Reliance Industries Ltd. (RIL) may buy out Bharti from Axa JV; stock up

Mukesh Ambani-controlled Reliance group is in talks to buy out Bharti in the life insurance firm Bharti Axa Life. Reliance, which has spelt out its aspirations to build a financial services empire, is understood to be in advanced stage of negotiations with the Mittals-led Bharti which has been looking for an exit for the past one year.

At 9:45 am, shares of Reliance Industries were trading 0.53% up at Rs 979 on the Bombay Stock Exchange .

According to a Reliance insider, "the group is indeed keen to enter insurance and has been approached by two to three companies, but is yet to finalise a partner." A Reliance spokesperson declined to comment on the matter while a Bharti spokesperson said, "As a policy, we do not comment on rumours or speculation".

Bharti Axa Life is one of the struggling players in the insurance industry with a market share of 1.1%. The firm, a joint venture in which Bharti owns 74% equity and the Paris-headquartered Axa group holds 26%, started operations in 2006. The company's new business premium income has dropped 17% to Rs 364 crore in 2010-11.

For Reliance, financial services and particularly insurance, are capital intensive avenues to deploy its large investible surplus generated by the petrochemicals business. A month ago, Reliance Industries, the country's largest private sector company, announced a financial services joint venture with New York-based DE Shaw .

"Life insurance with its huge opportunities is an obvious area that it will look into. Unlike general insurance where the key element is risk, the life business is a combination of savings and risk," said a senior investment banker.

At the peak of the stock market boom, the life insurance industry emerged as a formidable domestic investor. Fuelled by investor interest in Ulips, a market-linked product, insurance companies were competing with foreign portfolio investors in the local securities market. In 2007, of the total premium income earned by insurance companies, 80% was Ulip investment; of this close to 70% went into stocks.

While Ulip inflow has fallen as expenses have been capped and agents are less eager to promote the product, for investors Ulip has transformed into a more transparent product. "For a group taking up insurance business, traditional products like endownment are equally alluring with their higher margins," said a senior official of an insurance company.

Reliance's entry into financial services services is a development that is closely tracked by corporates and markets. It's perceived that the group will build businesses like non-banking financial services, insurance and asset management where entry barriers are low compared to banking.

Coal India strikes record high

The key benchmark indices recovered after hitting fresh intraday lows. The BSE 30-share Sensex was down 36.59 points or 0.19% to 19,255.43, up 42.80 points from the day's low and off 101.07 points from the day's high. The market breadth turned negative from positive. Weak Asian stocks and data showing sustained selling by foreign institutional investors this week weighed on the sentiment.

Index heavyweight Reliance Industries (RIL) snapped a four-day 6.35% fall on bargain hunting. Oil exploration major Oil and Natural Gas Corporation extended Thursday's gains triggered by reports of rise in oil and oil equivalent gas production in the year ended March 2011. Coal India struck record high on reports of getting imported coal at discounted prices. Auto shares were mixed. Cement shares rose as top cement firms -- UltraTech Cement and ACC early this week forecast strong growth in cement demand at the time of announcing January-March 2011 quarter results. Most bank stocks declined as the central bank is seen raising key short-term interest rates by a minimum 25 basis points at a policy review early next week.

As per provisional data released by the stock exchanges, foreign institutional investors (FIIs) sold shares worth Rs. 832.59 crore on Thursday, 28 April 2011. Foreign funds sold shares worth a net Rs. 796.80 crore in secondary equity markets in three trading sessions from Monday, 25 April 2011 to Wednesday, 27 April 2011, as per data from the Securities and Exchange Board of India (Sebi).

At 11:25 IST, the BSE 30-share Sensex was down 36.59 points or 0.19% to 19,255.43. The index gained 64.48 points at the day's high of 19,356.50 in early trade. The Sensex fell 79.39 points at the day's low of 19,212.63 in morning trade, its lowest level since 20 April 2011.

The S&P CNX Nifty was down 6 points or 0.10% to 5,779.45. The Nifty hit low of 5,764.50, its lowest level since 20 April 2011.

The market breadth, indicating the health of the market, turned negative from positive breadth earlier in the day. On BSE, 1060 shares advanced while 1320 shares declined. A total of 99 shares remained unchanged.

The total turnover on BSE amounted to Rs. 1129 crore by 11:25 IST compared with Rs. 741 crore by 10:25 IST.

Among the 30-member Sensex pack, 16 gained while the rest declined.

Index heavyweight Reliance Industries (RIL) rose 0.68% to Rs. 980.50, halting a four-day 6.35% fall, on bargain hunting. Reportedly Mukesh Ambani-controlled Reliance group is in talks to buy the stake held by Bharti Enterprises in an Indian insurer joint venture with AXA Group. Bharti AXA is a joint venture between Bharti Enterprises, which controls India's largest listed cellular services provider Bharti Airtel, and AXA, Europe's second biggest insurer. Shares of Bharti Airtel declined 0.61%.

RIL said recently that it is drawing up a plan to raise gas production from its D6 deepwater block in the Krishna Godavari basin in the Bay of Bengal, off India's east coast. RIL said the reservoirs in the block are more complicated than previously expected and continuous and significant efforts are underway for understanding these reservoirs. RIL said it is trying to identify well locations for incremental production and sustenance.

Gas output from the block touched a peak of 60 million metric standard cubic meters a day (mmscmd) last year. Production has now fallen to 50 mmscmd as against a target of 69.8 mmscmd, S.K. Srivastava, head of India's upstream regulator, said last week. He also said that Reliance hasn't given any satisfactory response on the matter.

Integrated development plan for all other discoveries in KG-D6 is being conceptualized to augment production in the most capital efficient manner, RIL said on 25 April 2011. The company said it is studying various options such as recompletion of wells and compression to increase gas production.

India's largest oil exploration firm by market capitalization Oil and Natural Gas Corporation (ONGC) rose 0.52%. The stock extended Thursday's close to 2% gains triggered by reports the company's oil and oil equivalent gas production rose 1.8% to 62.03 million tonnes in the year ended March 2011 over the year ended March 2010.

Coal India rose 1.28% to Rs. 381.10 after striking a record high of Rs. 383.30 on reports the company has received 27 proposals from 16 companies for getting imported coal at discounted prices.

