Market Round Up - 19th Feb 2008

Market Round Up - 19th Feb 2008

FIIs in buying mode

Foreign institutional investors (FIIs) bought shares worth net Rs 1147.50 crore on Friday, 15 February 2008, compared to their selling of Rs 1183.10 crore on Thursday, 14 February 2008.

FII inflow of Rs 1147.50 crore on 15 February 2008 was a result of gross purchases Rs 3898 crore and gross sales Rs 2750.50 crore. The 30-share BSE Sensex rose 348.62 points or 1.96% at 18,115.25 on that day.

FII outflow in February 2008 totaled Rs 315.40 crore (till 15 February 2008). FII outflow in calendar year 2008 totaled Rs 13,351.10 crore (till 15 February 2008).

There are a total of 1,290 FIIs registered with the Securities & Exchange Board of India (Sebi).

CRISIL net profit rises 291.74% in the December 2007 quarter

Net profit of CRISIL rose 291.74% to Rs 27.50 crore in the quarter ended December 2007 as against Rs 7.02 crore during the previous quarter ended December 2006. Sales rose 102.54% to Rs 84.68 crore in the quarter ended December 2007 as against Rs 41.81 crore during the previous quarter ended December 2006.

For the full year, net profit rose 89.06% to Rs 70.67 crore in the year ended December 2007 as against Rs 37.38 crore during the previous year ended December 2006. Sales rose 73.99% to Rs 255.32 crore in the year ended December 2007 as against Rs 146.74 crore during the previous year ended December 2006.

PM confident of sustaining 9% economic growth

On 15 February 2008, Prime Minister Manmohan Singh while addresing the annual meeting of the Federation of Indian Chambers of Commerce and Industry (Ficci) in New Delhi, expressed confidence on sustaining a 9% annual economic growth despite a possible global slowdown.

The minister also cautioned India must be aware that it cannot be completely insulated from chilly global winds that may blow in its direction.

He further said keeping the lid on inflation rate was a priority for his government, but controlling the price-line did not mean growth would be sacrificed.

Amid fears that a hike in petrol and diesel prices might fuel inflation, he said the government has taken an important policy stand to keep inflation under check and ensure that growth is more inclusive. The minister termed inflation as iniquitous tax explaining that it hurts the poor more than the rich. Therefore, it is essential to ensure that the poor are not adversely affected by high inflation, particularly that of basic items of consumption.

Inflation down 4.07% in the week ended 2 February 2008

Annual inflation, based on the wholesale price index, moved down 4.07% in the week ended 2 February 2008 compared with 4.11% in the week ended 26 January 2008. Inflation was 6.58% in the corresponding week a year ago.

The market estimate stood at 4.16%.

Prices of fruits and vegetables decreased 3% and those of arhar, masur and condiments and spicesn reduced 1% each. Prices of jet fuel also eased in the week.

Inflation figure for the week ended 8 December 2008 was revised upwards to 3.845 as against 3.65% reported earlier.

An eventful week for US Market

Lots of events dominated the US during the week that ended on Friday, 15 February, 2008. But the best part was that indices registered gains for the week after, each shedding more than 4% last week. Market closed higher in the first three days of the week but slipped in the later two.

The Dow Jones Industrial Average gained 166 points for the week. Tech - heavy Nasdaq gained 17 points. S&P 500 added 18.7 points.

On Monday, 11 February, it was reported that effective 19 February, 2008, Bank of America and Chevron will be added to the Dow Jones Industrial Average in place of Altria Group and Honeywell respectively. But on that very day, another Dow component AIG led to Dows downslide.

AIG was a major drag on the market on Monday after the company clarified its prior disclosures regarding CDOs saying that it has yet to determine the decline in value of its portfolio, and is still accumulating market data to update its valuation. The stock slipped by 12% and Dow would have ended the day higher, if not for AIG.

But the biggest news of the week was on Tuesday, 12 February, when it came to light that Warren Buffett's Berkshire Hathaway has made an offer to several flagging bond insurers. Berkshire Hathaway has sent an offer to reinsure the municipal bond holdings of Ambac, MBIA and FGIC. Berkshire offered to take a liability of $800 billion, adding $5 billion of its resources. Berkshire pledged there would be no distribution or management fees taken for 10 years. Dow ended the day higher by more than 100 points. (Full Story)

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News Round up- Economy (18th Feb 2008)

News Round up- Economy (18^th Feb 2008)

Insurance sector seeks 49% FDI

MUMBAI: The insurance sector has demanded a hike in foreign direct investment (FDI) limit from the present 26 per cent to 49 per cent and exemption of service tax for health insurances.

