Top-10 firms lose Rs 1.5 trillion; RIL worst hit

MUMBAI: The bloodbath on the bourses has wiped off a whopping Rs 1.50 trillion from market valuations of country's of 10 most valued firms in the past week, with Reliance Industries suffering the worst blow. The meltdown at the bourse washed away a big chunk from the market valuation of corporate behemoth Reliance Industries even as others like IT major Infosys Technologies and diversified conglomerate ITC Ltd managed to swim against the tide. The combined market cap of the elite club saw an erosion of Rs 1,50,730 crore in the past week, dropping to Rs 8,94,000 crore from the previous week's Rs 10,44,000 crore. With the market going for a free-fall last week, the country's most valued firm Reliance Industries lost Rs 45,600 crore in its market value dipping below the crucial Rs 2,00,000-crore mark. RIL, which announced its second quarter results last week, registered its profit up by 7.4 per cent at Rs 4,122 crore, while its revenue rose by 39.4 per cent to Rs 44,938 crore. Shares of RIL plummeted for three days in row last week to settle at Rs 1,015.50 on BSE on Friday, wiping off as much as Rs 29,038 crore or about 16 per cent of its market value in a single day.

Can investing in land assure good returns in future?

The lucrative long-term return on land plots may tempt you to buy, even at a time when the real estate sector is reeling under the impact of a slowdown. In such a market scenario, can investing in land still assure you of good returns in the future? What is the best way to invest in this precious asset and what are the crucial determinants to assess your prospective buy?

There are various ways to invest in land. Global real estate consultancy Jones Lang LaSalle Meghraj (JLLM) shares some key factors that are necessary to consider. “Identifying a piece of land that is in close or reasonable proximity to future market drivers is important.

Next, one should inquire into the legal status of the land and establish if it is for sale. Finally, locate the owners and make a purchase proposal. For maximum future returns, its is important to make one’s investment while entry costs are low,” says Anuj Puri, chairman and country head of JLLM.

One must especially keep in mind certain aspects to avoid any legal hassles later. For instance, land may be under litigation or may be earmarked for a government project. It could be categorised as forest land or could even be in a Coastal Regulation Zone.

It may also lack basic facilities such as water and power supply or fall in a politically or socially challenged sector. Any or a combination of these factors can subtract or nullify the investment potential of land. Hence all negative possibilities should be covered before purchase.

Another aspect which cannot be neglected is the paperwork needed. A number of documents are necessary in land purchase and need to be checked. The title deed (a legal document proving a person’s right to property), the encumbrance certificate (which proves that the land is not under some sort of legal dispute), the release certificate (in case the land was previously pledged to someone else), the surveyor’s report (to establish its exact dimensions) and — if the owner is an NRI — the power of attorney that gives his representative the legal right to act on the NRI’s behalf, are all significant documents that should be given careful consideration.

But is it profitable to invest in land in the current market situation? Some advise caution. “The current economic recession is leading to unprofitable business for everyone, whether it be a company or an investor. The downturn is obviously not the right time to invest in property as it is not going to reap any positive or profitable results. To make a profitable deal, the investor should wait for at least 2-4 years,” advises Vijay Jindal, CMD of SVP Builders India.

More :- economictimes.indiatimes.com

Sensex at 8.7K: Thirty stocks that bore the brunt

Reliance Infrastructure










Jaiprakash Associates

RIL stock skids 66% in the downturn

CHENNAI: From August '07 to January '08 when stocks rallied from strength to strength, Reliance Industries was the catalyst for the the 7,000-point sensex rally. But, ever since the fall started since January 10, it is again Reliance, according to data, may be the chief reason for bringing the benchmark down in the quicker and sharper downturn.
The world may have changed for Indian stocks and Sensex may have come down substantially but the the most influential stock in the 30-share bellwether index -Reliance still remains the match-maker. While the stock price has corrected by Rs 2,000 a share, Sensex came down by 12,500 points.

Extrapolating this, it is fair to say that for every one rupee shed by Reliance stock, Sensex has fallen by close to 6 points, according to analysts. When sensex went up by 49% in just 7 months (August to January) Reliance, which carried a weightage of 15.3% in early January, witnessed its stock price outperform the benchmark index and raised by 73%.

While the DLF stock went up by over 90% in the same period, the real estate company carried a meagre sensex weightage of 2%.