India's largest private sector bank by net profit ICICI Bank rose 0.28% on strong Q4 results. During market hours on Thursday, the bank reported a 44% jump in net profit to Rs. 1452 crore on 23% growth in net interest income to Rs. 2510 crore and an 18% growth in fee income to Rs. 1791 crore in Q4 March 2011 over Q4 March 2010. Consolidated net profit rose 16.85% to Rs. 1567.93 crore in Q4 March 2011 over Q4 March 2010.

The bank said its savings deposits increased by 26% to Rs. 66,869 crore as at 31 March 2011 from Rs. 53,218 crore as at 31 March 2010. The CASA (current & savings accounts) deposits ratio increased to 45.1% as at 31 March 2011 from 41.7% as at 31 March 2010. ICICI Bank's net non-performing asset ratio decreased to 0.94% as at 31 March 2011 from 1.87% as at 31 March 2010 and 1.16% as at 31 December 2010.

Most bank stocks declined as the central bank is seen raising key short-term interest rates by a minimum 25 basis points at a policy review early next week. India's second largest private sector bank by net profit HDFC Bank slipped 1.66% while India's largest bank by net profit and branch network State Bank of India declined 0.73%.

Auto shares were mixed. India's largest bike maker by sales Hero Honda Motors lost 2.10% to Rs. 1660.50 ahead of declaration of its year ended March 2011 result on 4 May 2011. It was the top loser from the Sensex pack.

India's largest tractor and utility vehicles maker by sales Mahindra & Mahindra (M&M) slipped 1.47%. The company on Wednesday announced the launch of its next generation passenger carrier Maxximo Mini Van priced at Rs. 3.2 lakh. Maxximo Mini Van will compete with Tata Magic and Maruti Omni in the mini van segments.

India's largest truck maker by sales Tata Motors fell 0.63%. Recent reports indicated the company has cut production in April 2011 of its sports-utility vehicles and cars--besides the Nano--by 15%-20% over March 2011. The production cut is normal balancing in production, reports said.

India's largest car maker by sales Maruti Suzuki India rose 1.12%. Chief Executive Shinzo Nakanishi said at the time of announcing Q4 results early this week that Maruti will make efforts to protect and increase margins going forward. Net profit fell 8.4% to Rs. 2288.60 crore on 24.60% increase in total income, net of excise, to Rs. 37522.40 crore in the year ended March 2011 (FY 2011) over the year ended March 2010. The company announced the FY 2011 results during trading hours on Monday, 25 April 2011. The company said adverse currency movement (particularly on exports), higher commodity prices and new model launches impacted the company's profits in the year ended March 2011.

India's second largest bike maker by sales Bajaj Auto rose 0.52%. The company announces its Q4 March 2011 result on 18 May 2011.

India's largest household products maker Hindustan Unilever gained 2.26% to Rs. 285 and was the top gainer from the Sensex pack. Reportedly the company has formed customer care teams to help boost efficiency and sales after studying product demand and customer behaviour at supermarkets.

India's second largest listed cellular services provider by sales Reliance Communications rose 0.96% on bargain hunting after sliding over 5% on Thursday on investor worries about the ongoing telecoms licencing graft case.

Reliance Infrastructure rose 0.16%. The company said after market hours on Thursday it bought back additional 2 lakh shares on Thursday, 28 April 2011, under its buyback programme of up to Rs. 1000 crore. The company has so far bought back 10 lakh shares under the buyback programme.

GVK Power Infrastructure advanced 2.07% to Rs. 24.65 after a large bulk deal of 1.5 crore shares was executed on the counter at Rs. 24.15 per share at 09:47 IST on BSE.

Crompton Greaves tumbled 9.92% on high volume of 14.49 lakh shares after consolidated net profit declined 18% to Rs. 251.43 crore on 16% rise in net sales to Rs. 2908.03 crore in Q4 March 2011 over Q4 March 2010. The result was announced after market hours on Thursday, 28 April 2011.

Cement shares rose as top cement firms -- UltraTech Cement and ACC early this week forecast strong growth in cement demand at the time of announcing January-March 2011 quarter results. ACC (up 0.26%), India Cements (up 0.23%), Madras Cement (up 1%), UltraTech Cements (up 2.15%), Shree Cement (up 0.23%), (up 8.28%), Prism Cement (up 2.66%), gained. Ambuja Cements surged 2.39% on massive volume of 5.34 crore shares on NSE.

The corporate results announced so far have been good. The combined net profit of a total of 380 companies rose 23.2% to Rs. 30693 crore on 26.3% rise in sales to Rs. 261302 crore in Q4 March 2011 over Q4 March 2010.

Nine of 14 economists polled by Capital Market expect 25 basis points (bps) hike in key short-term interest rates while five expect a 50 bps hike in short-term rates on 3 May 2011 when the Reserve Bank of India (RBI) undertakes its annual 2011-2012 monetary policy review. A cumulative hike of 75-100 bps in short-term rates is expected during the financial year ending March 2012 (FY 2012). 100 bps is one percentage point or 1 %. Economists expect inflation based on the wholesale price index (WPI) to slide to a median 7.8% in FY 2012 from 9.4% in the year ended March 2011 (FY 2011). The poll shows that economists expect inflation to remain high in the first half of the year and slide in the second half of the year.

A sharp surge in global crude oil prices over the past few months has raised macroeconomic worries. India imports majority of its crude oil requirements and high oil prices have raised concerns about widening current account deficit. High oil prices have also raised concerns about higher oil subsidy bill for the government and its negative impact on the government's fiscal position. US crude futures were down 38 cents or 0.34% at $112.48 a barrel.

The India Meteorological Department (IMD) has predicted the southwest monsoon 2011 to be 98% (normal) of the long period average (LPA) with a model error of plus/minus 5%. IMD has indicated that there is very low probability for the season rainfall to be deficient (below 90% of LPA) or excess (above 110% of LPA).

Good rains, if they arrive on time and if they are well spread, would help ease food inflation and boost rural income. Rainfall that comes within 96% to 104% of the long-term average is considered a normal monsoon season, but this alone doesn't guarantee a good crop. The timing and spread of the rains are equally important. The quantity and geographical spread of rainfall during the monsoon season is crucial for India's agriculture sector, which lacks irrigation facilities on more than half its farm land. Monsoon rains usually enter India's mainland through the southern state of Kerala in the first week of June, gradually progressing to cover most of central and northern India by July, before retreating in September.

