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According to latest report released by govt. body, in first fiscal stimulus package one there was Rs 10,000 crore of tax free bonds for India Infrastructure Finance Company Limited (IIFCL) and that has now been increased to about Rs 30,000 crore. There is a timeline of two years, 18-months and refinancing of Public-Private Partnership (PPP) projects etc.
IIFCL was incorporated on January 5, 2006, 2006, under the Companies Act 1956, as a wholly Government owned Company with an authorized capital of Rs. 2000 crore and paid-up capital of Rs. 1000 crore. Besides, the resource-raising program of the Company would have sovereign support, wherever required.
Govt. said, In order to give a boost to the corporate bond market, FII investment limit in rupee denominated corporate bonds in India has been increased from $6 bn to $15 bn. The most beneficiary sector of this package will be infrastructure and real estate companies, which are facing liquidity crunch.
The most disappointment outcome of this package was 20 lk cap, Hosing Sector and Public Sector banks both were asking for increasing 20 lakh cap to minimum 30 lakh cap that was been introduced in last fiscal package. But Planning Commission Deputy Chairperson Mr. MS Ahluvalia and the Finance Secretary said nearly 94% of home loans sanctioned are below the Rs 20 lakh bracket so it will not be hiked in this pack but they give a hint to increase it in next package.
To facilitate access to funds for the housing sector, the 'development of integrated townships' would be permitted as an eligible end-use of the ECB, under the approval route of RBI. NBFCs, dealing exclusively with infrastructure financing, would be permitted to access ECB from multilateral or bilateral financial institutions, under the approval route of RBI. Besides, ceiling on interest rates for such overseas borrowings has also been removed.
Credit targets of Public Sector Banks are being revised upward to reflect the needs of the economy in the present difficult situation. This will ensure flow of credit to the industry. The government will also closely monitor, on a fortnightly basis, the provision of sectoral credit by public sector banks.
For the export sector which has been hit by the recession in US economy, the government has extended the Duty Entitlement Passbook Scheme till December 31, 2009. Besides, duty drawback benefits on certain items including knitted fabrics, bicycles, agricultural hand tools and specified categories of yarn are being enhanced. These changes will take effect retrospectively from September 1, 2008. EXIM Bank which has obtained from RBI a line of credit of Rs.5000 crore and will provide pre-shipment and post-shipment credit, in rupees or dollars, to Indian exporters at competitive rates.
To give a leg-up to steel and cement sectors, the government has brought back countervailing duty on TMT bars and structural cement. These duties were exempted to provided to contain inflation. Full exemption from basic customs duty on zinc and ferro alloys, which was also provided to contain inflation, is also being withdrawn.
To boost the housing sector, the centre will work with state governments to encourage them to release land for low income and middle income housing schemes.
To boost the automobile sector, states, as a onetime measure up to June 30, 2009, will be provided assistance under the JNNURM for the purchase of buses for their urban transport systems. Accelerated depreciation of 50% will be provided for commercial vehicles to be purchased on or after January, 2009 up to March 31, 2009.
The government is closely monitoring its spending to expedite the pace of expenditure for all schemes and programmes. Government will set up a fast track monitoring committee to ensure expeditious approval and implementation of central projects and chief ministers are being advised to do the same.
An official statement said the measures outlined above taken together with steps taken earlier constitute a substantial counter-cyclical stimulus in the current year and added that the government does not envisage any further measures in the current fiscal year.
"However, Government is aware that the measures required to provide an economic stimulus to the economy have to extend beyond the current financial year. Towards this end, it is finalizing Plan and Non-Plan expenditure that will be required in the next financial year to maintain the tempo," it said.
The Plan for the next year will include proposals for recapitalization of the public sector banks of the order of Rs 20,000 crore over the next two years. This will help to ensure that the banking system will not suffer from capital adequacy constraints in order to provide credit growth needed to sustain the economic momentum in 2009-10.
The liberalizing of the ECB route has been a long standing demand of real estate developers, so they are clearly happy whether the current market scenario will actually make this a cosmetic change or do a lot more than that, the question mark still remains but clearly happy on that move.
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.
