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Fitch Ratings on Tuesday downgraded realty major Unitech Limited's (Unitech) Long-term rating to 'BBB(ind)' from 'A-(ind)' (A minus) an maintains its ngative long-term rating outlook.
The downgrade reflects the ongoing delay in the completion of asset sales, and its impact on Unitech's ability to service its short-term debt obligation, according to a release by the company.
Fitch on 11 November 2008 had said that it expected the asset sales to be completed by December 2008, and noted that the unsuccessful completion of the projected asset sales would trigger a ratings downgrade.
The Negative Outlook reflects Unitech's reduced liquidity position, as the company is facing significant maturities during the next six months (principal amount around INR27bn) and the ensuing substantial refinancing risk. The liquidity risks are accentuated by the tightness of the credit environment.
The Outlook also reflects potential further negative pressure on cash flow generation and credit metrics, stemming from a more adverse real estate sector environment than previously envisaged.
Following this rating action, Fitch also downgraded single certain structured products loan sell down transactions where the ratings of the pass through certificates (PTCs). The downgrade of the PTCs follows the downgrade of Unitech Limited's National Long-term and Short-term ratings to 'BBB(ind)' from 'A-(ind)' (A minus(ind)) and to 'F3(ind)' from 'F2+(ind)', respectively.
Source : EconomicsTimes
Source : EconomicsTimes
Wipro is reported to buy Citi's India tech arm for USD 127 million for cash. Citi Tech Services is an India-based captive provider of IT services and solutions and its revenues were approximately USD 80 million in CY08. Wipro, Citi will sign a master service agreement for six years. The agreement provides for delivery of at least USD 500 millon in service revenue over the period of the contract. The transaction is expected to be closed by March 2009.
Citi has 1,650 employees and Wipro will absorb all 1,650 employees of Citi Tech Services.
Jagdish Rao, Citi Tech Head said Citi Tech Services has close to 2000 people with revenues close to USD 80 million this year. According to him, integration with Wipro will provide a larger suite of services and help drive productivity and scale.
Girish Paranjpe, Joint CEO, Member of the Board, Wipro said, "This captive unit in India, they have set it up with a huge amount of thought process and created a world class facility. When Citi was looking to scale up this facility, they figured that it made more sense for somebody like Wipro to help them do this, which is why they asked us to take this unit over, and then help them scale this both in terms of the range of services that get provided and also the sophistication and the productivity that we can give by leveraging our processes and our experience elsewhere. So, it is a great opportunity for both – Citi to get the benefit of Wipro’s scale and flexibility as well as capacity, and for Wipro to get the benefit of deep banking expertise that comes out of this unit, and experience of managing risk and compliance, which is very key in the banking situation."
Soumitro Ghosh, Senior VP- Finance Solutions, Wipro said that the company is trying to see how it can bring in synergy between the BPO business as well as the application business. This will give a huge amount of synergistic play because Wipro would be Citi’s strategic partner practically on the infrastructure side, application side as well as on the BPO side, he added.
Here is a verbatim transcript of Soumitro Ghosh’s comments in a press briefing.
From a Citibank perspective, it is important from three-four perspective. It is important from a cost perspective where huge amount of cost will get taken out because even though Citi had really been outsourcing this piece of work to a captive, typically the captive has its own challenges. So we will be able to execute the infrastructure management business on a third party basis which is supposed to be far more productive. Plus all the new business which Citi’s is going to outsource – that is going to be done on a far more productive fashion.
Second is variablising the cost, so today there is a ramp up, ramp down situation, we can obviously help in variablising that entire cost. Third is that we can offer this with perhaps a different set of facilities managed services basis. Fourth is that we recently also acquired from Citi a fairly large amount of BPO business. So we are trying to see how we can bring in synergy between the BPO business as well as the application business. This will give a huge amount of synergistic play because we would be Citi’s strategic partners practically on the infrastructure side, application side as well as on the BPO side.
Here is a verbatim transcript of Soumitro Ghosh’s comments in a press briefing.
From a Citibank perspective, it is important from three-four perspective. It is important from a cost perspective where huge amount of cost will get taken out because even though Citi had really been outsourcing this piece of work to a captive, typically the captive has its own challenges. So we will be able to execute the infrastructure management business on a third party basis which is supposed to be far more productive. Plus all the new business which Citi’s is going to outsource – that is going to be done on a far more productive fashion.