Asian stocks declined on Friday after a report showing slowdown in US economy sparked concern whether earnings improvement can be sustained. The key benchmark indices in Singapore, South Korea, China, Taiwan, Indonesia and Hong Kong slipped by between 0.02% to 1.07%. Japanese markets are closed for a public holiday.

US stocks extended their multi-year highs on Thursday as the market clung to optimism generated by the Federal Reserve's plans to keep interest rates low. The Dow Jones Industrial Average rose 72.35 points, or 0.6%, to 12763.31, its highest close since 20 May 2008. The Nasdaq Composite index added 2.65, or 0.1% to 2872.53, its highest close since 12 December 2000 and the Standard & Poor's 500-stock index rose 4.82, or 0.4%, to 1360.48, finishing at its highest level since 9 June 2008.

In economic news, US gross domestic product grew at an annual rate of 1.8% in the first quarter compared with a 3.1% gain in the fourth quarter last year. Initial jobless claims for the week ended 23 April 2011 rose by 25,00 to 429,000, the highest level since January 2011 and pending home sales index of contract signings rose 5.1% to 94.1 in March 2011, from 89.5 in February 2011.

Trading in US index futures indicates a flat opening on Friday, 29 April 2011.

Gold hits new high of Rs 22,470

Gold set a new record at Rs 22,470 per 10 grams today on brisk buying by stockists and jewellers for the upcoming ‘Akshaya Tritiya’ and marriage season, driven by a record rally in global markets. Silver also surged Rs 3,400 to Rs 72,000 per kg.

The white metal had hit a record level of Rs 74,300 on April 25.

Traders said Akshaya Tritiya festival (May 6), which is considered auspicious for buying gold, bolstered the trading sentiment for the yellow metal.

The market also received support as the gold advanced to a record high in the international markets, after the US Fed pledged to keep interest rates near zero to bolster the recovery, weakening the dollar and boosting the demand for precious metals as a store of value.

Gold in the Asian region gained 0.4 per cent to reach a never-seen-before level of $1,533 an ounce. Silver also strengthened by 0.6 per cent to $48.13 an ounce, approaching the record level of $49.79 set on April 25.

The Fed has signalled that it will maintain monetary stimulus and kept its target rate for overnight lending between banks at zero to 0.25 per cent, while ending $600 billion of bond purchases on schedule in June.

At the domestic front, gold of 99.9 and 99.5 per cent purity surged Rs 275 each to Rs 22,470 and Rs 22,350 per 10 grams, respectively. Sovereigns followed suit and rose by Rs 100 to a new peak of Rs 18,300 per piece of eight grams.

Silver ready staged a strong comeback and spurted by Rs 3,400 to Rs 72,000 per kg and weekly-based delivery jumped up by Rs 3,195 to Rs 70,695 per kg.

Silver coins, too, zoomed up by Rs 3,000 to Rs 77,500 for buying and Rs 78,500 for selling of 100 pieces.

Mahindra takes aim at minivan market

Mahindra and Mahindra Ltd, the country’s largest utility vehicle maker, has launched a minivan, a derivative of its Maxximo minitruck, to compete with Tata Motors Ltd’s Magic and Maruti Suzuki India Ltd’s Omni.

With this, Mahindra hopes to capture a slice of the market for minivans in small towns and cities. Tata’s Magic is the segment leader and sells 5,000-6,000 units a month. The market for minivans is about 140,000 units a year, Mahindra said.

Minivans are emerging as the top choice for both entry-level contract and stage carriages, said Rajesh Jejurikar, chief executive of Mahindra’s automotive division.

Priced at Rs.3.2 lakh (in Navi Mumbai, excluding taxes and insurance), Mahindra’s minivan is Rs.1,500 dearer than the Magic.

In the absence of a formidable competitor except the Magic, the new offering augurs well for Mahindra, said Surjit Arora, an analyst at Prabhudas Lilladher India Pvt. Ltd. But like Tata’s Ace, a mini-truck with a payload capacity of less than 1 tonne, the Magic will continue to enjoy the first-mover advantage, he said.

Tata Motors created a new segment when it launched the Ace in 2005. Similar offerings from rivals such as Piaggio Vehicles India Pvt. Ltd, Force Motors Ltd and Mahindra have entered the market but they have not been able to dent Tata Motors’ share much. The Ace continues to sell 15,000-16,000 units a month.

Mahindra spent Rs.130 crore on its minivan project. The vans will roll out from its factory in Chakan near Pune. The line that makes the Maxximo truck has a capacity to manufacture 6,000 vehicles a month.

Mahindra has sold nearly 40,000 of its mini-truck since the launch in January 2010.

Mahindra’s minivan will reach 230 dealer outlets nationwide by June, said Jejurikar. Subsequently, the company plans to offer a CNG (compressed natural gas, a less-polluting fuel) variant.

It also plans to export the vehicle to neighbours Bangladesh and Sri Lanka, he said.

Sales of light commercial vehicles—such as Magic, Ace, Maxximo and Gio (another sub-1 tonne offering from Mahindra)—have been expanding at a healthy pace with auto makers tapping into the segment that addresses last-mile connectivity.

Sales of these light vehicles, which accounts for more than half of all commercial vehicle sales in the goods and passenger carrier segment, increased 22.88% to 353,000 units in the year that ended 31 March, according to the Society of Indian Automobile Manufacturers.

According to research by credit rating agency Icra Ltd, the light commercial vehicle segment in India is seeing a polarization towards the sub one tonne market; the demand is also shifting from the traditional three-wheeler segment to this segment. Icra estimates growth in the light commercial vehicle segment to be marginally higher than that of the medium and heavy duty segments, which are projected to expand at 9.5-11.5% over the next five years.

Sensex opens higher in early trade

Snapping a three-day losing streak, the Bombay Stock Exchange benchmark Sensex recovered by over 93 points in opening trade on Thursday on the back of a fresh spell of buying by funds as well as retail investors amid a firming trend on other Asian bourses.

