Asian stocks edge up as Greece tensions ease

Crude flies above $81, risky assets have a fantastic Friday

The movement in the Asian stocks turned out to be fairly resilient in the face of abating worries about the sovereign debt problems in Europe and as the Euro's rebound sent risky assets higher. The US markets were mostly flat yesterday but the DOW futures raced up in the screen trade today, indicating that the stocks could be flying ahead of the weekends.

Yesterday, the euro gained after European Central Bank President Jean-Claude Trichet said he welcomed a European Union agreement on an aid plan for Greece. Media reports stated that European leaders and the International Monetary Fund have agreed to support debt burdened-Greece. This framed up the things nice and easy for risky assets and an early rebound in crude oil from $80 per barrel levels augured well for the Asian markets, helping the regional benchmarks post strong gains.

Japan's Nikkei ended 1.6% higher at 10,996.37, its highest close since the early days of October 2008, after briefly topping the psychologically important 11,000-point level. A weaker yen, which benefits Japanese exporters by making their products more competitive overseas, supported the sentiments. The greenback extended its strength slightly in Asian afternoon trade on Friday, but failed to break pass 93 levels as exporters actively sold the dollar to repatriate profits

The Australian stocks also closed slightly higher as funds returned to the major resource and finance sectors stocks in tune with the strong undertone in the Asian equities. The benchmark S&P/ASX200 index added 11.5 points, or 0.24%, to 4,896.9 points, while the broader All Ordinaries index gained 8.9 points, or 0.18%, to 4,905.2 points.

Chinese banking stocks jumped despite Industrial & Commercial Bank of China's plans to raise funds, as some analysts saw the move ending speculation over capital-raising after last year's lending spree. This, alongwith the drop in the markets earlier in the week meant that plenty of buying support was in for the Chinese stocks ahead of the weekends and the Shanghai Composite gained 1.3% on the day.

In other markets, Hong Kong's Hang Seng Index advanced 1.3% reversing Thursday's declines, while South Korea's Kospi added 0.6%, Australia's S&P/ASX 200 inched up 0.2% and Taiwan's Taiex surged 0.5%. Elsewhere in the region, New Zealand's NZX 50 rose 0.1% and Philippine stocks ended 0.3% higher.

In Mumbai, the key indices pared gains in late trade after surging to their highest level in more than two months in mid-afternoon trade. Index heavyweight Reliance Industries (RIL) trimmed gains in late trade and the BSE 30-share Sensex was provisionally up 58.62 points or 0.33%, off close to 65 points from the day's high. Metal, consumer durables, auto and banking stocks rose. But, IT stocks fell.

Dow Jones Industrial Average futures were last seen quoting up 25 points in screen trade. Crude oil has firmed up above $81 per barrel, currently quoting at $81.12, up 59 cents from the previous close while Gold is also extending the yesterday's intraday bounce from six week lows. COMEX April Gold futures are currently trading at $1098.20, up $4.10 per ounce from the previous close

Eurozone throws its weight behind Greece...finally

In a bid to restore confidence in their common currency, all 16 eurozone leaders have reportedly agreed to provide joint financial assistance to the debt-laden Greece in tandem with the International Monetary Fund (IMF). The euro rose on Friday from a 10-month low against the dollar after European Central Bank (ECB) president Jean-Claude Trichet toned down his opposition to the IMF's involvement in a Greek rescue plan. "Europe has taken a big step in the face of a big challenge," Greek Prime Minister George Papandreou told reporters after talks in Brussels, declaring himself satisfied. European Council President Herman Van Rompuy called the deal significant not just for Greece, but for the stability of the eurozone.

Backers of the plan included French President Nicolas Sarkozy, according to reports. Sarkozy previously had opposed a role for the Washington-based IMF. The deal was brokered during a summit in Brussels. The French President said that the eurozone would put up two-thirds of the money, and the IMF the rest. Terms imposed by German Chancellor Angela Merkel mean that the concerted EU-IMF mechanism could be activated only under strict conditions and would require the unanimous approval of the eurozone. Greek Finance Minister George Papaconstantinou said that the deal removed the risk of default by his country. He also said that no aid was being given to Greece as of now.