The impact of Reliance's rise is significant on Sensex as blue-chip firms SBI, ITC, ADAG-controlled Reliance Comm and ONGC cumulatively held a weightage of close to Reliance"s 15% in January. "The Reliance stock is pivotal to sensex's fortunes. There has hardly been any day, when Reliance has fallen and has not pulled down sensex alongwith it. Nobody remains unaffected when the big boy falls," said a large broker at Bombay Stock Exchange.

During the downturn, the Reliance stock has fallen by 66%, again outperforming Sensex which has shed 59% in the same period.

Although Sensex constituents such as RCom, Larsen & Toubro and DLF have fallen by 75-80% in the same period, which is sharper than Reliance, the three stocks have a cumulative weightage of just under 10% (which is less than Reliance's 12% influence), data shows.

One half of all Sensex companies taken together i.e around 15 stocks have just the same influence that a single scrip has: Reliance. DLF may have corrected by over 80% but Reliance's freefloat market cap is 14 times more than it. "Sensex is calculated under free-float market capitalisation method.

This means that the influence of closely-held companies such as DLF on the index is preventing even if their stock price fall is much sharper," the research head of a foreign brokerage explained.

Repo boost: Experts hail move, want further policy steps

Experts unanimously hailed the Reserve Bank’s repo rate cut by 100 basis point as positive, but added that the impact on capital markets would not be much. Most experts felt that confidence in the market was low and decisions needed to be taken to counter short-selling and volatility.


The RBI today cut the repo rate cut — the first since 2003 — in a bid to infuse liquidity into the system. (Read: RBI cuts repo rate) After the announcement, the Sensex rose about 500 points but negated the rise later in the day to end 247 points up.


Terming the cut as a prompt move carried out in the best interests in the economy, Deven Choksey of KR Choksey Securities said this is the beginning of a cut and we may see interest rates coming down gradually.


Ajay Bagga, CEO, Lotus India Asset Management Company, feels the rate cut was a big positive that surprised the market. “After nearly three years, this is the first rate cut. It signals the resolve of the regulators to move to a pro-growth stance.”


Shashank Khade, VP, Portfolio Management Services, Kotak Securities, felt the rate cut was expected even as it came a little ahead of time. “I am not sure whether the equity markets will really have too much to cheer immediately. Given the way the volatility in the markets has been, there has to be a much higher reward to actually invest in equity.”


What ails markets now?

Ambareesh Baliga of Karvy Stock Broking said the markets have their own set of problems. “There is a lack of confidence, which will not come just because of a CRR or a repo rate cut.”

Read more........... http://www.moneycontrol.com/

Mkt to bottom at 8,800-9,800: ICICI Securities

Pankaj Pandey, Head - Research, ICICI Securities said he expects the markets to bottom at about 8,800-9,800. Going forward, Pandey does not see earnings driving the markets.

He feels investors should have a portfolio of about 40% in equities, about 20-25% in cash and the balance in fixed deposits. Pandey is bullish on PNB, Axis Bank, Indian Overseas Bank, PNB, NTPC, Power Grid, Infosys and Satyam.

Here is a verbatim transcript of the exclusive interview with Pankaj Pandey on CNBC-TV18. Also watch the accompanying video.


Q: What exactly are you advising investors at this juncture? Do you think that we may be at least close to the last 5-10% of the bottom?

A: We expect market to bottom at 8,800-9,800. After breaking the 10,000 level, from an eight-year cycle perspective we expect, about 55-58% correction. So we feel that we are closer to the bottom range. We advise investors to have a portfolio of about 40% in equities, about 20-25% in cash and the balance in FD.

Q: What have you set your eye on this results season?

A: Results, I think have more or less been a mixed bag across the sectors. second quarter may not have a significant bearing on the market because global cues continue to be bad. Going forward as well, we don’t expect results to drive the markets.

Globally as a thumb rule, I think, contraction of about 10% in US GDP can happen. Whether that happens over a period of three quarters or six quarters remains to be seen. So, we anticipate that nothing major is likely to happen until the second half of 2009. A survey by The Economist says that about three quarters is the most moderate view in terms of the contraction in GDP and probably the most pessimistic view is about 18 months.

Read more............. http://www.moneycontrol.com/

Market crash: Tips to cut losses

THE market's blows are only getting harder.

The bad news is that the worst may not be over yet. Amidst all this turbulence, only one thing can save you: The right advice.

Here’s how you can limit the damage, straight from wealth's experts.

