Banks to get stress test results Friday: report

(Reuters) - U.S. banks will be briefed by regulators as early as Friday on how they performed in government "stress tests," before the results are made public later, The Wall Street Journal reported, citing government officials.


Reuters - The Wall Street entrance to the New York Stock Exchange is pictured March 27, 2009. REUTERS/Eric Thayer ...
Some estimates of likely losses that were used in the stress tests were tougher than expected, the newspaper said.

"Under a more adverse scenario, which assumes a 10.3 percent unemployment rate at the end of 2010, banks would have to calculate two-year losses of up to 8.5 percent on their first-lien mortgage portfolios, 11 percent on home-equity lines of credit, 8 percent on commercial and industrial loans, 12 percent on commercial real estate loans, and 20 percent on credit card portfolios," the paper said, citing a confidential document from the Federal Reserve.

On Tuesday, Treasury Secretary Timothy Geithner said most U.S. banks have enough capital to keep lending, but a pile of bad debts is fostering doubts about their health and slowing a recovery.

An official at the Federal Reserve said last week that results of the tests, designed to see how the nation's 19 largest banks would fare should the U.S. recession prove unexpectedly severe, would be made public on May 4.

The official said regulators will try to prove the rigor of the tests by releasing a document on Friday that explains the underlying assumptions. The document will outline the methodologies employed and serve as a guide on how to interpret the results.

Thanks to http://finance.yahoo.com

Sensex fails to maintain initial gains, ends lower by 81 pts

Mumbai, Apr 22 (PTI) In high volatility, the Bombay Stock Exchange 30-share Sensex today failed to maintain its initial gains and ended lower by 81 points due to persistent selling pressure in view of political uncertainty and fall in US index futures.
Realty, consumer durables, capital goods and auto were the main losers despite key rate cuts by the Reserve Bank of India yesterday.

Dealers attributed the volatility in the market to investors' cautious approach as also the uncertain political situation because of no clear indication as to who will form the next government.

The Bombay Stock Exchange bellwether Sensex showed signs of recovery in the morning with a jump of 138 points in response to the Reserve Bank's rate cuts yesterday but it failed to maintain its rally in the afternoon session.

The BSE-30 share index resumed higher at 10,968.60 and hovered in a range of 11,036.24 and 10,715.66 before finishing the day at 10,817.54, showing a net loss of 80.57 points or 0.74 per cent from its previous close.

The 50-share Nifty of the National Stock Exchange also fell by 35 points or 1.04 per cent to end at 3,330.30 from its last close.

Foreign institutional investors (FIIs) pulled out Rs 191.01 crore yesterday, as per provisional figures issued by stock exchanges.

Thanks to http://www.ptinews.com

Wall Street ends mixed; Dow down 27 points

The US markets reversed early losses led by financials, after Goldman posted strong first quarter profit.

Financial stocks had been among the session's worst performing sectors in the first few minutes of action, falling as much as 2.7% as traders took profits following the strong gains that financials registered late last week. However, buyers provided support by buying the dip in financials.

The market was also buzzing about President Barack Obama's press conference on the economy later today. The president is expected to talk about government's recession-busting actions.

However, earlier in the session, shares of General Motors tumbled 16% as the treasury department instructed the auto maker to prepare for a bankruptcy filing by first June deadline. Also Read - How ADRs performed

The Dow Jones Industrial Average slipped 25.57 points, or 0.3%, to 8,057.81. The S&P 500 Index was up 2.17 points, or 0.3%, to 858.73, and the Nasdaq Composite Index rose 0.77 points, or 0.1%, to 1,653.31.

Richard Bove, Financial Strategist, Rochdale Securities said, “The reason numbers are good is because their core business, which is trading did extraordinarily well. You had a whole series of things working in Goldman’s favour. The competition is gone away; all of the firms are no longer in business. Goldman has pricing power because there are so few competitors, or weaker competitors, Goldman has doubled the price of transaction in the first quarter."

In Commodities

Crude prices slipped below USD 50/bbl mark, extending yesterday's 4.2 percent loss, after the international energy agency forecasted that 2009 demand may slump to the lowest level in five years amid the global economic recession.

Copper climbed to the highest in almost six months in London, pacing an advance in industrial metals, as investors sought to catch up on gains made in shanghai and New York.