The government announced FISCAL STIMULUS PACKAGE:
Major tax cuts across the board to boost demand and allocated additional funds and incentives for exports, housing, textile and infrastructure to stimulate the economy due to global financial crisis.The package, coming on the back of fresh REPO and Reverse REPO cuts announced by the RBI on Saturday, includes a four per cent(4%) cut in ad-valoram duty across the board, to boost additional spending, besides enhanced credit for exporters, along with a Rs 10,000 crore mop up for India Infrastructure Finance Company.Import duty on Naptha for use in power sector as well as export duty on iron ore to be eliminated."In order to provide a contra-cyclical stimulus via plan expenditure, the government has decided to seek authorisation for additional plan expenditure of up to Rs 20,000 crore in the current year," the statement said, adding the total spending programme in the four months ending March was expected to be Rs 300,000 crore.As part of efforts to boost the housing sector, the public sector banks would shortly announce a package for home loan borrowers in two categories -- up to Rs five lakh and between Rs 5-20 lakh, the statement said, adding that additional measures would be taken, as necessary, to promote an accelerated growth trajectory.Attaching special significance to infrastructure development, the government authorised India Infrastructure Finance Co Ltd (IIFCL) to raise Rs 10,000 crore through tax- free bonds by March 2009 and said it would be permitted to raise further resources. this initiatives would support a PPP (Public-Private Partnership) programme of Rs 100,000 crore in the highways sector,"
Paying special attention to exports, the government decided to provide an interest subvention of two per cent up to March 2009 for pre and post-shipment export credit for labour-intensive exports like textiles, leather, marine products and SME sector. The concession is subject to a minimum rate of interest.Besides, it would provide an additional Rs Rs 1,100 crore for full refund of terminal excise duty/CST and another Rs 350 crore for export incentive schemes and a back-up guarantee of Rs 350 crore to ECGC (Export Credit Guarantee Corporation) for providing guarantee for exports to difficult markets and products.
The government plans to allocate the money, equivalent to 5 percent of gross domestic product, by March, it said in a release in New Delhi today. The Reserve Bank of India yesterday cut interest rates for the third time in less than two months. India said on Sunday it will seek approval for extra spending worth 200 billion rupees ($4 billion) as part of a plan to boost the economy and help it counter the global slowdown.
The government also announced a series of measures including duty cuts on several products, plans to boost home loan growth and allowing a state-run firm to issue tax free bonds worth 100 billion rupees to fund infrastructure projects.
COMMENTS:
INDRANIL PAN, CHIEF ECONOMIST, KOTAK MAHINDRA BANK, MUMBAI:
"Obviously the monetary policy was not enough to provide a boost to the economy. The reduction in Cenvat will help boost consumption demand.
"The overall package is geared towards helping producers especially the export sector to tide over the difficult time of the global credit crunch.
"While tax reductions can be effective immediately, for the overall package to work itself into the economy may take some time."
``This is huge and it reflects the seriousness of the global economic crisis,'' said Sonal Varma, a Mumbai-based economist at Nomura International Plc in Mumbai.``This also shows there is nothing like decoupling in an integrated world - India is getting affected by both global trade and financial channels.''
The unprecedented spending comes after Mumbai, India's financial capital, came under attack from terrorists last month and as a global credit crisis cuts off access by Indian companies to international funds.
SARANG WADHAWAN, MANAGING DIRECTOR, HDIL :
"What the RBI announced yesterday was good and the government package hasn't got much relevance to commercial real estate. We do feel that the housing loan subsidy towards 2 million rupees budget (houses) works.... I think a direction from the RBI towards banks to start lending, that will actually ease real estate. For us, none of our flats run in the 2 million rupees budget. Unless you're talking of really low income housing it really doesn't provide much...I think commercial real estate needs a lot more impetus.
SHERIAR IRANI, CO-RESEARCH HEAD, JM FINANCIAL :
"On the face of it the amounts don't seem to be very large, especially that for infrastructure. I think it will provide a boost to individual sectors such as textile, gems etc. The market may react in a sector-wise way. I don't see the market reacting as a whole."
Global Impact :
Governments around the world are spending to revive growth. China unveiled a 4 trillion yuan ($582 billion) package in November and President-elect Barack Obama plans to make the ``single largest new investment'' in roads, bridges and public buildings since the 1950s to lift the sagging U.S. economy.
India, where domestic consumption makes up 60 percent of the GDP, is facing the impact of the global recession because its integration with the world economy has been rising.
The loss, equal to almost half of the Frankfurt-based company's second-quarter revenue from equity sales and trading, is a black eye for Richard Carson, who was named global head of equity derivatives in May.
Deutsche Bank, led by Chief Executive Officer Josef Ackermann, may post its second quarterly loss of the year this week on writedowns and slowing revenue from investment-banking, according to the median estimate of six analysts. At the securities unit, co-headed by Anshu Jain, equity sales and trading revenue sank 49 percent in the first half as customers shunned structured products. The credit-crisis spread to equity markets in the third quarter, and the Standard & Poor's 500 Index is now heading for its worst month since 1938.