Scenario 1: I invested in the markets for the short term; what should I do now?
Right now, the markets are driven by global sentiment. And, financial planner Arvind Rao reckons that it may take up to the fourth quarter of 2009 for the global market to pull up. On the domestic front too, things may look brighter only in the third or fourth quarter of 2009. "This is mainly because of the huge input costs and high interest rates as of now, " he says.

In such a scenario, you have 2 options:
Option 1: If you are hard pressed for money, you have no choice but to withdraw.

PV Subramanyam, financial domain trainer, says, “If you need money soon, say in a year or two, it is better to sell now even if that means booking losses. There’s no way of predicting how the markets would behave.”

Option 2: Sandeep Shanbhag, investment expert and Director, Wonderland Consultants, says, “If you initially invested for the short term but can weather the storm, then wait, provided you have fundamentally good stocks. However, if you need funds, then exit as early as possible and treat this as a mistake not to be repeated.”

Caution: Do not play the markets on a short term basis simply because of the looming uncertainty.

Read more...... www.Moneycontrol.com

Satyam cuts FY09 rev guidance due to forex fluctuation

Satyam Computer has announced its Q2 FY09 numbers. The company has reported a growth of 6.05% in net profit of Rs 580.85 crore as against Rs 547.70 crore, QoQ. Revenues were up by 7.6% at Rs 2819.29 crore versus Rs 2620.83 crore. Satyam has met its second quarter guidance; revenues went up by 2.3% to USD 652 million while guidance was USD 645 – 651.9 million. EPS stood at $0.39 per share, wherein also the company met its guidance.Rupee guidance changed only for rupee move from 43- 47 per dollar.

Satyam has cut its FY09 revenue dollar guidance to USD 2.55-2.59 billion versus USD 2.65-2.69 billion. Ramalinga Raju said that 3% was due to cross currency movement and 2% on account of reduction in volumes that he expects.

The Satyam Management including Ramalinga Raju, Founder and Chairman, Ram Mynampati, President, CHB and Srinivas Vadlamani, CFO spoke in an exclusive interview with CNBC-TV18.

The management said that the company’s dollar guidance was impacted 3% due to cross currency and 2% due to business conditions. It expects a 100-150 bps expansion in margins, which has helped in enhancing the dollar EPS guidance. It added that there had been some reduction in licences in ERP and said it was premature to quantify medium term prospects. The gross employee additions guidance of the company has been scaled down to 10000 from 14000-15000.

The management informed CNBC-TV18 that the company’s legal dispute with Upaid was status-quo and said that the hearing was slated for next year. It feels that it is too early to quantify the impact of the BFSI consolidation in the US.


Ramalinga Raju feels the near-term environment remains challenging. He added that forex fluctuations have impacted their US GAAP revenues by 3%. He does not see a dramatic slowdown and added that clients were circumspect over the 2009 budgets.

Here is a verbatim transcript of the exclusive interview with the Satyam Management on CNBC-TV18. Also watch the accompanying video.

Q: Could you start by explaining your dollar guidance, the revenue guidance- why has that been lowered? How much of it is because of cross currency issues and how much of it is because of the tough environment that you see around you?

Raju: It is a combination of factors. We have enhanced our guidance at the consolidated numbers at rupee level from 34% to about 35.4%.

At the dollar level we have reduced our revenue guidance from 26% to 21% at the upper end of the guidance. About 3% of that can be explained by the cross currency movement and 2% on account of reduction in volumes that we expect.

So under the current circumstances we believe we have done well for the quarter and we feel this is number that we are able to give confidently.


Read more......... http://www.moneycontrol.com/

ICICI Bank has healthy capital position: Chanda Kochhar

Chanda Kochhar, Joint MD and CFO, ICICI Bank, said India’s largest private sector bank has a very healthy capital position, “In the past few days there have been rumours being circulated about ICICI Bank’s financial health in certain parts of the country. These rumours are baseless. We wanted to clarify that ICICI Bank has a very healthy capital position.”

Kochhar said ICICI Bank is the second largest bank in India with an asset base of more than Rs 4,84,000 crore. “We have been proactively raising capital and have a net worth of Rs 47,000 crore. This gives us capital adequacy of 13.4%. The regulatory requirement is 9%, which means it is at least 150% more than what is required. This is one of the highest capital adequacy positions among large Indian banks. This indicates a very strong capital position and comfortable levels of leverage at which ICICI Bank operates.”