However, participants kept their commitments restricted, on Thursday being the last session of monthly expiry in the derivatives segment on the NSE.

The 30-share barometer, which has lost nearly 153 points in the previous three sessions, rose by 93.36 points, or 0.48 per cent, to 19,542.05.

The wide-based National Stock Exchange index Nifty also moved up by 22.50 points, or 0.38 per cent, to 5,856.40.

Brokers said the emergence of buying by funds and investors, taking positive cues from other Asian markets in line with overnight gains in the US market following the Federal Reserve’s decision to hold short-term interest rates near zero, boosted the sentiment here.

Meanwhile, in the Asian region, Hong Kong’s Hang Seng index was up by 0.54 per cent and Japan’s Nikkei by 1.13 per cent in morning trade today. The US Dow Jones Industrial Average ended 0.76 per cent higher in the previous session.

Nifty likely to trade in 5750-5950 range

The Nifty traded in a volatile manner amidst the rollover pressures and finally closed at 5834, down 34 points, on Wednesday. Among the Nifty stocks, only ONGC and M&M closed with gains while most others closed in the red. Ambuja Cement, Wipro and JP Associate were among the weakest counters, recording over 3-4 % fall in the day.

In the midcap space, Bosch, Bata India and Glaxo closed on a strong note while Lanco Infra, Exide Ind and Sterlite Tech closed weaker. Sectorwise, we have correction in frontline IT stocks due to poor results and also in private bank stocks. We have seen Nifty trading in a tight range of 5800 to 5950 over the past week and the index is likely to continue trading in this range. The expiry is likely to be around 5875-5900 level.

What is encouraging in this market is the rate at which the rollovers are taking place. Last month, Nifty moved higher by over 12%. The April series was more of consolidating the gains in March in the 5700-5950 range. Both series saw strong rollovers with the Nifty being near to the monthly highs. This, along with the premium in rollovers, indicates positive bias for the markets in the May series. Going forward, Nifty is likely to trade in the range of 5750 to 5950 before taking any new course. Straddles or strangles can be written to take advantage of the range trading.

5950 is a very strong resistance level for Nifty where in the near past long unwinding was observed. One can strongly go long once that level is breached, taking into consideration the level of premium in Nifty future. Any closing above 5950 can trigger short squeeze resulting in a rally of 100-150 points rally thereon.

Nifty strategy: Short strangle in May (Sell 6100 Call at . 42 and Sell 5600 Put at . 48). The total premium inflow would be . 90. The breakeven for the strategy would be 6190 on the upside and 5510 on the downside. One can go long on Nifty futures above the resistance level of 5950.

(The author is Vice-President - Derivatives Research, Padmakshi Financial Services)

PSU OMCs gain on a likely hike in petrol prices next month

Shares of three public sector oil marketing companies rose 1.28% to 2.04% on reports state-run oil marketing firms may hike petrol prices after 10 May 2011 when the state polls end.

BPCL (up 2.04%), HPCL (up 1.36%) and Indian Oil Corporation (IOC) (up 1.28%), rose.

The BSE Sensex was down 144.12 points or 0.74% at 19,440.19.

According to reports, state-run oil marketing companies (PSU OMCs) could hike petrol prices by up to Rs. 3 per litre and the hike could be announced on 15 May 2011 during the fortnightly review of prices.

PSU OMCs have the freedom to revise petrol price in tandem with international crude. But the government, which holds majority stake in the companies, had reportedly told them to hold the price line since January in view of the state polls.

Ranbir Singh Butola, chairman of IOC, was quoted by media as saying that IOC was losing Rs. 18.11 per litre on diesel, Rs. 28.33 a litre on kerosene and Rs. 315.86 per cooking gas cylinder. Butola said IOC was losing money on petrol but declined to put a number to it since the fuel was deregulated and the company was not supposed to get compensation from the government for keeping pump prices artificially low.

A hike in petrol prices will boost the finances of state-run firms since crude oil prices have soared to above $110 per barrel in the international market. US crude futures were down $1.12 or 1% at $111.16 a barrel today, 26 April 2011.

Sensex falls on Asian cues; Banks, IT, auto down

The Indian markets have opened lower tracking global cues. The Sensex was trading 148 points lower at 19,435 and the Nifty declined 46 points to 5,828 at 9.50 am.

Realty stocks rebounded after Monday's declined. The BSE realty index rose 0.38 per cent. All other sectoral indices were trading in the red. Banking, auto and IT stocks fell close to 0.50 per cent.

Only four stocks rose on the Sensex. Reliance Com was the biggest gainer, rising 0.86 per cent. Jindal Steel, ONGC and Bharti also saw buying interest.

Among the losers, Sterlite saw the biggest cut, falling 2 per cent. The stock had seen a good run-up to the results, rising for the past few sessions. The company reported strong numbers on Monday, announcing a 35 per cent rise in net profit. Maruti declined 1.4 per cent. The stock rose on Monday after the company beat Street expectations in this quarter.

HUL, HDFC, Jaiprakash Associates, M&M, HDFC Bank and ITC declined 1-2 per cent.

The market breadth was weak with only 28 per cent stocks managing to mover higher on the BSE 500 index.

Ambareesh Baliga of Way2Wealth said, "The markets were looking to move up on account of earnings but that has not happened after Infosys and RIL punctured the rally. Earnings show that there is margin pressure coming in despite clear topline gains. 5,900-5,950 is a clear cap for markets though there is not too much downside."

Markets across Asia were trading in the red after the Wall Street saw a dip on Monday. The Nikkei in Japan was trading 1.32 per cent lower. Hong Kong's Hang Seng and South Korean Kospi were also trading in red.

Overnight, the Dow fell 26 points or 0.2 per cent on mixed earnings.

Paramount Printpackaging’s IPO gets subscribed 0.22 times on second day

Paramount Printpackaging’s proposed initial public offer (IPO) has been subscribed 0.22 times on its second day. The company has fixed the price band at Rs. 32-35 per share for its IPO. The company has proposed an IPO of 1.3 crore equity shares ofRs. 10 each through 100 per cent book building process, to part finance its expansion plans. The issue has opened on April 20, 2011 and will close on April 25, 2011.