``In a volatile environment, anyone with a large inventory is vulnerable to surprising moves,'' said Matthew Clark, a London-based analyst at Keefe, Bruyette & Woods Ltd. ``We know Deutsche has had some troubles with equity derivatives in previous quarters.''
Carson, 36, reports to Yassine Bouhara, the bank's global head of equities. Carson didn't return calls to his London office and cell phone seeking comment. Officials at the bank in London and Frankfurt declined to comment.
Deutsche Bank dropped 12 percent to 26.55 euros as of 3 p.m. in Frankfurt trading. The shares have slid 70 percent this year, paring the bank's market value to about 15 billion euros ($19 billion).
No Bonuses
The stumble in derivatives is one of the biggest in sales and trading since Jain and Michael Cohrs, 50, took over the investment bank in 2004. Two years later, the bank's sales and trading were dragged down by losses from trading stocks for its own account. That year, then-Chief Financial Officer Anthony Di Iorio said the bank lost less than 100 million euros trading stocks for its own account in the second quarter.
Ackermann, 60, the highest-paid executive within Germany's top 30 companies, opted to forgo his 2008 bonus. Cohrs and Jain, 45, also agreed to go without the year-end payouts.
Volatile markets are curbing revenue at some of the world's largest banks. New York-based Citigroup Inc. said on Oct. 16 revenue from equity trading fell 54 percent in the third quarter on losses in convertibles, holdings of government sponsored enterprises and proprietary trading. Credit Suisse Group AG said last week 1.7 billion Swiss francs ($1.5 billion) of trading losses contributed to its second unprofitable quarter this year.
Revenue Declines
Deutsche Bank said in July second-quarter revenue from equity sales and trading dropped to 830 million euros from 1.4 billion euros in the same period a year earlier as demand for equity derivatives waned.
``The dislocations on capital markets in September must have had a catastrophic impact on the business'' at Deutsche Bank, Dirk Becker, a Frankfurt-based analyst at Kepler Capital Markets, said in a note to investors.
Deutsche Bank's securities unit, known as corporate banking and securities, accounted for almost half of the company's total profit in 2007.
Lehman Brothers Holdings Inc.'s bankruptcy on Sept. 15 roiled equity and debt markets and forced governments from Washington to Berlin to shore up banks' capital. Deutsche Bank has booked markdowns of 7.3 billion euros since last year, and banks and brokers worldwide have reported credit losses and writedowns of more than $670 billion since the collapse of the U.S. subprime-mortgage market.
WASHINGTON: The US government is expected to shortly announce a list of about 20 banks in the next round of companies receiving capital injections under a $700 billion rescue package, according to a source familiar with the U.S. Treasury Department's thinking.
The Treasury in recent days has detailed a plan to directly inject $250 billion of capital into U.S. banks in exchange for preferred shares. Nine of the largest U.S. banks were essentially arm-twisted last week into signing on for the first $125 billion in capital infusions.
Neel Kashkari, Treasury's interim manager for the rescue program, told lawmakers on Thursday that more banks are expected to receive capital infusions within a few weeks, meaning that Treasury is expected to announce those banks in the coming days.
The announcement of an additional 20 to 22 banks receiving capital is expected as soon as today, the source said.
Data compiled from Economics Times
NEW YORK: The Nasdaq Stock Market's decision to suspend one of its own listing rules comes as an avalanche of shares tumble below the $1 threshold, and is intended to avoid the mass delistings that followed the burst of the dot-com bubble.
Last week, parent company Nasdaq OMX Group filed a request with the US Securities and Exchange Commission to temporarily suspend the minimum price requirement that protects listed companies from becoming penny stocks.
It said in the filing that "US and world financial markets have faced almost unprecedented turmoil," which has undercut the share prices of companies that would otherwise remain suitable for continued listing.
The SEC endorsed the suspension, which went into effect on Friday and will end Friday Jan 16. Magnus Bocker, Nasdaq's president, told media the measure is "a very natural thing when the market is in disarray like it is right now." "We saw the same things following Sept 11. There is so much uncertainty in the equity markets right now for so many companies, that focusing short-term on that rule is just the wrong focus," he said in an interview.
Nasdaq, traditionally home to technology stocks but now more diversified, said in the filing that the number of stocks falling below $1 has increased "dramatically" from last year, particularly this month. At the end of September, 227 securities were penny stocks, up from 64 at the same time last year, the exchange said.
By Oct 9, the number had jumped to 344. Among the Nasdaq's new penny stocks, satellite radio company Sirius XM Radio Inc said it is considering a reverse stock split, which would double its share price while halving the number of shares.