She said the bank has already clarified about its investments in the UK subsidiary. “About 98% of them are in investment grade and above category. We have also clarified that the capital adequacy not only of ICICI Bank but also of the subsidiaries are very comfortable. Today, the Reserve Bank also clarified that ICICI Bank and its subsidiaries abroad are well and sufficiently capitalized. They also clarified that we have enough liquidity to meet the requirements of our depositors.”



The Finance Minister has also clarified that the Indian banking system is well capitalized and well regulated. “In that context, I would only like to reiterate that the rumours are quite baseless. I would like to assure all our stakeholders including depositors, and investors that we continue to have a healthy capital position and financial position. We will be able to meet everybody’s requirement and there is no cause to worry at all.”

source: http://www.moneycontrol.com/

Liquidity adequate, global exposure small: ICICI Bk

Chanda Kochhar, Joint MD and CFO, ICICI Bank, said the bank has adequate rupee and global liquidity of Rs 12,000 crore. "We have no international investments, only loans on our balance sheet. We do not use rupee liquidity to fund global activities."


Kochhar said the bank has not seen a scale-down in deposit growths. "The focus this year is on current and savings accounts."



According to her, the bank has not seen an increase in NPAs, or Non Performing Assets, as the corporate sector is holding up. "About 90% of total loans are India related."

She feels the current investment pipeline is strong enough to ensure a 7.5% GDP growth.

Commenting on the banks' UK operations, Kochhar said exposures in the market there are very small given our size and profitability. "NPAs at 0% in UK subsidiary. Over 90% of investment in UK market are to companies with atleast 'A' rating."

She said there is a cash collateral of USD 45 million from the Bumi Group. "The net loan stands at USD 100 million for which there is adequate cover."

Here is a verbatim transcript of the exclusive interview with Chanda Kochhar on CNBC-TV18. Also watch the accompanying video.

Q: You have made four clarifications in the last fortnight or so. The RBI has clarified your liquidity position, but your stock is down 25% today. Is there any reason that you can think of why the stock market is hammering your stock down?

A: We have always believed that we would concentrate on our performance. The other thing we would do as a responsible bank is talk about facts. The rest of the movement if it happens is on the basis of rumours – we are on the point where we have to concentrate on our performance and on facts.

Q: You have actually spoken quite a bit about your liquidity position etc, obviously the market is worried about something. Are there any issues which might affect your performance or your balance sheets significantly in the foreseeable future – something that you’ve not had reason to report yet?

A: One of the things – the rumour that has been going around is about liquidity and as mentioned even in the morning that we have adequate and more than adequate rupee liquidity. We also have adequate global liquidity worth more than Rs 12,000 crore and also we do not use rupee liquidity to fund the growth of our international operations. So that’s one clear statement of fact and every rumour going around it which is not true has to be kind of discounted.

Secondly, in the recent past people have had questions on our international book on which we have clarified in the past. So I again clarify that in the ICICI Bank balance sheet we have no international investments as such. There are only loans which are primarily to Indian companies for their global operations. While they are foreign currency loans, they are related to the global operations on the Indian companies. As far as our UK subsidiary is concerned, yes, we do have certain amount of investments.


We have more than clarified about what the size of those investments is. Also more than 90% of those investments are still A minus and above ratings and given the context of our size of the group, having a balance sheet of Rs 4,84,000 crore and a net worth of Rs 47,000 crore – these exposures are very, very small. We have to look at them in that context. So if people have fears around that, I am only re-clarifying that these are small exposures given our size and our profitability.


Q: Have you seen a sharp increase in NPAs for ICICI Bank that you might report this quarter or in the next few?


A: No. The NPA levels continue to remain where they have been even in the last quarter. Even as we report earnings for Q2, you will not see anything untoward as far as the NPAs are concerned. In that context, even our UK subsidiary – as far as its entire loans and advances book is concerned there is actually zero NPA there.



Q: The other set of rumours doing the rounds is ICICI has lent to international companies, very clean loans at that time when they were lent with adequate collateral in terms of shares. But those shares have fallen and therefore some of those loans are now backed by inadequate collateral, and one of the names being mentioned is the Bumi Group. Are there generally fears that loans lent to global companies either from your global branches or from the Indian units are now being threatened that the stock market has fallen and not for any other reason?

A: Our total loans and advances even globally, 90% is India related. So, first of all global loans are very small even if a few of the loans exist.