As per the NSE-BSE demand graph available on NSE website at 17.00 pm, it has received 2920500 bids against the issue size of 13094175 shares, 1183500 bids have been received at the cut off price.

The book running lead manager to the issue is Onelife Capital Advisors.

The proceeds of the issue will be used by the company for setting up new facilities for manufacturing of high end duplex board cartons, shippers and printed corrugated box in Gujarat as well as augment the company’s long term working capital requirements.

Paramount Printpackaging caters to over 100 clients in various sectors like FMCG, Pharma, Electricals, Auto ancillary and Food. The company at present has the capacity to convert about 500 tons of paper board every month, which in terms of finished products works out to an average of 20 lakh cartons a day. The company offers a packing solutions consisting of a wide range of cartons, which is complemented by print finishes such as stamping, embossing, complex varnishing and security features.

Goldman Sachs, Citigroup, Temasek rush for Muthoot Finance IPO

Goldman Sachs, Citigroup and Temasek are among scores of global investors scrambling for a share of the pie in companies that are in the rapidly-growing business of lending against gold. Heightened investor interest in this segment is reflected in the fact that the 900-crore initial public offering from Muthoot Finance, the country's largest gold loan company, drew bids for at least 25 times the shares on offer.

Returns from an earlier public offering by rival Manappuram have raised investors' hopes of profiting from this issue too. That raises the possibility of pricing it at the top end of the 160-175 band.

"It is a unique business model and given Indians' obsession with gold, it is an attractive business model," said a director of a US-based fund that bid for it, but did not want to be identified for regulatory reasons. "Given these reasons, the issue is priced attractively and it is difficult to match the scale and expertise of the private players in this segment for banks as it is not their core business."

Manappuram has more than doubled while Shriram Transport Finance has gained 72% since January 2010, compared with a 21% rise for the benchmark Sensex. South Korea's Mirae, US' GMO, Jupiter, Tudor, DKR Oasis, Geosphere and Congruix and private funds such as Barings and Wellcome Trust were among the global bidders, said brokers familiar with the bids.

Attractively priced, feel investors

Domestic funds SBI, HDFC, Reliance, Birla and IDFC also bid for the Muthoot IPO. Lending against gold is seen as the best bet in secured lending, with the precious metal at a record high of $1,500 an ounce. With inflation fears, gold and silver prices are forecast to rise.

Commodities bull Jim Rogers expects gold to rise to $2,000 an ounce in the coming years. Lending about 30% of the value of such an asset ensures safety at 13% interest. If the loan value rises, then interest rate jumps without additional risk which equity investors prefer.

"Investors want to buy unique stories," says Falguni Nayar, head of investment banking at Kotak Mahindra, one of the share sale arrangers. Furthermore, investors believe the stock was priced at a reasonable valuation compared with listed peers, unlike most other issues that are overpriced.

"Muthoot will be trading at an FY12 priceto-book range of 2.2-2.4 times," says Santosh Singh, analyst at Espirito Santo Securities .

IDBI Bank –Buy- Sharekhan

IDBI Banks Q4FY2011 results came in above our estimates in terms of the profit after tax (PAT), which grew by 62% year-on-year (y-o-y) to Rs. 516.3 crore. The growth in the profit was driven by a sharp reduction in the provisions and a 51% sequential growth in the non-interest income. However, the growth in the net interest income (NII) was lower than estimated at 46% y-o-y; the NII declined by about 8% sequentially. This was mainly due to the contraction in the margin (down 18 basis points sequentially to 2.1%). The gross non-performing assets (NPAs) declined to 1.76% from 2.22% in Q3FY2011 led by aggressive write-offs (Rs449 crore in Q4FY2011).

During Q4FY2011, IDBI Banks advances grew by 16.8% quarter on quarter (q-o-q) while its deposits grew by 20.1% q-o-q. However, on a year-on-year (y-o-y) basis, the advances and deposits grew by 13.7% and 7.6% respectively as the bank had grown at a slower rate till Q3FY2011.

The NII declined by 8% sequentially to Rs1,109 crore, mainly due to deterioration in the margin. The margin declined by 18 basis points Q-o-q to 2.1% led by an increase in the cost of funds (7.45% compared to 7.1% in Q3FY2011). For FY2011, the banks margin improved to 2.1% from 1.57% in FY2010.

IDBI Banks current account-savings account (CASA) ratio improved to 21% mainly contributed by the end-of-the-period (EOP) deposits. The core CASA ratio has shown an improvement of about 100 basis points on a sequential basis to about 16%.

The banks non-interest income increased by 51% y-o-y, mainly due to a strong growth in the fee income, which increased by 51% q-o-q. Further, the growth in the non-interest income was aided by earnings of Rs. 73 crore from recovery (the written-off accounts) and Rs. 48 crore from treasury profits.

The gross NPAs declined significantly to 1.76% from 2.22% in Q3FY2011 led by aggressive write-offs (Rs 449 crore) during the quarter. However, the slippages remained high (Rs 650 crore compared to Rs690 crore in Q3FY2011) which is a cause for concern. The provision coverage including the written-off accounts declined to 74.7% from 75.6% in Q3FY2011.

We expect a slower business growth ahead due to an increased focus on the qualitative parameters (margins, CASA, asset quality etc). The bank targets to increase its margin to about 2.5%, its CASA ratio to 22% and its return on asset to 1% by FY2013. Though its asset quality deteriorated in FY2011, we expect the same to improve in FY2012. Going forward, the growth in its profits will be driven by an improvement in the margin and a reduction in the NPA provisions. We maintain our target of Rs182 (1x FY2012 book value [BV] for the bank and Rs30 per share for investments) and BUY recommendation on the stock.

Sensex gains 131 points, led by RIL ahead of its results

The BSE Sensex gained for the third straight day today, adding 131 points to close at 19,602, led byReliance Industries ahead of its fourth quarter results and a firm global trend.

Brokers said investor sentiment remained positive on the back of steady FII inflows and expectations of encouraging Q4 earnings from RIL, to be announced this evening.

However, lower-than-expected earnings by software major TCS and higher food inflation for the week ended April 9, capped the gains.

The 30-share Bombay Stock Exchange index, Sensex, which climbed 380 points in the previous two sessions, added another 131.25 points, or 0.67 per cent to close the day at 19,602.23.