On the rival New York Stock Exchange, drugstore chain Rite Aid Corp, retailer Circuit City Stores Inc, and Internet-based calling firm Vonage Holdings Corp all recently dipped below the $1 level. They now trade on NYSE's small-cap Arca platform.
Glenn Tyranski, senior vice president of financial compliance at NYSE Regulation, the arm's length regulatory arm at exchange parent NYSE Euronext, said about 20 listings are below the minimum price requirement. But NYSE is not now considering suspending its price requirement, he told media. "It's more than we've had previously, but we don't have that wave of people that are tripping the (requirement) yet."
Another crisis, another suspension
While NYSE has never suspended its price requirements, Nasdaq did so shortly after the Sept 11, 2001 attacks on the United States, in an effort to keep plunging stocks on the public market. That suspension also came amid the stock market downturn caused by tumbling tech stocks, or the bursting of the "dot-com bubble," which swelled to its maximum size in 2000.
Scores of Internet companies were wiped out over the next two years, badly shaking the tech-heavy Nasdaq. Although the current crisis is centered on the financial sector, the exchange wants to avoid a similar exodus of listings, from which it derives about 16 percent of overall revenue.
Diego Perfumo, analyst at Equity Research Desk, a Connecticut-based advisory firm specializing in exchanges, said the rule suspension protects companies with "sound business models that are trading below their fundamental value."
"This measure removes additional selling pressures on the stock from institutional investors that have a positive view of the long term prospects but are only allowed to invest in 'listed' companies," Perfumo said. As of Sept 30, Nasdaq had delisted about twice as many stocks as it had in the same period last year, according to data from the exchange. The two dominant US exchanges have slightly different price requirements.
On the larger NYSE, a listed companies whose average closing price dips below $1 in the last 30 days receives a warning that it must boost its share price within 6 months or face delisting. On the Nasdaq, companies receive the warning when they close below $1 for 30 consecutive days. After the suspension, Nasdaq said it would reevaluate the share prices of its listed companies based on Jan 19, 2009 data.
Date Fetched from Economics Times
Country's largest private sector lender ICICI Bank filed a complaint against some brokers and websites that were creating panic among depositors and shareholders by spreading rumours about the financial health of the bank.
The complaint filed before Additional Commissioner of Police Economic Offense wing of Mumbai Police said that certain people were acting in concert to spread ‘malicious rumours’ through various media to gain financial benefits by hurting the bank reputation.
Earlier, The U.K. government last week said it would invest at least 50 billion pound ($87 billion) to recapitalize Royal Bank of Scotland Group Plc, Barclays Plc and at least six others. Reports said Edinburg based RBS , market cap of 11.9 billion pounds, seeks 10 billion pound help from Investor and UK Government. A similar move is taken by Barclay;s Plc who asks for 3 billion pound cash call. U.K. Treasury officials have been working with the banks on the program and tomorrow will begin outlining details of a related plan to guarantee about 250 billion pounds of interbank loans though an insurance system.
The move would make the government the biggest shareholder in at least two banks, HBOS and Royal Bank of Scotland, the newspaper said on its website. It did not give a named source for its information.
The Sunday Times said the bank rescue could leave the government owning 70 percent of HBOS and 50 percent of Royal Bank of Scotland, and as a result it could take board seats at both banks and exercise control over future dividend payments.
Noted that British Finance Minister Alistair Darling, attending a G7 finance ministers' meeting in Washington, said on Saturday the government was to give more details early this week about its already announced 400 billion pound banking rescue plan.
The package of measures included a 50 billion pound cash injection, guaranteeing interbank lending by 250 billion sterling to help unfreeze wholesale markets, and extending a Bank of England scheme that swaps banks' risky assets for government debt to provide 200 billion pound of cash to the system.
In its bleakest forecast in years, the International Monetary Fund (IMF) said the world economy was set for a major downturn with the United States and Europe either in or on the brink of recession.The IMF said a still developing financial upheaval — the most violent since the 1930s — would exact a heavy economic toll as markets wrestle with a crisis of confidence and global credit is choked off.
In its report, the IMF warned that credit conditions would remain very difficult, restraining global growth prospects. “The world economy is now entering a major downturn in the face of the most dangerous shock in mature financial markets since the 1930s,” the IMF said in its World Economic Outlook.
In hindsight, the IMF said lax economic and regulatory policies probably allowed the global economy to “exceed its speed limit”. At the same time, market flaws, together with policy shortcomings, allowed stresses to build.
The IMF slashed its 2009 forecast for world growth to 3 per cent, which would be the slowest pace in seven years, from a July projection of 3.9 per cent, and warned that a recovery would be unusually slow. It said growth this year would come in at 3.9 per cent, a touch below the 4.1 per cent projected in July.