The total amount of loan that Bumi Group loan has borrowed is USD 150 million. We have cash collateral against it to the extent of USD 45 million. So, the net loan amount is close to USD 100 million. Against that, we have more than adequate cover.



So, the non-India related loans are very few transactions – less than 10% of our global loans and advances, maybe a few transactions again which in some way or the other are related to India because again this is a company that exports a lot of coal to India and there is a whole lot of Indian linkage in terms of people buying coal from this company into India.



We have adequate security not just in the form of shares or other security, but in the form of pure cash collateral. Also, this is a company which has EBITDA of more than USD 500 million. So, there are underlying cash flows, there are other forms of securities, and we have a cash collateral sitting against it.


Read more........ http://www.moneycontrol.com/

RBI cuts CRR by 150 bps

In an anticipated move, the Reserve Bank of India, or RBI, has cut the cash reserve ratio, or CRR, by 150 basis points to 7.5% with effect from tomorrow in a bid to infuse liquidity into the markets.

On October 6, the RBI had cut the CRR by 50 bps to 8.5%. Today's 150-bps cut includes October 11's cut. The cut will inject liquidity into the system to the tune of Rs 60,000 crore.

Nilesh Shah of Envision Capital said, “The CRR cut is definitely a positive move, which is going to soothe some liquidity fears. The stock market also needs liquidity and this (the rate cut) will help to some extent. Whether this is going to help us beyond a day or beyond an intra-day basis is something that remains to be seen.”

“Directionally, the CRR cut is a positive move that helps the banking system, helps the overall economy and will probably help the market in short-term or intra-day,” Shah added.

The announcement came close on the heels of a sharp fall of over 1,000 points on the Sensex on Friday morning amid cues from falling global markets. Soon after the announcement, the Sensex recovered a bit, before falling again later.

Udayan Mukherjee, Managing Editor, CNBC-TV18, said, “The announcement will get gobbled up, or maybe prompt or induce a bit of short covering with the market going up.”

Mukherjee said that it was a welcome move but added he didn’t see it affecting the stock market substantially. “Of course, it aids the money market and injects a bit of liquidity to the system — 150 bps is a fairly meaningful chunk of money coming in,” he said, adding that from a stock-market perspective, the cut would produce some kind of positive sentiment for a short while, "but the problems of the stock market are different."

Finance Minister P Chidambaram also issued a statement on the CRR cut and welcomed the RBI's decision.

source: http://www.moneycontrol.com

US markets end lower, Dow down 157 pts

Wall Street capped its worst week in seven years
with a late sell off as traders briefly celebrated the house's approval of the Wall
Street bailout bill and then sold their positions ahead of the weekend. Anxiety
in fact hitting the markets with the VIX topping 45.

Stocks fell even after US President Bush signed the bailout package. Unemployment
report showed 1,59,000 people lost their jobs in Sep. Construction,
manufacturing & retail shed maximum jobs while healthcare & govt added workers.

In commodity markets crude was little changed amid skepticism that the bailout package will keep the US from falling into a recession, curbing demand.

Dow Jones dropped 157 points at 10325.38, S&P
down 15.05 points at 1099.15 and Nasdaq slid 29.33 points to 1947.39.

A look at how the Indian ADRs performed:

Name Infosys Sify Rediff.com India Satyam Wipro ICICI Bank HDFC Bank MTNL Tata Comm Dr Reddy's Lab Tata Motors Patni Computer Sterlite Ind

Symbol INFY SIFY REDF SAY WIT IBN HDB MTE TCL RDY TTM PTI SLT

Price 29.58 1.89 3.85 15.04 9.09 22.79 86.00 3.92 19.48 10.80 7.13 7.45 7.64

Change -1.00 0.07 -0.15 -0.56 0.16 -1.71 -0.50 -0.02 -1.66 -0.21 -0.13 -0.30 -0.57

Change% -3.27% 3.85% -3.75% -3.59% 1.79% -6.98% -0.58% -0.76% -7.85% -1.91% -1.79% -3.87% -6.94%

Volume 3,733,951 54,811 44,186 1,648,255 620,307 3,599,310 315,579 54,338 207,896 182,935 803,551 30,873 1,511,552

High 31.59 1.92 4.04 16.94 9.98 23.50 91.48 4.18 20.83 11.55 7.48 7.73 8.40

Low 29.56 1.76 3.82 15.01 8.70 22.05 83.11 3.90 18.62 10.80 7.01 7.37 7.53