Second is variablising the cost, so today there is a ramp up, ramp down situation, we can obviously help in variablising that entire cost. Third is that we can offer this with perhaps a different set of facilities managed services basis. Fourth is that we recently also acquired from Citi a fairly large amount of BPO business. So we are trying to see how we can bring in synergy between the BPO business as well as the application business. This will give a huge amount of synergistic play because we would be Citi’s strategic partners practically on the infrastructure side, application side as well as on the BPO side.
Source : MoneyControl.com
Indian Markets opened its day with nagative data and contined its closing on negative side. Sensex opened with a loss of 106.78 points, at 9,821.57 with a negative clue over Asian Indices. Markets continued its southward journey through-out the day southern journey in the absence of any positive news. An intraday recovery was witnessed on a number of occasions on expectations of a further rate cut by the central bank and on a likely second government stimulus package for the economy. The indices get more pressure from Real Estate and Capital Goods ( CD ) sector as well as from index stock JP Assos and Tata Motor. Sell-off was seen across the board in today's trade and even midcap and small cap stocks also followed the similar trend. Market participants believes this is a normal volatility ahead of F&O expiry of December series ( as December series will expires on 24th December, 2008). The Sensex ended the day with a loss of 241.60 points, or 2.43% at 9,686.75 after touching a high of 9,838.38 and a low of 9,643.56. The broad-based NSE Nifty declined 70.65 points, or 2.32% at 2,968.65 after hitting a high of 3,040 and a low of 2,957.05. The BSE Mid-Cap index fell 2.51% while the BSE Small-Cap index dipped 2.51%. Both the indices outperformed Sensex.
Sectoral : There was no place to hide for bulls all sectoral indices closes their trade in red. Consumer Durable index was the worst hit, falling 119.58 points or 5.81% and closed at 1937.87, followed by realty index, which was down 122.26 points or 4.84% and closed at 2406.38. Rcom was the only gainer in Index and on Nifty adding 1.24% and closes at 226.15 on sensex. On the loosing side Satyam and JP Associate were the top losers among the sensex stocks, plummeting 13.55% and 10.18%.
Tech Update : Technology major Satyam got another dose of bad news as reports from Fox News said that the World Bank has banned the company from providing software services to the bank for eight years due to alleged malpractices later this news was confirmed by World Bank Security Manager. One should note that Satyam is the same company who had been awarded by World Council for Corporate Governance for "Golden Peacock Global Award for Excellence in Corporate Governance" with Ola Ullsten. Also, it must be noted here that, Satyam's CMD Mr. Ramalinga Raju was recognised as "Entrepreneur of the Year Award 2007". But this company is on radar after the MAYTAS deal. This deal dampned the company image in front of Investor and as well as Institutional Clients. The stock plunged 13.5% in todays trade. Some news also circulating on market that Satyam top and founder Ramalinga Raju had resigned from the board. As per unconfirmed reports, Raju has put in his papers and he awaiting the company board's decision on the issue. Rupee depreciated further against the dollar and closed at 48.76 as against yesterdays close of 48.02 .
Economy Review : In its mid-year review of the economy, the finance ministry today, 23 December 2008, said there is a considerable scope for monetary easing over the next six to 12 months and an aggressive monetary policy may be necessary if the global economic turmoil continues to adversely affect manufacturing.
Reliance Industries: India's largest private sector company by market capitalization and oil refiner Reliance Industries (RIL) fell 1.92% to Rs 1,260 on recent reports it may face pressure from the US to stop selling gasoline to Iran. As per reports, eight American lawmakers have asked the Export-Import Bank of United States (Ex-Im US) to immediately suspend all financial assistance to Reliance Industries (RIL) till it agrees to stop selling gasoline to Iran.
In a letter written to Ex-Im Bank president James Lambright, the American lawmakers stated that RIL is a major supplier of gasoline to Iran which is detrimental to the national security interests of the US and the loan is in direct collision with its foreign policy on Iran.
Banking
Banking stocks fell as the recent rate cuts raised concerns about a fall in net interest margin (NIM). India's largest commercial bank State Bank of India (SBI) fell 0.87%. On Saturday, 20 December 2008, SBI slashed its lending rate by 75 basis points, to be effective from 1 January 2009. India's second largest private sector bank by net profit HDFC Bank slipped 4.39% as its American depository receipt (ADR) fell 4.02% on Monday, 22 December 2008.
India's largest private sector bank by net profit ICICI Bank slashed 4.27% as its American depository receipts (ADR) dipped 3.8% on Monday, 22 December 2008. Its advance tax payment declined 6% to Rs 470 crore in Q3 December 2008 over Q3 December 2007.