"For the growth of the insurance sector, the FDI cap of 26 per cent should be increased to 49 per cent. This will help to further deepen the Indian insurance market," Unison Insurance Broking Services' Managing Director, B K Sinha, said on the sidelines of an insurance seminar on Sunday.(Full Story)

 

 

HSBC hints at more investment in India

MUMBAI: Hoping to benefit hugely from the India-growth story, global banking major HSBC, hinted at more investments in the country once the regulatory environment permitted it.

The bank is understood to be open to adopting the inorganic route to grow in the Indian market as and when the regulatory environment become conducive for it.

"We are waiting for the right market opportunities in India and will increase our investment here, as and when the regulator allows us," HSBC's Head of Personal Financial Services, Asia-Pacific, Nicholas G Winsor, said. (Full Story)

 

 

New UK rules for money transfer to India

LONDON: The British government has introduced new rules for money transfer companies to ensure that the money, which is transferred from Britain overseas including India, are delivered safely and to the right person.

Annually, about 2.3 billion pounds are transferred from Britain overseas, most of it to 50 developing countries.

A large chunk of it, about 300 million pounds, is transferred to India every year, followed by Pakistan (200 million pounds).

However, individuals who transfer the money to India and other places face worries about the amount reaching the destination, and reaching the right person. (Full Story)

 

 

SEBI warns investors against 'Art Funds'

MUMBAI: The Securities and Exchange Board of India has sought to caution investors with regard to investing in Art Funds, funds/schemes launched by companies formed for the purpose.

The market regulator Wednesday said at present, no entity was registered with it under the SEBI (Collective Investment Schemes) Regulations.

At the same time, SEBI has threatened actions, civil and criminal, against such funds / companies and warned against launching of "Art Funds" or schemes without registration. (Full Story)

 

 

Tax collection needs to be balanced: Supreme Court

NEW DELHI: The Supreme Court has rejected the Kerala government's plea, seeking disallowance of tax exemption benefits to an assesee saying a balance should be struck between revenue collection and business-friendly approach.

"Tax administration is a complex subject. It consists of several aspects. The government needs to strike a balance in the imposition of tax between collection of revenue on one hand and business-friendly approach on the other," a bench comprising Justices SH Kapadia and BS Reddy said. (Full Story

 

 

Small investors expect populist budget

The UPA's Finance Minster is expected to deliver a populist budget and so the demands are running high. The small investors are hopeful of a tax cut. At present, income up to Rs 1,10,000 for men and Rs 1,45,000 for women attracts no tax. Experts feel that this threshold can be increased by another Rs 40,000. Since incomes have also risen significantly, the highest tax rate of 30 per cent should be applicable to salaries above Rs five lakh against the current Rs 2,50,00. This could translate into a cool saving of Rs 40,000.

Another way to save on tax is to invest up to Rs one lakh into tax saving instruments. Investors want their limit to be hiked but they are also demanding that the government should extend tax saving sops to a wide variety of options. Investors are also demanding that interest on fixed deposit savings should become tax free and MFs across the board should get a tax saving waiver instead of restricting this option only to ELSS schemes.

"Even if you increase tax slab, it will definitely help. Secondly, mutual fund as a method of saving is becoming more popular. It is an opportunity to create wealth and not just an avenue for savings or short-term speculation. Having burnt their fingers in the recent market correction, small investors would be looking for a silver lining in this year's budget. A cut in income tax rates is what everyone is expecting but at the same time, more money in the hands of investors, whether invested or spent, will also help spur growth

 

Rupee appreciates 15 paise

Mumbai: Overcoming the weakening trend of the past few days, the Indian rupee on Thursday appreciated by 15 paise against the U.S. currency at 39.61/62 in sync with the surge in domestic as well as Asian stock markets amid increased availability of dollar. The rupee moved between 39.60 and 39.73 at the interbank foreign exchange market. It had closed at 39.76/77 on Feb 13, its lowest level since November 28 last year.

The rupee premiums on forward dollar also recovered sharply on fresh paying pressure from banks and corporates. Foreign exchange dealers said anticipation of fresh capital inflows, the key driver for the Indian unit, in view of the rise in equity markets and expectations of foreign institutional investors turning active once again boosted rupee sentiment. A record FII inflows had pushed the rupee up by about 12 per cent against the dollar last year.

 

Other Stories

FM may cut duty to spur growth

Industry bodies like the Consumer Electronics & Appliances Manufacturers Association have sought a cut in excise duty from 16 per cent to 8 per cent. The general consensus, however, is that a moderate duty cut to 12 per cent could be in the offing.

 

Petro price hike just a drop in ocean for PSUs

IOC chairman said the increase in prices of diesel and petrol will substantially reduce the bonds in the next financial year.

 

India, China are not immune to crisis: IMF

The IMF MD also admits that the Fund had previously underestimated implications of the crisis in the US.