EU leaders were under pressure to come up with a detailed plan to aid Greece, amid mounting worries that the debt troubles in countries like Greece, Portugal and Spain could spread elsewhere in the euro zone. Eroding confidence in the euro was also among the factors that influenced the outcome of the Brussels summit. The euro fell to a 10-month low against the dollar in afternoon trading on March 25 after the Trichet reportedly said that getting help from the IMF to solve the region's debt problems would be very, very bad. Separately, Zhu Min, the deputy governor of the People's Bank of China, said that the Greek debt crisis was only the tip of the iceberg and complained that Europe had offered no decisive action on the matter.

Earlier, the ECB took some pressure off Greece by extending emergency lending rules, saying that its bonds won’t be cut off from ECB refinancing operations next year in case Moody’s lowers its rating to a level comparable with other companies. That decision marked a reversal for the ECB, which said in January that it wouldn’t soften its collateral policy for the sake of a single country. The bank was scheduled to reintroduce pre-crisis rules at the end of 2010.

Piramal Healthcare acquires "i-pill" from Cipla

Piramal Healthcare Ltd. announced signing of a definitive agreement for the purchase of all Intellectual Property Rights (IPRs) in India related to "i-pill" brand of Cipla for an aggregate consideration of Rs950mn. "i-pill" features in the top-300 pharmaceutical products and had sales of Rs309.2mn as per ORG IMS for the last 12 months. The acquisition of "i-pill" strengthens Piramal’s over the counter (OTC) portfolio which has strong consumer brands such as Lacto Calamine skin care range, Supractiv Complete, Saridon and Polycrol antacid. "i-pill" is an emergency contraceptive pill (ECP) used to prevent unplanned pregnancy and is available over the counter at local chemists. It is not an abortion pill.

Maruti to spend Rs17bn on Manesar expansion

Maruti Suzuki India Ltd. said that it will invest about Rs17bn for the proposed capacity expansion at its Manesar plant by 2.5 lakh units annually. This initiative will help the company scale up the Manesar plant's capacity from 300,000 units per annum to 550,000 units per annum over the next two years. Maruti Suzuki's present production facilities are located at Gurgaon with a capacity of 7 lakh (0.7 million) units and Manesar with capacity of 3 lakh (0.3 million) units. Maruti Suzuki also said that it will invest around Rs12.5bn to double its K-series engine manufacturing capacity in the next 2-3 years. The country's largest car maker currently makes 250,000 K-series engines at its Gurgaon plant annually. "We will invest 50 billion yen (around Rs25bn) in our R&D center and engine capacity expansion. It is likely to be equally divided into both," a company spokesperson said. Maruti Suzuki currently makes a total of one million engines (petrol, diesel and K-series petrol) at its Gurgaon facility. Maruti Suzuki said that it has become the first automobile company in India to produce one million (10 lakh) cars in a single financial year. The one millionth car manufactured by Maruti Suzuki in the fiscal year 2009-10, a glistening red Maruti Suzuki Swift, was rolled out on March 23 from the company's Manesar plant. In FY10, Maruti Suzuki has sold 923,242 units (791,260 in domestic market and 131,982 exports)

ICICI Bank gets QFB privileges in Singapore

The Monetary Authority of Singapore allowed ICICI Bank to offer retail banking services. The authority has granted ICICI Bank a qualified full banking (QFB) status. ICICI Bank now has the permission to open 25 outlets (branches or ATMs) in Singapore. “We are delighted to receive this approval since it will further strengthen our footprint in the corporate, commercial, wealth management and Direct banking services in Singapore," said Chanda Kochhar, Managing Director and CEO, ICICI Bank. " We expect to see significant increase in our client base in the region having strong India connections”. ICICI Bank is the second Indian entity to get this authorisation in Singapore. The country’s largest lender, State Bank of India (SBI), was given a similar license two years ago. The license is a part of a bilateral agreement between India and Singapore to open up their financial sector. On its part, the RBI had allowed DBS, Singapore’s largest bank, to open another eight branches in the country. Another Singapore bank, UOB was also given the nod for a branch operation here. SBI has used the authorisation to open seven branches and 17 ATMs in the city state and has started retail banking operations.

