed in the morning trades, however, the mining stocks recorded smart gains as a better-than-expected Japanese factory output report boosted copper prices. Mitsui & Co gained 1.6%, BHP Billiton advanced 2%, Mitsui O.S.K. Lines was u p 3.4%.
The Nikkei index was flat at 9,457. The Hang Seng index was up 0.3% at 17,949. Straits Times gained 1%. Australia's S&P/ASX gained 1.4% at 3,806. The MSCI Asia Pacific Index gained 0.3% to 100.45 as of 10:38 a.m. in Tokyo.
Japan’s unemployment rate rose to a 5-year high in the month of April. The jobless rate rose to 5% from 4.8% in the month of March.
Crude oil shot up to US$65.08 a barrel after OPEC decided to leave production quotas unchanged.
In news from the media:
Petroleum consultant Gaffney, Cline & Associates has confirmed the presence of oil & gas in two offshore blocks in Reliance’s KG basin-D3 and D9.
Suzlon Energy has successfully renegotiated financial covenants and amended key terms of the bank loan facilities it had taken for acquiring REpower Systems AG and Hansen Transmission.
Aditya Birla Group may not buy L&T stake in Ultratech Cement.
R-Power in talks with Australian mining firm BHP Billiton and Rio Tinto for setting up a coal mining joint venture.
SEBI plans to extend the facility of internet trading in securities on exchanges by enabling use of wireless technology.
The annual wholesale inflation rate remained unchanged at 0.61% for the week ended May 16.
It was the second straight day of gains for the Indian markets on Thursday. The upswing was seen despite weak cues from the US and the Asian markets. The Metal, Banking and the PSU stocks were among the top gainers followed by the Capital Goods and the Realty stocks. However, some offloading was seen in the Pharma, IT and FMCG counters.
The Sensex surged 186 points or 1.3% to close at 14,296 after touching a high of 14,377 and a low of 14,078. The index had opened at 14,115 against the previous close of 14,109.
The NSE Nifty gained 61 points or 1.4% to shut shop at 4,336.
Among the BSE Sectoral indices BSE Metal index was the top gainer adding 2.7%, followed by the BSE PSU index up 2.3%, BSE Bankex index up 1.8%, BSE Capital Goods index up 1.7% and BSE Realty index up 1.7%.
Shares of L&T gained by 2.3% to Rs1342 after the company announced its Q4 results with net profit at Rs9.99bn posting 3.3% growth as against Rs9.67bn in the same period last year. The company’s net sales grew 23.6% yoy at Rs104.7bn as against to Rs84.7bn and has one-time loss of Rs1.44bn. The company announced that it would pay dividend of Rs10.50 per share.
Shares of M&M advanced by 2.1% to Rs639 after the company announced its Q4 results with net profit at Rs4.18bn posting a growth of 89% yoy as against Rs2.21bn. Net sales were up 15% at Rs36.2 versus Rs31.4. The company Q4 EPS was at Rs10.81 versus Rs9.02 and also announced that they would pay dividend of Rs10 per share.
SAIL surged by over 6.5% to Rs164. The company’s Q4 net profit dropped 37% yoy at Rs14.9bn as against Rs23.8bn in the same period last year. The company posted revenues of Rs120.6bn as against Rs134.8bn.
After gaining over 700 points in two trading sessions, some cooling off is not ruled out as trader and investors would prefer to book some profits ahead of the weekend. No other immediate catalysts for now besides the GDP numbers tomorrow.
Inflation stands unchanged at 0.61%
India's Wholesale Price Index (WPI) based inflation rose 0.61% in the week ended 16 May 2009 from year earlier same as in the previous week, but substantially lower compared to 8.66% a year ago. However, the index rose 0.1% to 232.2 from previous weeks level, recording seventh weekly gains.
The index of primary articles rose 0.04% from previous weeks level, recording rise for the seventh consecutive week, while manufacturing index rose 0.1% posting tenth weekly rise. However, the index of fuel, power, light and lubricants also moved 0.1% during the week compared to its previous weeks level.
Within the primary articles, the index of food articles declined 0.04% from the previous weeks level due to lower prices of gram, fruits & vegetables and jowar (1% each), but non-food articles increased 0.2% powered by higher prices of raw cotton (2%) and linseed (1%). However, the primary article inflation climbed up to 6.22% from 6.05% in the previous week.