 

IT shrugs off recession fears

It is now clear that the IT and BPO sector will be hit by the US recession only in the future

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FM may approve $ 5 billion fund for Indian M&A

The government is considering a sovereign investment fund with an initial corpus of $5 billion to acquire companies abroad. The investment fund may also be used to bolster the country's energy security by acquiring coal mines and oil and gas blocks abroad.

Prime minister Manmohan Singh has issued a directive to the finance ministry in this regard, and an announcement is likely in the Budget, an official said.

According to officials, one of the options available to the government is to create a special purpose vehicle (SPV), which will borrow funds from RBI in the form of long-term securities in foreign currency and lend the same to Indian companies at lower rates. Thus, RBI and the government will be able to earn more on forex reserves, which currently fetch average returns of 3.5-4%.

 

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News- Sensex may touch the level of 29,000 by June 2009

Like Mumbaikars caught unawares by the recent spell of cold wave, investors have been struggling to adapt to the recurring bouts of volatility on the bourses over the last one month. But the weathermen of Dalal Street are expecting sunny skies by the end of this calendar year. Five of the six participants at the ET Round Table see the bellwether BSE Sensex between 20-22,000 then.

The panelists included Narayan Ramachandran, MD & Country Head, Morgan Stanley; Pankaj Vaish, MD & Head equities and fixed income, Lehman Brothers; Ved Prakash Chaturvedi, MD & CEO, Tata Asset Management; Gaurang Shah, MD, Kotak Life; Rashesh Shah, CEO, Edelweiss Capital; and Motilal Oswal, Chairman, Motilal Oswal Securities. The session was moderated by Ramesh Damani, director, Ramesh S Damani Finance.

Only one participant, Ved Prakash Chaturvedi felt that the market was likely to be around 18,000 levels on December 31, 2008. "But that does not mean that mutual fund investors will not make money," he added.

Mr Ramachandran expects a modest performance by the Sensex in the current calendar, but expects the benchmark to touch 29,000 by June next year. Slowing corporate earnings is one factor that most market watchers feel could hold back the market. However, the ET panelists are not too worried about it.

According to Mr Ramachandran and Mr Vaish, interest rates are showing signs of slackening and that could provide a support to corporate earnings over the next couple of years. "These (recent outflow of FII money) are not big things...they are just minor....India has attracted a lot of money and most of it came because of the fact that India is an attractive destination for money," said Mr Ramachandran. "The real thing that will decide is where fundamentals are going. I feel that they (fundamentals) are solid," he added.

Mr Shah felt that issue was not about whether earnings will grow 18% or 12%, but about the rate at which the Indian GDP would grow. "If you expect corporate earnings growth of 11-12%, it means we are looking at a GDP growth of 4.5 to 5 to 6%. But if you expect GDP growth rate to be around 8%, give or take 200 basis points, then a 17-18% corporate earnings growth is not difficult. And I haven't seen anybody—Indian or global—question India's 8% GDP growth rate," Mr Shah said.

While foreign funds have pulling out over the last few months, domestic liquidity has been a strong pillar of support and this trend is expected to continue, feels Mr Chaturvedi. "The kind of money we have seen that has flown in from the domestic investors in the last one year is certainly heartening," said Mr Chaturvedi. "My guess is that if you combine insurance and mutual funds and other (domestic) sources of inflows into the market, close to $2 billion of fresh money is coming into the market every month," he added.

Mr Gaurang Shah sees more investors tapping the stock market through Unit Linked Insurance Plans (ULIPs), mainly because of the handsome returns these products have delivered in the last four years of the Bull Run.

He excepts inflows of roughly $5 billion through various insurance schemes during the current quarter, a significant portion of which will be accounted for by ULIPs.

"I think relative disadvantage of insurance as a instrument vis-à-vis other fixed interest products has come down, which is also because real interest rates have reduced across the world over the last 10 years. So I see money continuing to come in," he said.

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FIIs in buying mode - 14th Feb 2008

FIIs in buying mode

Foreign institutional investors (FIIs) bought shares worth net Rs 349 crore on Wednesday, 13 February 2008, compared to their selling of Rs 115.10 crore on Tuesday, 12 February 2008.

FII inflow of Rs 349 crore on 13 February 2008 was a result of gross purchases of Rs 3969.90 crore and gross sales Rs 3620.90 crore. The 30-share BSE Sensex rose 341.13 points or 2.05% at 16,949.14 on that day.

FII outflow in February 2008 totaled Rs 279.80 crore (till 13 February 2008). FII outflow in calendar year 2008 totaled Rs 13,315.40 crore (till 13 February 2008).

There are a total of 1,285 FIIs registered with the Securities & Exchange Board of India (Sebi).

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