Videocon joins mobile bandwagon with launch in TN

Videocon Telecommunications Ltd. launched mobile telephone services under the GSM platform. The service, which was launched in Tamil Nadu with sub-one paise effective tariff, will be rolled out in other states, covering 100 cities over the next 100 days. Addressing a press conference, Chairman of Videocon group, Venugopal Dhoot, said that Videocon would invest Rs140bn in its mobile telecom business in the next three years, and expects to secure 100 million subscribers over the period. Dhoot said that a consortium of banks led by State Bank of India (SBI) has committed to lending Rs70bn to Videocon, for the telecom business. The rest of the funds will come from internal accruals. In Tamil Nadu, where Videocon joined nine other operators, the company intends to invest Rs15bn, generating employment to some 20,000 people.

IOC, OIL confirm making cash offer for Gulfsands

Indian Oil Corp Ltd. (IOC) and Oil India Ltd. (OIL) confirmed that they had approached Gulfsands Petroleum Plc for a possible all cash offer worth 381 million (US$570mn) to acquire the UK-based company. Gulfsands is an oil producer with interests in Syria, Iraq and the Gulf of Mexico. "In response to recent speculation concerning a possible offer for Gulfsands, Indian Oil and Oil India confirm that they have jointly made an approach regarding a possible all cash offer for Gulfsands," the two companies told the LSE. In a separate notification to the LSE, Gulfsands said that the company had received a preliminary approach on March 18 for a possible offer at 315 pence per share for its entire issued and to-be-issued share capital. The board of Gulfsands has, however, rejected the preliminary offer. "As stated on Mar 19, the board is unanimously of the view that the proposal is wholly inadequate, highly conditional and materially undervalues the company," Gulfsands said. The two state-owned oil companies said they were still eyeing a possible takeover of Gulfsands after their US$570mn takeover bid was rejected as inadequate. Earlier, news reports quoted the two companies as saying that are not planning to raise their bid for Gulfsands.

Petrol, diesel prices may rise marginally

Prices of petrol and diesel are likely to increase by 41 paise per litre and 26 paise a litre respectively in Delhi and Mumbai and 12 other metro cities from April 1 the country prepares to switch over to the Euro IV standard fuel, Petroleum Secretary S. Sundareshan said. "This hike is not on the basis of Rs400bn capital expenditure oil companies incurred in upgrading their facilities to produce cleaner fuel but a requirement to bring domestic rates to international parity,” . Sundareshan said. The actual price hike needed to cover the cost would have been 3-4 times the proposed increase. Public sector oil marketing firms will sell ultra-low sulphur petrol and diesel in 13 major cities from April 1, while Euro-III grade fuel is to be supplied only in the rest of the country.

Food inflation falls for 3rd successive week

Food inflation in India dipped marginally in the middle of March, falling to a five-month low, the government said. This was the third consecutive drop in food inflation in as many weeks. Inflation also fell in the Primary Articles group and Fuel group, it said. Inflation for the Food Articles group dropped to 16.22% in the week ended March 16, as compared to 16.3% in the previous week, the Commerce & Industry Ministry said. Inflation in the Non-Food Articles category too slipped to 13.06% from 13.99% in the week ended March 6. Primary Articles inflation stood at 13.88% in the week under review versus 14.16% in the preceding week. Inflation in this crucial group was at 4.91% in the corresponding week a year earlier, the government data showed. The WPI for this group rose by 0.1% to 282.3 from 282.1 in the previous week. Annual point-to-point inflation in the Fuel & Power group remained unchanged at 12.68% in the week ended March 13. It was at (-)6.06% in the week ended March 14, 2009. The WPI for this major group remained unchanged at its previous week's level of 361.7.

IFRS to benefit India Inc:Mohandas Pai

As the India Inc is set to converge from the Indian Accounting Standards to International Financial Reporting Standards (IFRS) from 1st April 2011, the industry captains voiced that the convergence would favour Indian corporates eyeing the global markets, at the IFRS summit organized by Confederation of Indian Industry (CII) - ‘IFRS Convergence Gaining Strength’.