Futures in China and the US advanced after the Chinese government said it is considering additional stimulus measures to spur economic growth. Government plans to spur growth in the US, Europe, Japan and China helped trigger a 58 percent rally in London prices this year.

Thanks to http://www.moneycontrol.com

Tech Mahindra bags Satyam: Samir Arora, Forrester react

After three months of the new board taking over Satyam, Tech Mahindra finally won the high profile race for Satyam. The company bid Rs 58 per share, beating rivals engineering major Larsen & Toubro and private equity (PE) major Wilbur Ross. Tech Mahindra will have to pay Rs 1,757 crore to buy the 31% stake in Satyam. The total acquisition cost will rise upto Rs 2,890 crore once it gets the mandated 51% stake.

Satyam's government-appointed board clarified that Tech Mahindra will take control only when the Company Law Board (CLB) gives its nod for the sale process. They also admitted that the crucial process of restatement of accounts would take a few more months.

Samir Arora, Fund Manager, Helios Capital, feels the model which the government adopted for Satyam could be an operating model for future scams in India. He credits the government for handling the situation deftly and swiftly without loss of jobs, confidence, or clients.

Arora feels the risk going forward will be on Tech Mahindra financing the deal.

However, JR Varma, Former Member, SEBI, said the deal has gone very well for everyone except Satyam's shareholder. "A preferential allotment to Tech Mahindra means the old shareholders of Satyam will receive less. Other than the open offer that is going to be there, they are not going to receive any money. It is not very clear whether they will benefit from the ongoing business as well."

Sudin Apte, Senior Analyst, Forrester, feels questions still persist on how the integration process will pan out. Clients, he feels, are also wondering how a company specializing in telecom will be able to service them. "Also, it is not exactly present in the domain and the lines of services of Satyam." He feels a Tier-I Indian company or a multinational could have been a better option to take over approximately a USD 2 billion company when this fiasco opened up. "I wish there was one top company who was trying to buy this company as it would have been much better for clients." According to Apte, there is going to be a possible 5-6% rationalization of staff at Satyam based on how its clients ramp up.

Also Read:

Restatement of co's accounts will take few months: Satyam

Continued on next page…

Thanks to http://www.moneycontrol.com

Sensex cheered by global mood amid local slump

Industrial production may be in a slump but not investor sentiment. The return of foreign institutional investors (FIIs) into the Indian markets and an improving global financial environment have been the key factors behind a stocks rally that has seen the benchmark Sensex climb 32 per cent - or 2,643 points - in the past one month.

It gained 7.6 per cent in the current week ahead of Good Friday to close at a six-month high of 10,803. That spirit contrasts some ground realities.

The Index of Industrial Production (IIP) has contracted on the year, while GDP growth projections have been lowered, with a matching shrinkage in expectations of corporate profitability. But then, there is also a "no news is good news" mood on the external front and positive announcements at the G-20 summit of elite economies.

"Overall, risk aversion has eased and investors are moving from secure assets to riskier assets," said Aseem Dhru, chief executive officer, HDFC Securities. While market discounted all the bad news on economic and corporate front, FIIs emerged as strong buyers with net equity purchases of Rs 4,042 crore since March 9.

"FII purchase in a beaten down market over the last one year has built in a positive investor sentiment," said Divyesh Shah, CEO, Indiabulls Securities. Experts, nevertheless, remain cautious, "I expect sensex to rally between 9,000 and 11,000,' said Dhru.

"Some profit booking is expected," added Shah. However, they see clarity emerging within three months.

Thanks to http://in.news.yahoo.com

Vodafone CEO sees potential in emerging mkts - paper

Vodafone Group's chief executive told a German newspaper that while emerging markets were not unscathed by the global economic crisis, they still offered opportunities to mobile phone operators.

"I'm assuming that growth will slow down in emerging markets but they still offer us vast potential," Vittorio Colao told Welt am Sonntag in an interview to be published on Sunday.

Two thirds of the world's cell phone subscriptions are in developing nations, with the highest growth rate in Africa, a United Nations agency said last month.

Other companies that have invested heavily in emerging markets include India's Bharti Airtel, Norway's Telenor, South Africa's MTN and Egypt's Orascom Telecom.

Colao also told Welt am Sonntag it was definitely time for consolidation among mobile phone operators, but declined to say whether and how Vodafone would participate in the process.

Thanks to http://in.news.yahoo.com