The wide-based National Stock Exchange index Nifty also surged 33.05 points, or 0.56 per cent to close at 5,884.70. It touched the session's high of 5,912.90 and a low of 5,864.35.

The RIL stocks rose by 1.39 per cent to Rs 1,039.95. However, having failed to meet market expectations,Tata Consultancy Services fell 2.23 per cent to Rs 1,191.65. It had gained two per cent in the early trade.

A firm trend in the Asian markets and higher openings in Europe, followed by overnight gains in the US supported Indian markets.

While metals, oil and gas, realty, bank and auto sectors, pushed up the market, a weak trend in capital goods, power and IT sectors reduced the gains.

Sensex ends 110 points up; Maruti, ONGC, Hindalco gain

Indian markets ended on a positive note but off highs as investors took some profits off the table ahead of truncated week-end. Metals, oil&gas and realty stocks led the upmove while capital goods, power and IT led the losers pack.

Bombay Stock Exchange's Sensex ended at 19581.67, up 110.69 points or 0.81 per cent. The 30-share index hit a high of 19695.98 and low of 19530.50 intraday.

National Stock Exchange's Nifty was at 5887.70, up 36.05 points or 0.62 per cent. The broader index touched a high of 5912.90 and low of 5866.90 in today's trade.

BSE Midcap Index was up 0.10 per cent and BSE Smallcap Index edged 0.03 per cent lower.

Amongst the sectoral indices, BSE Metal Index was up 1.57 per cent, BSE Oil&gas Index gained 1.14 per cent and BSE Realty Index moved 0.60 per cent higher. BSE Capital Goods Index slipped 1.06 per cent and BSE Power Index declined 0.91 per cent.

Maruti (3.80%), ONGC (2.78%), Hindalco (2.66%),HDFC (2.46%) and Sterlite Industries (2.30%) were the major Sensex gainers.

BHEL (-4.73%), TCS (-2.61%), Bharti Airtel (-1.38%),Tata Motors (-0.99%) and Cipla (-0.42%) were amongst the top losers.

Shares of TCS were down on profit booking after it reported better-than-expected quarterly figures. Its standalone net profit grew to Rs 7569.99 crores for the year ended March 2011 against Rs 5618.51 crores a year ago. Net sales grew to Rs 29275.41 crores from Rs 23044.45 crores.

Reliance Industries will be announcing results later in the day. Analysts are expecting the oil&gas major to report robust numbers due to higher gross refining margins. The stock ended at 1.37 per cent higher on the BSE.

Market breadth was positive on the BSE with 1364 gainers against 1510 losers.

Sensex extends weekly rally at start...Nifty eyes 5900

BSE Sensex was trading at 19,602, up 133 points over the previous close. While, NSE Nifty was trading at 5,885, up 33 points over the previous close.

The Indian equity benchmarks have started the last trading of the week on solid note, joining a worldwide rally in stocks following strong results from some top US corporates. Barring Infosys, results from the Indian companies too have been largely in line with estimates with an odd one like HCL Technologies beating market expectations.

At 09:22 am (IST), the BSE Sensex was trading at 19,602, up 133 points over the previous close. While, NSE Nifty was trading at 5,885, up 33 points over the previous close.

The broader indices are also trading firm and the market breadth is positive. Most sectoral indices on the BSE are in the positive territory.

Meanwhile, shares of scam-tainted Unitech, DB Realty and the ADAG companies have recovered ahead of the High Court ruling on the bail applications of five executives allegedly involved in the 2G scam.

Hero Honda, ONGC, Jindal Steel, Hindalco, L&T, TCS, HDFC Bank, Sterlite, Tata Steel, Grasim, ACC, Sesa Goa, HDFC, HCL tech, ICICI Bank, Maruti Suzuki, DLF, Ranbaxy and DLF are among the notable leaders in the Sensex and the Nifty.

BPCL, Siemens, Tata Motors, Kotak Mahindra Bank, GAIL, Bajaj Auto, M&M, SAIL and JP Associate were among the notable losers in the Sensex and the Nifty.

In global action, markets across Asia have advanced, tracking a solid rally on Wall Street and the European markets. Crude oil has risen for a third straight day amid increasing signs that the global economy is doing well. The dollar has lost some ground against the main counterparts while gold is trading above the US$1,500 an ounce.

India Infoline

Gold breaches 22,000 mark, silver shines at 66,300

Gold crossed the psychological Rs 22,000 mark on Wednesday on aggressive buying by stockists, amid a rising global trend. It rose by Rs 115 to Rs 22,060 per 10 grams. Silver also climbed to a new high and rose by Rs 1,850 to Rs 66,300 per kg on demand from industrial units.

Silver coins followed suit and shot up by Rs 1,500 to a record high of Rs 72,000 for buying and Rs 72,500 for selling of 100 pieces. Trading sentiments remained bullish as gold extended its recordmaking rally to top $1,500 an ounce in global markets as dollar fell on mounting debt in the Europe and the US, prompting investors to seek bullion as a store of value.
In international markets, gold climbed 0.3% to $1,500.43 an ounce and silver jumped 0.9% to a 31-year peak of $44.35 an ounce on Wednesday.

Besides, retail customers and jewellers buying for the coming marriage season further fuelled the uptrend. On the domestic front, gold of 99.9 and 99.5% purity shot up by Rs 115 each to a new high of Rs 22,060 and Rs 21,940 per 10 grams, respectively. Sovereigns also moved up by Rs 100 to fresh peak level of Rs 18,000 per piece of eight grams.

Silver continued its record setting spree and spurted by Rs 1,850 to new peak level of Rs 66,300 per kg and weekly-based delivery by Rs 1,530 to Rs 65,055 per kg.

Gold breaches 22,000 mark, silver shines at 66,300

Muthoot Finance IPO subscribed 10 times on QIB support

Country's largest gold financing company Muthoot Finance's initial public offering, which closes on April 21, has received good response from investors - especially qualified institutional investors.

The issue has been subscribed 10 times so far, as per data available on NSE. Reserved portion of qualified institutional bidders, which closes today, has subscribed more than 23 times - QIBs put in bids for more than 41 crore equity shares as against reserved portion of 1.8 crore shares.