India's largest home loan lender by operating income Housing Development Finance Corporation (HDFC) fell 1.32% after it cut its retail lending rates by 50 basis points, effective 22 December 2008. HDFC announced the rate cut after trading hours on Friday, 19 December 2008.
Asian Markets : Asian Markets closed in negative for third consecutive day, including India all asian markets endes on red. Japan Nikkei was closed today due to national holiday. Hang Seng closed at 14,220.79 losing 401.60 points or 2.75% . Straits Times closed at 1,724.54 losing 21.09 points or 1.21% . Shanghai Markets ended its day at 1897.22 shedding 90.53 points.
China's oil demand shrunk for first time in 3 years in November. Hyundai Motor fell 10% after Toyota predicted first operating loss in 71 years.
European Markets : Euro markets closed flat with mixed clues. They started trading on positive zone and remain strong throught - out the session but at the time of closing session they moved into Flat to red on the news of US GDP contracts to 0.5% and lower new home sales data which is at 17 yr low. Euro range also expecting second stimulus package from Euro biggest economy Germany. London Based FTSE 100 index closed in green with a gain of mere 6.82 points or 0.16% and closes at 4,255.98 . German based DAX index closed in red at 4,629.38 with a loss of 9.64 points or 0.21% . France based CAC 40 index also closed in red at 3,128.41 with a loss of 22.95 points or 0.73%.
American Markets : US markets opened on higher nod but cant sustain that rally. As US new home sales data released and it is at 17 yr low. US GDP also contractes to only 0.5% . The report suggest that recession that began a year ago is now sinking definitively into the official U.S. economic data. Existing-home sales plunge 8.6%, and price slide is steepest ever. US vice - president Biden says that Obama Administration, Congress Close to Accord on Stimulus Plan . This help market to open higher but not able to hold its ground.
Open a Brokerages A/c with us in minimum brokerages and charges . Funding and Leverage will be provided by us . Call to know more 9933964704 or email trade@tradingideas.in
Trade Performance for 23 - 12 - 2008
- Buy JSWSTEEL @ 223.50 sl 222.50 sl 227 / 231 - Exited at 228. Made profit of Rs. 4.50/share. If traded with 200 shares, then profit of Rs. 900/trade.
- Buy Ranbaxy @ 222 sl 219.50 tgt 226 - Exited at 225. Made profit of Rs. 3/share. If traded with 200 shares , then profit of Rs. 600/trade.
- Short HDIL @ 154.70 sl 156 tgt 152 / 149 - Exited at tgt1. Made profit of Rs. 2.70/share. If traded with 250 share, then profit of Rs. 675/trade.
- Buy Satyam @ 154 tgt 160 sl 151 - Sl Triggred. Made loss of Rs. 3/share. If traded with 200 share , then loss of Rs 600/trade.
- Buy Reliance Comm @ 216 sl 214 tgt 218 / 220 - Exited at tgt1. Made profit of Rs. 2/share. If traded with 250 shares, then profit of Rs. 500/trade.
- Buy Infosys @ 1189 sl 1176 tgt 1200 / 1215 - SL triggred . Made loss of Rs. 13/share. If traded with 50 shares , then loss of Rs. 650/trade.
Profit : JSW Steel - Rs. 900/trade , Ranbaxy - Rs. 600/trade , Short HDIL - Rs. 675/trade , RCom - Rs. 500/trade .
Loss : Satyam - Rs. 600/trade , Infosys - Rs 650/trade.
Approx Profit : 1425 / trade.
****** All Qty mentioned here is our suggested qty, that we mentioned in our Trading SMS with each call..
Links to This Week Performance Report ( 22-12-2008 to 26-12-2008)
Trade Performance for 22-12-2008 | No Call - We were Busy
The Securities and Exchange Board of India (SEBI) has passed consent orders against brokerages Sam Global Securities and Globe Capital Market for their conduct on May 17, 2004 when the benchmark Sensex lost more than 11% or 565 points. The brokerages have remitted a sum of Rs 15 lakh each towards settlement charges.According to SEBI, prima facie evidence "revealed that certain entities including Sam Global Securities and Globe Capital Market had portrayed bearish outlook to their clients through SMS's and e-mails".
The market regulator further adds that "the applicants also committed various other irregularities such as trading through unregistered sub-broker, non-compliance with the code of conduct for stock brokers, non adherence to KYC norms and unauthorized distribution of trading terminals, etc".
According to the SEBI release, the applicants, vide letters dated September 24, 2007 and January 31, 2008 proposed settlement of the said proceedings through a consent order.
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