T V Mohandas Pai, Director and Head, Finacle, Admin, Human Resources, Infosys Leadership Institute and Education and Research, Infosys Technologies Ltd said at the CII IFRS summit, "There are concerns among industry players but in fact it would benefit the Indian industries. IFRS is world’s best accounting standard and converging into the same would make raising funds outside India and attracting foreign investment easier. IFRS shall help in maintaining transparency levels to attract overseas players."

S Mahalingam, Chairman – CII IFRS Summit and Executive Director & Chief Financial Officer, Tata Consultancy Services Limited also said that there should be no fears among industry players as the key elements of Indian Accounting Standards and IFRS are not going to vary much.

Y H Malegam, Chairman of the National Advisory Committee on Accounting Standards (NACAS) said, "Under IRFS, there will be changes in treating certain aspects of assets and liabilities like treatment of redeemable preference shares and depreciation provisions. But,mainly the terminologies will change and other provisions would not affect the tax treatments and cash profit calculations." He further added that IRFS guidelines for the banking, insurance and NBFCs would be released soon. He also said, "IRFS will consist of two parts,initially for the organizations with more than Rs 500 crore networth and rest having less than Rs 500 crore networth with having a difference of reporting disclosures by both."

Manfred Hannich, Global Head of Accounting Advisory Services, KPMG informed that the US is also considering IRFS convergence. "India is one of the earliest countries to go for IRFS and the US may follow soon as discussion on consolidated taxation treatment on financial reports is underway," Hannich said

Zain board clears asset sale to Bharti Airtel

It is third time lucky for Bharti Airtel. After two aborted attempts to enter the lucrative African market involving South Africa's MTN group, India's cellular telecom major finally seems to have hit the target. The board of directors of Kuwaiti telecom operator Zain approved the sale of most of its African assets to Bharti Airtel, according to various media reports. The exclusivity period for talks between the two parties was scheduled to end on March 25. The due diligence on the deal is completed and the sale documents will be signed with in several days, the reports said.

Bharti Airtel said on March 21 that it had tied up the entire financing requirement of US$8.3bn with major international banks and India's SBI. Bharti Airtel has said it would pay a total US$9bn in cash to Zain, including US$700mn to be paid one year after the deal closing. Bharti Airtel is likely to seal the deal in a day or two. The deal, among the largest cross-border M&A transactions by India Inc., will give Bharti Airtel access to 15 African markets, sans Sudan and Morocco. The combined telecom entity will have more than 165 million subscribers with total revenue of US$13bn.

Bharti Airtel shares fell on concerns that a debt-funded deal to buy the African assets of Zain may stretch the Indian mobile operator's financials. At 10 times enterprise value to EBITDA (earnings before interest, tax, depreciation and amortisation), Bharti Airtel is paying a rich price for a group of loss-making assets on a continent full of operational challenges, analysts said. The financing is estimated to lift Bharti Airtel's debt to EBITDA ratio to more than 2 times, from 0.4 times before the deal. Bharti Airtel is borrowing heavily to pay for the acquisition just as it gears up for the upcoming third-generation (3G) operations, which will cost billions in licence fees and equipment.

India needs US$1 trn for infra spending: PM

India will need to spend US$1 trillion in infrastructure in the 12th Five-Year Plan, Prime Minister Dr. Manmohan Singh said. He also said that the Indian economy will grow by 8.5% in FY11 and 9% in FY12. He reiterated the Government's long-term goal of attaining 10% GDP growth. "The Government's 10% GDP growth target is ambitious but not impossible," the Prime Minister said. Recent economic performance has been commendable on several counts, Dr. Singh said, adding that progress in the power sector growth is less than satisfactory.