Non-institutional and retail investors' portion remains undersubscribed.

The non-banking finance company engaged in gold loan business plans to raise Rs 901 crore via an initial public offer of 5.15 crore equity shares at the higher end of price band of Rs 160-175 a share.

Issue proceeds will be mainly used for augmenting capital base to meet future capital requirements to provide for funding of loans to customers.

ICICI Securities and Kotak Mahindra Capital Co are the book running lead managers to the issue while HDFC Bank is the co-manager.

Muthoot Finance IPO subscribed 10 times on QIB support

Sensex ends 300 points lower; DLF, JP Asso, TCS down

Indian markets ended sharply lower for second consecutive session as weak global peers and concerns of possible rate hike by the Reserve Bank of India spooked sentiments.

Bombay Stock Exchange's Sensex closed at 19095.02, down 291.80 points or 1.51 per cent. The 30-share index hit a high of 19649.22 and low of 19071.47 intraday.

National Stock Exchange's Nifty ended at 5731.60, down 92.95 points or 1.60 per cent. The broader index touched a high of 5897.90 and low of 5722.25 in today's trade.

BSE Midcap Index fell 1.30 per cent and BSE Smallcap Index moved 0.73 per cent lower.

All the sectoral indices ended lower. BSE Realty Index fell 3.48 per cent, BSE IT Index was down 2.73 per cent and BSE Capital Goods Index was declined 2.15 per cent.

DLF (-5.16%), Jaiprakash Associates (-3.33%), TCS (-3.07%), Infosys Technologies (-2.89%) and L&T (-2.88%) were the major Sensex losers.

Hero Honda (2.33%), HUL (2.10%), Bajaj Auto (0.87%),ONGC (0.80%) and Maruti Suzuki (0.44%) were the top gainers.

Market breadth was negative on the BSE with 1713 declines against 1177 advances.

economictimes.indiatimes.com

Indian stocks slip as tech worries weigh

Indian stocks lost early gains to trade lower on Monday, with the information technology sector remaining under pressure after results and guidance from Infosys Technologies Ltd. disappointed investors last week.

The Sensex XX:SENSEX -1.51% fell 168.47 points, or 0.9%, to 19,218.35, led by declines of more than 2% for shares of Infosys IN:500209 -2.89% ; Cipla Ltd. IN:500087 -1.46% ; Tata Consultancy Services IN:532540 -3.07% ; and DLF Ltd. IN:532868 -5.16%

Shares of Hero Honda Motors Ltd.IN:500182 +2.33% bucked the trend, rising 3% after the auto maker last week announced an interim dividend to 70 rupees per share.

The S&P/CNX Nifty XX:NIFTY -1.64% fell 0.9% to 5,769.70.

The drop in Infosys shares follows a 9.6% slide on Friday after the firm said profit for its quarter ended March 31 rose by a smaller-than-expected 13.6% from the year-earlier period as costs outpaced growth in revenue.

Net profit rose to 18.18 billion rupees ($408 million) from 16.00 billion rupees in the year earlier period. Analysts polled by Dow Jones Newswires expected the company’s profit to rise to 18.81 billion rupees.

For the current financial year that started April 1, Infosys said it expects an 8% to 10% growth in earnings per share in U.S. dollar terms, to a range between $2.83 and $2.88. Current financial year revenue is expected to climb 18% to 20% to $7.13 billion to $7.25 billion.

Deutsche Bank, however, said that the quarterly miss was a “one-time phenomenon” and that the software-maker’s management was “unduly conservative” in its guidance.

Among the offsets expected by Deutsche Bank is that Infosys should continue to benefit from increased hiring at lower wages, which should bring down its overall wage inflation and cost base.

Investors worried about the information technology’s prospect will next turn to results from Tata Consultancy Services IN:532540 -3.07% due on Thursday.

The banking sector, also a key component for the market’s overall earnings growth, fell 1% , with investors awaiting quarterly results earnings from HDFC Bank Ltd.IN:500180 -1.77% later Monday.

Marketwatch

Weekly Markets: Sensex drops on Infy nos, inflation data

Markets paused the last three week's rally as traders took to booking profits. Infosys' dissapointing earnings estimate did nothing to help the sentiments which were down with crude oil prices and inflation at high levels.

The holiday shortened week saw the Sensex drop 65 points to 19,386. The index opened the week at 19,383 and touched a high of 19,737 on Wednesday - Tuesday being a holiday on account of Ram Navami. Thursday market stayed shut for Ambedkar Jayanti. On the last trading day of the week index plunged after IT Major Infosys came out with its quarterly numbers.

Industrial production rose 3.6% in February 2011. However, market was expecting IIP growth to be at 4.8%. Manufacturing output rose an annual 3.5% in February 2011. January's industrial output annual growth rate was revised upwards to 3.9% from 3.7%.

The wholesale price index rose 8.9% in March 2011, higher than 8.3% rise in February 2011 and also ahead of market expectations.

Crude oil continued to hover around higher levels. High oil [prices have raised concerns of a widening current account deficit and higher oil subsidy bill.

Infosys reported marginal rise of 2% in its consolidated net profit at Rs 1,818 crore for the fourth quarter ended March 2011 on sequential basis. The company had reported a net profit of Rs 1,780 crore in the December quarter. For the quarter ending June 30, 2011 the company expects revenue to be in the range of Rs 7,311 crore and Rs 7,382 crore; growth of 18.0% to 19.1% y-o-y.

"The results were tad below expectations. At Rs 3306, if Infosys had delivered 25-30% topline and 15-20% bottomline growth, we could have seen more upside on the stock. The scrip is down 7% due to profit booking," said Gaurang Shah, AVP, Geojit BNP Paribas Financial Services.

Infosys was the biggest loser among Sensex stocks, plunging 7.3% to Rs 2,989. Other IT stocks dropped. Wipro tumbled 3.5% to Rs 450. TCS ended flat at Rs 1,190. Other losers included Core Projects, Oracle Financial Services and Tech Mahindra.

IT index, as a whole, slipped 4.5% to 6,259. BSE realty and metal indices dripped 1-2% each.

Meanwhile, FMCG index surged 2% to 3,713. Bankex gained 0.6% in the week to end at 13,383.