In its latest report, the global economic watchdog warned that emerging and developing economies were also slowing, and, in some cases to rates well below trend.
China and India will experience slower growth on weaker exports, but should continue to be supported by solid private consumption, according to the report.
Growth in China is likely to remain at 9.7 per cent this year and 9.3 per cent in 2009, compared with 11.9 per cent in 2007, the IMF said. India will grow at 7.9 per cent this year and slow to 6.9 per cent in 2009, it said. The Indian economy grew 9.3 per cent last year.
Elsewhere in Asia, domestic demand has softened as high food and fuel prices have weighed on consumption.
Bank of Japan(BOJ), a central bank of Japan pumped 4 trillion yen into money market after current turmoil in Global Market and yestraday fall of more than 950 points in Tokyo Stock Exchange key index Nikkei - 225.The Bank of Japan (BOJ) pumped a record 4 trillion yen into the Tokyo money market on Thursday for the 17th consecutive day of emergency operations to facilitate interbank borrowing. The BOJ conducted its biggest ever single-day liquidity provision in the money market as credit conditions remained tight amid concerns over the course of the market despite coordinated interest rate cuts by six central banks in North America and Europe on on Wednesday.
Overnight call money rates remained at around 6 per cent for foreign banks and around 0.55 per cent for Japanese regional banks, both above the BOJ's official target of around 0.5 per cent, even after the BOJ injected 2 trillion yen into the market in the morning. This prompted the central bank to provide an additional 2 trillion yen in the afternoon.
After a long wait Reserve Bank of India ( RBI ) finally slashed the CRR. On Monday , after market hours RBI breifed a meeting and announces 50bps down in Cash Reserve Ratio (CRR) to 8.50% from currently 9%. The change will come into effect from the fortnight beginning Oct. 11, 2008. As a result of this reduction in the CRR, an amount of about Rs 200 billion or 20000crores would be released into the system.
This measure is ad hoc, temporary in nature and will be reviewed on a continuous basis in the light of the evolving liquidity conditions, a government notification said. It may be recalled that on Sep. 16, 2008, the RBI announced several measures to ease the pressures on domestic financial markets brought on by external developments in response to the bankruptcy/sell-out/restructuring of some of the world`s largest financial institutions. Since then, there has been a sharp deterioration in the global financial environment with the number of troubled financial institutions rising, stock markets weakening and money markets strained. Central banks across the world have stepped up their liquidity operations, including coordinated actions, and some have banned/limited short selling of financial stocks.
These new developments have impacted domestic money and forex markets with a marked increase in volatility and a sharp squeeze on market liquidity as reflected in the movements in overnight interest rates and the high recourse to the liquidity adjustment facility (LAF). Active liquidity management is a key element of the current monetary policy stance.
The Reserve Bank will continue with its policy of active demand management of liquidity through appropriate use of the CRR stipulations and open market operations (OMO) including the MSS and the LAF, using all the policy instruments at its disposal flexibly, as and when the situation warrants, it added.
SEBI removes ban on issuance of P-Notes
Market regulator, Securities & Exchange of India (SEBI) has decided to lift curbs on the issuance of the Participatory Notes (P-Notes) by the Foreign Institutional Investors (FIIs) in a bid to revive the stock markets troubled by the global financial meltdown. SEBI Chairman C. B. Bhave after the Board meeting in Mumbai said that the regulator will remove the 40% restriction for issuance of Particpatory Notes for both cash and derivative segments.
SEBI has also decided to undertake a comprehensive review of FII framework in the backdrop of global developments triggered by ongoing global turmoil. The regulator had imposed the restrictions on the P-Notes in October last year amid excessive speculation.
The global meltdown in financial market has arrised a series of chain reactions in India, but the impact is not going to be as widespread as earlier imagined. Noted that global financial gaint Lehman ( which was supposed sometime , it can save any bankcrupt companies by giving his valuable advice.. ), but what happen to U.S forth largest bank now itself is on Sale !! yes on Sale... Lehman North America's Investment banking and brokerage is sold to Barclays, now Lehman India operation which is a mainly a back office operation of Lehman based in Mumbai has more than 2,000 employees and handle the investment bank’s information technology and R&D activities is also on sale. Japanese financial services major Nomura Holdings is all set to buy the Indian operations of fallen Lehman Brothers and is likely to retain nearly 2,000 strong workforce.
Similarly, American Insurance Group (AIG), - A Insurance Gaint of America and world is now taken over 70% by Federal Government for a sum of $85 bl. AIG has a business in India also, by special purpose vechicles namely TATA AIG. TATA holds 74% and rest 26% is with AIG. On concerns of TATA AIG future, there is TATA who have given thumbs up to all consumers who were worried about their insurance carried out through this special purpose vehicle (SPV).