The index for manufacturing product group rose 0.1% from previous week, while the annual inflation in the manufactured product group stood at 1.1%. Among the manufactured products, the index for food product climbed up 0.5% due to higher prices of bagasse (25%), unrefined oil (21%), malted food (7%), imported edible oil (3%) etc, while the index of beverages tobacco & tobacco products rose 0.1% from the previous week level. However, the index of textile group and transport equipment & parts declined 0.1% each from their previous weeks levels.
The inflation has continued to be below 1% for the sequential eleventh week, but it has been rising for the seventh week on week-on-week basis, which is raising concerns. The weekly rise is largely contributed by primary articles, while lower industrial production has also pressured the prices of manufactured products.
A survey of professional forecasters conducted by the Reserve bank has projected the WPI based inflation to be negative at -1.4% in the first quarter of 2009-10 and further deeper negative at –2.5% in the second quarter, due to rapid rise in prices in the corresponding previous period. However, during the first seven weeks out of the 13 weeks in the first quarter, the inflation stood at 0.5% compared to 8.3% in the corresponding previous year period.
Satyam to downsize operations, close offices
A handful of the 105 offices and 30 delivery centres that Satyam Computer Services has worldwide may soon cease to exist.
The Hyderabad-based company, recently acquired by Tech Mahindra, is evaluating options to downsize operations at its overseas development centres and terminate lease contracts for offices and other properties.
By consolidating its offices and delivery infrastructure, Satyam will be able to up capacity utilisation and also reduce overhead costs, two persons in the knowledge of the development told Business Line.
“The concept of global delivery centres is good but all delivery centres and offices will be right-sized both in terms of people and physical infrastructure,” one of them said.
Resurrection Plan
This review of operations is part of Operation Phoenix, Tech Mahindra’s plan of resurrecting Satyam.
Satyam has seven development centres in China, Germany, Brazil, Egypt and Malaysia, which act as near-shore destinations for getting work done in the same time zone as places such as the US and the UK.
A spokesperson for Satyam refused to comment on the news.
In April, Satyamites on bench in the US were asked to quit and return to India.
Satyam has already pruned its sales force across the globe.
However, recent news reports indicate that it plans to increase the sales team by 20 per cent. This could not be verified independently.
Another official said that Satyam is likely to consolidate sales operations in the US as a section of customers based there has severed ties with the company. The company has 14 offices in the country.
Apart from its 10,000 excess employees, Satyam is believed to have 20,000 spare seats in India across the 23 delivery centres.
“We have identified several rented premises whose lease will be terminated to provide sizeable savings. This space is anyway in excess and was invested based on anticipated growth,” Mr A. S. Murthy, Chief Executive Officer of Satyam, told staff in a recent email.
High-profile exodus
Meanwhile, the exodus of high-profile officials from Satyam continues
Those who have quit include Mr Virender Agarwal, Business Head of India, the Middle-East and the Asia-Pacific regions; Mr Hetzel Folden, head of the strategic deals group; Mr Naresh Jhangiani, human resource head of business process outsourcing, and Mr Deepak Nangia, head of the Australian region.
Ms Archana Muthappa, India-based spokesperson for Satyam, too has put in her papers.
Last week, Mr Vineet Nayyar, CEO of Tech Mahindra, had said Satyam has excess staff of 10,000
via BL
Crude tops $64
Prices surge as energy department reports unexpected drop inc rude inventories
Crude oil prices rose substantially higher on Thursday, 28 May 2009. Prices rose for the fourth consecutive session as energy department reported unexpected drop in crude inventories for last week. Market was anticipating a buildup in crude inventories.
On Thursday, crude-oil futures for light sweet crude for June delivery closed at $64.59/barrel (higher by $1.14 or 1.7%). Last week, crude ended higher by 8.2%.
Crude ended April higher by 2.9%. Previously, March trading ended up 10.9%. It rallied 11.3% in the first quarter. Oil prices had reached a high of $147 on 11 July, 2008 but have dropped almost 56% since then. Year to date, in 2009, crude prices are higher by 33%. On a yearly basis, crude prices are lower by 42%.
The energy department reported today that crude inventories declined by 5.4 million barrels in the week ended 22 May, 2009. Market was expecting stockpiles to show an increase of 1.8 million barrels. U.S. refineries ran at 85.1% of their operable capacity last week, up sharply from 81.8% in the prior week.
The EIA also reported that gasoline inventories fell by 600,000 barrels last week. Distillate stockpiles, which include heating oil and diesel, rose 300,000 barrels last week.