Among banking stocks, ICICI Bank and HDFC Bank ended on a flat note at Rs 1,101 and Rs 2,360, respectively. However, Federal Bank rallied 5% to Rs 445. Yes Bank and IndusInd Bank jumped 3% each. Canara Bank, Kotak Mahindra Bank and Bank of Baroda were up 2-3% each.

www.business-standard.com

Mohandas Pai resigns from Infosys Technologies

In what comes as a major setback to Infosys Technologies, board member TV Mohandas Pai has resigned, the company said in its press release while announcing the fourth quarter earnings. Pai has requested the board to relieve him after the company's AGM on June 11.

"We all know that he is taking this painful decision, since he has much bigger projects in the horizon—nation building," NR Narayana Murthy chairman and chief mentor of the company said in the release.

"Mohan has been an early adopter and a keen anchor builder of Infosys. It is difficult to imagine Infosys without Mohan’s passion, commitment, joie-de-vivre and intellect," Murthy said.

Mohan joined Infosys in 1994 and has served as a member of the board since May 2000. He was the chief financial officer from 1994 to 2006. In 2006, he voluntarily demitted the office of CFO to lead efforts in the areas of human resources and education and research.

After Nanadan Nikelani's resignation, this is the second biggest exit of a senior member from the company. Add to this K Dinesh, one of the founder members and a member of the board, who has chosen to retire. He was head of quality, information systems and the communication design group.

India's second largest IT services exporter Infosys reported a 2.15% growth in its fourth quarter net profit at Rs 1,818 crore versus Rs 1,779.8 crore in Q4FY10. Its standalone revenues came in at Rs 6,668 crore. A CNBC-TV18 poll saw net profit at Rs 1856 crore and revenue at Rs 7447 crore.

The board of directors will meet on April 30, 2011 to finalise on the new chairman post Murthy's retirement in August 2011.

www.moneycontrol.com

Sensex, Nifty decline 0.3% this week

Indian equity benchmarks ended with moderate loss this week. The 50-share NSE Nifty was down 17.45 points or 0.3%, to close at 5,824.55 and the 30-share BSE Sensex slipped 64.63 points or 0.3%, to end at 19,386.82.

However, the broader indices were marginally in the green - the CNX Midcap Index was up 0.3% and BSE Small Cap Index up 0.5%.

The BSE Auto Index was up 0.6%, Bankex up 0.7% and Capital Goods Index up 1.8%. However, Metals Index was down 0.6% and Realty Index down 2.1%.

Information Technology Index cracked 4.5% on disappointing EPS guidance from Infosys for FY12.

Infosys has guided for an earnings per share of Rs 126.05-128.21 for 2011-12, while many analysts had projected an EPS of close to Rs 145-150.

Analysts say they are likely to lower their 2011-12 (April-March) earnings expectations for Infosys Technologies since the guidance is way below what they were expecting.

Infosys plunged 7.3%. DLF tanked 5.8% and Siemens India tumbled 5%. JSPL, Wipro and Cairn India were down 2-4%.

However, Hero Honda surged 10.6% as the company declared a dividend of Rs 70 a share. Jaiprakash Associates shot up 5.1%.

ITC, Bharti Airtel, L&T and Kotak Mahindra Bank gained 3-4%.

In midcap space, Finolex Industries went up 10.4%,. Jubilant Life Sciences, Sterlite Tech and IndusInd Bank gained 3.5-5%.

However, Aftek, Voltas, Gammon India and Rolta were down 3-4%.

www.moneycontrol.com

Indian inflation rises to nearly 9%

India's inflation unexpectedly accelerated in March to nearly nine percent, data showed on Friday, piling pressure on the central bank to be more aggressive as it battles to tame price rises.

Annual headline inflation, measured by the wholesale price index, India's main price measure, leapt to 8.98 percent in March from 8.31 percent the previous month, stoked by higher food, fuel and manufacturing costs.

The figure was far above market expectations of 8.30 percent and the highest of any major Asia-Pacific economy.

The commerce ministry also sharply revised upwards January's inflation reading to 9.35 percent from 8.23 percent earlier.

"With inflation numbers of this magnitude, especially core inflation, the Reserve Bank of India (RBI) may feel compelled to be a bit more aggressive next time around," said HSBC chief India economist Leif Lybecker Eskesen.

India released the data on the same day China revealed that inflation in the world's second-biggest economy had soared to a 32-month high.

The Asian Development Bank warned last week that controlling inflation was the region's "top priority" as strong growth, turmoil in the Middle East and Japan's nuclear crisis drive up food and oil prices.

The RBI has raised its key policy rates eight times since March 2010, making it the most hawkish central bank in Asia.

"Inflation is the most important short-term problem," said Montek Singh Ahluwalia, deputy head of India's Planning Commission, who urged the RBI to use "all the flexibility" at its disposal.

Price rises are a major political headache for the embattled Congress party-led government, which is also reeling from a string of corruption scandals.

Poorer households, the backbone of the party's support, have been especially hard hit by inflation which is a traditional lightning rod for political discontent in the country of 1.2 billion.

Fuel and power prices climbed 12.92 percent while food rose 9.47 percent, the commerce ministry data showed.

Economists expect the central bank to hike rates again at its next meeting on May 3, even with recent data showing industrial output slowing sharply as a result of monetary tightening.

"Today?s inflation number cements the case for a hike at next month?s meeting," said Credit Suisse economist Robert Prior-Wandesforde.

Bank policymakers have sought to minimise the risks to economic growth by raising rates in quarter point steps, but economists now say it may move more boldly with a possible half a percentage point rise in May.

Ahluwalia warned high interest rates could derail the government's nine percent growth target for this year by slowing investment and consumption.

"We may not hit nine percent," he told reporters.

Economists now say inflation, initially fuelled by spiralling food prices, has spilled over into the general economy, pushing up wages and other costs.

Asian economies including South Korea, China, Indonesia and Taiwan are all battling inflation pressures with global prices of crude oil riding at $122 and other commodities costs rising.

China reported Friday 2011 first-quarter growth slowed slightly to 9.7 percent while inflation hit 5.4 percent year-on-year in March -- its highest since July 2008.

http://www.google.com/hostednews/afp/copyright?hl=en