Third, and even more significant, is the fact that the conservative approach to reforms in the financial services sector has ensured that the tremors of earthquakes in the US are being felt minimally in India.A meeting a few days ago of the regulators for the pension, insurance and other similar sectors concluded with a sigh of relief and pronouncement that slow and steady opening up of the economy has helped in the long run. This is not to say that capital account convertibility - or making the rupee freely tradable - will not take place. But probably as the regulators have pointed out, this can happen when the economy is at a more mature stage.
Ultimately, therefore, the big losers in the global financial crisis in this country are likely to be the iconic software firms like Infosys, Wipro and Tata Consultancy Services (TCS). Much of their business comes from the erstwhile giant investment banks and that could affect their profitability in the short term. In the medium-to-long term, however, these companies are likely to have greater resilience given their innovative approach in the past to hunting out new markets and customers.
The other area where worries still remain is the pullout of funds by foreign institutional investors from the country's equities and debt markets. The bourses have been showing considerable volatility ever since the news came in about the failure of Lehman and the domino-like effect on other investment banks.
While the Indian stock markets became volatile, they have not crashed as might have been expected initially. They now seem to be stabilizing as safety nets are being created for collapsed banks, like converting Goldman Sachs and JP Morgan into commercial banks while other banks are picking up some entities cheap like the takeover of Wachovia by Wells Fargo.
As far as the US and even Europe are concerned, the ramifications appear to be unending as the scenario is unfolding into the biggest banking crisis in 100 years. Financial institutions considered to have a rock-like stability including Merrill Lynch, Morgan Stanley, JP Morgan and the Lehman Brothers collapsed within days of each.
Some were rescued through various manoeuvres and only Lehman actually declared bankruptcy. Reports reaching here also indicate that many smaller banks are declaring insolvency in the US - a development not being taken note of by the international media which is focusing on the big fish. Thus average people in the US are facing severe hardship. No wonder then the battle is being described as one of Main Street vs Wall Street.
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After a long three years of Controversial talk on Indo - US Nuclear deal, U.S. Congree finally approved this deal on Wednesday. The motion get 86 votes in favour and 13 votes against the motion. One of the Congressman quoted on this deal " Historic Vote " and said this will form a lasting strategic alliance between the United States and the world's largest democracy. The agreement, which the Bush administration considers a significant foreign policy achievement, will open door for India's Civil Nuclear projects. This will end a drought or 'technology denial regime' of 34 year that India was facing ban from U.S and many Nuclear Power Supply countries from late 1974 ( Pokhran-1 ) after the first Nuclear Test. India-US Nuclear Deal Sparks Interest in Doing Business in India.
In last month India has agreed to open its civilian nuclear facilities to international inspection under the Nuclear Non proliferation Treaty, though its eight military nuclear plants would not be subject to scrutiny in NSG brifed meeting. This deal will open $150 billion market to devlope Nuclear Plants and maintain them for both Indian and American plus all devloped nation who have Nuclear facilities. Though the amount is large and will surely helped American companies who are facing cool off in heir home countries.
Bush praised the vote, saying the agreement "will strengthen our global nuclear nonproliferation efforts, protect the environment, create jobs and assist India in meeting its growing energy needs in a responsible manner."Ron Somers , President of Industries Association - A group of U.S. top 300 companies who are committed to a long term partnership with India, quoted "The benefits will be many and the impact profound, beckoning a new era in US-India relations."
"By enabling US-India civil nuclear cooperation, India not only joins the international nuclear non-proliferation mainstream, but now has the opportunity to achieve energy security, while protecting the global environment," later he said.
"A massive scope for commercial opportunity between US and Indian companies will also be the result, valued at more than $150 billion over the next 30 years, spurring a revival of the nuclear power industries of both countries that will create as many as a quarter million high-tech US jobs for generations to come," words of Ron Somers.
It would shore up "a durable foundation upon which US-India relations will flourish and America's partnership will deepen with the world's largest free-market democracy," the business advocacy organisation said.
On the day of Gandhi's Jayanti - World know him as Mahatma Gandhi and we know by Bapu. Indo - US deal took place, this Proves that India will always use Nuclear power for its Civil Projects. And U.S also know this fact, thats why it completed on October 2nd , 2008 in IST.
On the day of Gandhi's Jayanti - World know him as Mahatma Gandhi and we know by Bapu. Indo - US deal took place, this Proves that India will always use Nuclear power for its Civil Projects. And U.S also know this fact, thats why it completed on October 2nd , 2008 in IST.