Separately, Finance Minister Pranab Mukherjee said that the Centre is aiming to spend US$514bn in the infrastructure sector by 2012. Core sector growth is key for attaining 9-10% GDP growth, he added. The deficit in the country's power output remains worrisome, Mukherjee said. The Indian economy grew by 6.7% in 2008-09 and has accelerated to 7.2% in 2009-10. The Government would allow private sector companies to issue infrastructure bonds to raise funds for core sector projects, the Finance Minister said. The deficit in the country's power output remains worrisome, Mukherjee said.

A meeting of the full Planning Commission conducted a mid-term review of the 11th Five Year Plan (2007-12), and lowered India's targeted growth of 9% per annum because of the two trying past years. "The average rate of growth in the plan period could be a little over 8%," said the appraisal document that was placed before the high-level meeting, chaired by the Prime Minister, while assuring a return to high growth in the medium term. He said the past two years were particularly difficult for the Indian economy due to the global slowdown, and this was exacerbated by a poor monsoon and the consequent drop in food production.

Weekly Stock Picks - March 26 2010

Buy Raymond

Buy Sintex Industries

Buy Hero Honda

Buy Indiabulls Real Estate

Buy SBI

Weekly Newsletter - March 26 2010

The main indices seem all dressed up to bid farewell to a fiscal, which has brought a fair amount of cheer all around. The coming week could see some spurts largely depending on the global cues. It's a holiday-shortened week yet again and the financial year-end little tricks could well come into play. Towards the end of the week, the Export-Import data, auto sales numbers, cement dispatches et all will provide some sector and stock-specific activity. With indices at higher levels, investors are rightfully concerned about allotting more towards equities. Continue to scout for some better deals, else play the waiting game for some time to strike some good bargains.

Nifty eyes 5300

Today's major news

Pratibha Industries secures Rs196.6 crore worth of orders; the stock closes 1.08% lower

Credit growth exceeds the central bank's target

Tata Motors to sell 20% in Telcon to Hitachi; the stock jumps 3.36%

Click here for more stories

Post-market summary

Global signals

Drug makers and oil stocks dragged the European markets lower on Friday, as concerns continued on Greece debt crises. At the time of writing this report, FTSE 100 was down by 0.15%.

All the major Asian indices closed higher. Shanghai Composite, Nikkei and Hang Seng closed 1% up each. SGX Nifty closed 11 points higher.

US stock futures opened higher ahead of key data related to final estimate of Q4 gross domestic product (GDP) growth.

Indian indices

On the first day of April F&O contracts, which also happens to be last day of the week, ergo weekend drag, the market traded with in a band of around 125 points to end the session up—third day on trot. Absorbing concerns on Greece’ debt crisis, growing debate between the US and China on pricing of yuan, firm Asian markets combined with continuous buying in auto stocks on hope of a better Q4 earnings of auto companies help the market touch two-month high in today’s trade.

On buoyant leads from Asian markets, the Sensex opened flat, moved up and touched the day’s high of 17,683—124 higher than its yesterday’s closing and wrapped the session 86 points higher at 17645. The Nifty closed 22 points higher at 5282.

Market sentiment

Despite closing positive, the market breadth was negative as declining stocks outdid advancing stocks. Of the 2,935 stocks traded on the BSE, 1,651 stocks declined, whereas 1,197 stocks advanced. Eighty-seven stocks closed unchanged.

Sectoral & stock screening

Auto and banking stocks witnessed some investor interest with the BSE Auto and BSE Bankex up by 1.75% and 1.59% respectively. Information technology stocks have been under pressure and the sector index, BSE IT, was down by 0.67% for the day.

The star stock of the day was Indiabulls Real Estate that was up by 5.55%, followed by Bajaj Auto that surged 5.16% and Everest Kanto Cylinder that rose by 4.71%. On the other hand, Siemens slid the most by 2.31%, followed by Pantaloon Retail that fell by 2.27% and Dr Reddy’s Laboratories that shed 2.26%.

Viewing volumes

On the second straight day, Industrial finance company IFCI was the most actively traded share with over 0.67 crore shares changing hands on the BSE, followed by India’s second largest realty company Unitech (0.34 crore shares), steel major Ispat Industries (0.31 crore shares), wind turbine maker Suzlon Energy (0.29 crore shares) and Gujarat NRE Coke (0.27 crore shares).