Gasoline production averaged nearly 9.4 million barrels a day last week, up from 8.7 million barrels in the week ended 15 May, 2009 as the nation entered into the post-Memorial Day driving season.
In its latest annual report, EIA reported yesterday, on international outlook for energy that global oil demand will grow to 91 million barrels a day in 2015 and 107 million barrels a day in 2030. Global oil supply will rise to 106.6 million barrels a day by 2030. The EIA also said natural-gas consumption will increase to 153 trillion cubic feet in 2030. The Energy Information Administration predicted in a newly released report that oil prices will rise to $110 in 2015 and $130 in 2030.
OPEC, in its latest meeting, decided to keep production quotas unchanged, in line with expectations. The cartel, which accounts for about one-third of the world's oil production, decided to leave production levels unchanged at today's meeting in Vienna.
Also at the Nymex on Thursday, June-dated reformulated gasoline rose 0.2% to $1.8955 a gallon, while June heating oil gained 2% to $1.5927 a gallon.
Natural gas for July delivery jumped 7% to reach $3.888 per million British thermal units. EIA also reported today that U.S. natural-gas inventories rose 106 billion cubic feet in the week ended 22 May.
Crude prices had ended FY 2008 lower by 54%, the largest yearly loss since trading began at Nymex.
At the MCX, crude oil for June delivery closed at Rs 3,087/barrel, higher by Rs 70 (2.3%) against previous day's close. Natural gas for June delivery closed at Rs 188.3/mmbtu, higher by Rs 14.6/mmbtu (8.4%).
Bullion metals shine
Gold manages modest jump while silver adds substantial glaze
Precious metals ended higher on Thursday, 28 May, 2009 at Comex. Prices ended higher as couple of encouraging economic reports hit the wires today thereby increasing inflation concerns. Economic reports on durable goods and housing – both checked in better than expected.
Generally, a stronger dollar pressures demand for dollar-denominated commodities, such as crude oil and gold, which become more expensive for holders of other currencies and also vice versa.
On Thursday, Comex Gold for June delivery rose $8.2 (0.9%) to close at $961.5 an ounce on the New York Mercantile Exchange. Last week, gold ended higher by 3%. Year to date, gold prices are higher by 10.6%.
For the month of April, gold had lost 3.7%, the second consecutive monthly drop. For the month of March, gold fell 2.1%, down for the first month in five. But the metal gained 4.3% in the first quarter. Before March, for the month of February, gold ended higher by 7.4%. For January, 2009, gold had gained 3.9%.
On 17 March, 2008 prices had skyrocketed to a high of $1,034/ounce. But prices have dropped somewhat (7%) since then.
On Thursday, Comex silver futures for July delivery rose 29.5 cents (2.1%) at $15.16 an ounce. Year to date, silver has climbed 32.3% this year. For 2008, silver had lost 24%.
The Commerce Department reported on Thursday, 28 May, 2009 that U.S. new home sales rose 0.3% in April to a seasonally adjusted annual rate of 352,000. But the figure was well below the 365,000 pace expected.
In a separate report, The Commerce Department reported on Thursday, 28 May, 2009 that new orders for U.S made capital goods were much stronger than expected in April. Orders for durable goods rose 1.9% in April, pushed higher by new orders for primary metals, machinery and motor vehicles. It marked the largest gain in new orders since December 2007.
In 2008, gold prices ended higher by 5.5%. The dollar index had gained 12% that year.
Last year, the weakening dollar and higher global demand for raw materials had led to records for commodities including gold. Gold reached a record in March 2008 as a U.S. housing slump and credit crisis spurred the Federal Reserve to slash borrowing costs. In the last move, the Federal Reserve has cuts its target bank lending rate to 0.25% from 5.25% in September, 2007. The Fed did it in nine steps.
Prior to 2008, gold had witnessed the greatest annual gain in twenty eight years by gaining $200/ounce (31%) in FY 2007 as lower interest rates had sent the dollar tumbling, and crude-oil prices rose to a record. Silver had climbed 16% in FY 2007. In 2006, silver had jumped 46% while gold gained 23%.
At the MCX, gold prices for June delivery closed higher by Rs 90 (0.61%) at Rs 14,712 per 10 grams. Prices rose to a high of Rs 14,759 per 10 grams and fell to a low of Rs 14,560 per 10 grams during the day's trading.
At the MCX, silver prices for July delivery closed Rs 351 (1.51%) higher at Rs 23,516/Kg. Prices opened at Rs 23,113/kg and rose to a high of Rs 23,675/Kg during the day's trading.
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