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Market Today - Rebound
Markets opened gapup on strong U.S. and Asian clues, but not able to maintain these levels.Sensex opned with a long gap of 146 points @ 13007 but dropped to a low of 12,697 in noon deals. But then recovred a lot on a news of maybe Senate can pass a new bailout plan tonight and vote in favour of the motion. Sensex finally closed at 195 points up at 13055 and NSE Nifty shuts it shop at 3950 up 29 points only. Rupee also touched a new 64 month low of 47.23 but finally settled at 46.61. This help IT stock to surge and gives a inproportionate gain to BSE SENSEX over NSE Nifty , which has a higher weighage then Nifty. All Asian market was on mixed bag - Nikkei, Taiwan and Hangsang were on gaining side and Kospi and Straigh Times were down. All European market were up by 0.5% - 1% while DAX closed on Red for about 24 points or 0.5% . Tomorrow market will be closed on account of Gandhi Jayanti and Lal Bhadhur Shastri Jayanti. Sectorial
Bankex were again the star of today trade, and second most sector on Gaining side. While the top most firing sector was IT due to Rupee depriciation to 47.23 a new 64-month low. IT and Bankex were 4% and 3.2% respectively. On laggerds , Oil and Gas Sector and Realty were legged behind and down about 1.1% and 2.3% respectively. All Sector on BSE ended on Northward except these two. Satyam and JP Associates was the gem of today trade both gained more than 7% and Reliance and DLF was the crushed today and finally closed on Red note with 2% each. Turnover on 11th Sept , 2008
NSECash Rs.10793.25 BSECash-Rs.4357.88 Future Rs.47733.85 No Arbitrage, CAlls & Strategy for Tomorrow , as tomorrow is trading holiday, will uploaded Arbi and calls for Oct 03 on Oct 02.
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Wachovia Corp.'s may face a accusition like Washington Mutual ( WaMu). Suitors may use a style like JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon did last week: Chase waited for regulators to seize WaMu business and they came & buy the best assets and let the government sort out the rest. 
Among Suitors Citigroup Inc., Wells Fargo & Co. and Banco Santander SA are in talks with Wachovia, report from the Wall Street Journal reported yesterday. This is the same constorium who was taking to WaMu to buy its entire system. But Unfortunetly regulators seized the bank two days ago and Chase purchased the best assest in $1.9 billion which is a fraction amount what they were paying in March. Analysts of Goldman Sachs and some other leading Ratings Co beleives that soon North Carolina based - Wachovia will join the league. Regulators may help suitors to purchase the bank by seizing its assest. Later a press release from Regulator desk stated that - " U.S. benefited from seizing and selling WaMu because the Federal Deposit Insurance Corp. didn't have to tap its $45 billion insurance fund. "
Views on WaMu Failure
``WaMu's takeover has proven that there's an easy way, if the FDIC is involved,'' said Sean Egan, president of Egan-Jones in Haverford, Pennsylvania. ``You kick the hell out of the equity holders and bondholders. That may be the new model for bank takeovers.''
Christina Pretto, a spokeswoman for New York-based Citigroup, declined to comment on the Journal's report, as did Santander's Peter Greiff, spokesman for the Spanish bank, and Wells Fargo's Julia Tunis Bernard in San Francisco. Wachovia's Christy Phillips Brown wouldn't comment on the news accounts or on analysts' reports.
Limited Risk
After WaMu's failure -- the biggest in U.S. history -- Dimon said in an interview that the New York-based bank gained ``a fabulous franchise'' while limiting the risk. ``We got this at a price that protects us, where if we were wrong, it still protects us,'' said Dimon, 52.
Wachovia has more resources to draw upon than WaMu did, including its market capitalization of $21.6 billion and assets that rank sixth among U.S. lenders. CEO Robert Steel, 57, the former Treasury official hired this summer to replace Kennedy Thompson, told employees in an e-mail yesterday that Wachovia was ``strong and performing well.'' The bank is more diversified than WaMu, owning the third-biggest U.S. brokerage, plus units in wealth management and corporate and commercial banking, he wrote.
Credit Ratings
Wachovia dropped $3.70 to $10 in New York Stock Exchange composite trading yesterday and lost $1.50 more in extended hours. Yields on Wachovia's bonds soared to 24 percent, from 7.5 percent on Sept. 5, an indication that investors are concerned about default.
Analysts questioned Wachovia's ability to stay independent after seeing loan losses tied to WaMu. JPMorgan is taking on $176 billion in mortgage-related assets and taking writedowns of about $31 billion, the New York bank said. Some of those were option ARM loans, which are prone to default because they let borrowers defer some interest and add it to the principal.
JPMorgan concluded that losses on the loans may equal up to 20 percent of their value, said Sean Ryan, an analyst at Sterne Agee & Leach in New York. Wachovia has $122 billion in option adjustable-rate mortgages.
``If we apply marks similar to those used by JPMorgan in the recent WaMu acquisition, the levels of potential losses would bring Wachovia very close to the threshold of being considered `well-capitalized,' '' Goldman analyst Louise Pitt wrote in a note to investors yesterday. Banks that are less than well-capitalized face curbs on their activities by regulators.
Those potential losses may discourage immediate bids for Wachovia, said Larry Carroll, president of Carroll Financial Associates Inc. in Charlotte, which oversees $1.3 billion.
``If you just wait, it may get you at a much cheaper price and not have to take all the bad stuff,'' he said.
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NCAER : NCAER ( National Council of Applied Economic Research, India ) a apex government body published a research report stating rising Inflation, instabilty in political front, rising input cost & terririsom factor adding fuel to hamper India Inc confidence.In its survey name " MacroTrack " , agency said the companies ( espacially Service Oriented Sector companies ) is not thinking this is right time to Invest on India. According to Survey Business Outlook of country saw a decline of 30 points from the last April Business Outlook. In July, the agency says that the Business Survey Index Confidenc than in April, recorded a decline of 22.9 points @ 125.8 points down from 148.5. This Survey display a picture for next 6 month Business Outlook based on Industries. Survey added that there is a decline of 19% on economy situation compared from previous quarter of Jan- March 08 and most effected secor is Service Sector.
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Market opened lower on news of Lehman is going to file motion for chapter 11 Bankruptcy protection on failed negotiations with other US banks. Indian market opened down about 3.5% in opening trade and plunged to more than 6% in day trade. However buying came in last 2 hours of trade, this help Nifty to close around 100 points up from days lows and Sensex closer to 400 points from day low. After Adjustment Nifty finally closes @ 4072.90 down 155.55 points and Sensex closes @ 13531.27 down about 469.54 points. Crude touched a low of $95 in NYMEX , first time from Febuary,2008 . Rupee also touched a low of 46 mark to a dollar , which is a low of 24 month.
Sectoral
BSE Realty and IT make the worst hit , loosing 7.6% and 5.5% respectively. Realty were down because of high beta index and Lehman Brothers has a significant holding in all Realty stock either thru direct holding , via P - notes or thru Private Equity Investment. Moreover, Unitech denied the media report that Unitech Mumbai project who has PE investment of Lehman Brother is on toast. Second most affected sector was IT, it was down on their financial news of Lehman, if Lehman is going to end then they will have to face big loss because Lehman has tied up with all major IT companies like Satyam Comp , Infosys , HCL Tech, etc .. They have to write down a major part of their revenues coming from Lehman as a Bad debt. As crude is continuously dragging towards south. All Auto stock moved up a bit positive despite of Sell in Indian Market. Maruti ended green with more than 2% and HDFC who is major Financial Institution also moved up in Green.
Turnover on 15th Sept , 2008
NSE Cash Rs.11936 BSECash-Rs.4485.30 Future Rs.61185.99
Arbitrage Opportunities NSE & BSE
No opportunities has been created for tomorrow . As mkt dragged too much.
If any want to trade as a Arbitrager can ask for the same on infotips@yahoo.com . Service Brought to u by Trading Ideas - Your Trading Partner http://tradingideas.in/
Advanced Tax Figure for India Inc Q2
- Videocon Inds pay Rs.25crs as Advance Tax in comparison to Rs20 crs
- RIL pays Rs680 crs ad ADVANCE TAX in comparison to Rs650 crs last yr
- SBI Advance Tax at Rs1560cr Vs Rs1054cr YoY
Important News for Sept 16 , 2008
- US FOMC meeting will be held tomorrow ( 16th Sept , 2008 ) to decide on Intrest Rates and they will also talk on situation of current US Fiancial Market .
- AIG ( American International Group ) ask US Federal Govt for a fresh new loan of $40 billion . AIG is going to announce something special tonight. They are in talk with US billionaire Warren Buffet for a special package to protect investor and policyholder.
- Tomorrow major exchange of Asia Nikkei and Hang Sang will deliver their sentiment on Lehman News as there was a trading holiday in both of exchange.. We believe they will tank and resulting weak opening for Indian Market tomorrow also
- Analyst believes after collapse of Lehman Brothers and the sale of Merrill Lynch have left questions about the future of the last two major brokerage and Investment firm, Goldman Sachs and Morgan Stanley
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