Sensex plunges on technical sell-off

Almost all the gains made in last two sessions were wiped out on Tuesday, as investors booked profits tracking the fall in global markets

and due to lack of buying support. Foreign funds and traders exited realty, metal and power stocks which had run up recently.

Equities opened lower trailing other Asian peers after euphoria over China’s stimulus package fizzled out. What began as technical profit booking soon turned into a sell-off as foreign funds pressed the sale button, said marketmen.

Benchmarks breached psychological technical supports but ended just off the day’s lows.

“Sensex reacted exactly from the ‘Bearish Engulfing’ pattern formed on Nov 5 when it fell almost 900 points from its day’s high of 10945. As seen from daily chart, Sensex has established a range bound movement between 9631 and 10945. If the negative trend continues, any move below support of 9631 would lead to 9321- 9258 and one can expect a bounce back. Overall trend would turn positive only above 10945. Sensex move above 10945 without moving much below 9258 level would indicate a bullish break out of the ‘Inverse Head and Shoulder’ pattern,” said Birendrakumar Singh, technical analyst at Religare Securities.

Bombay Stock Exchange’s Sensex tumbled 696.47 points or 6.61 per cent to end at 9,839.69. The 30-share index touched an intra-day low of 9,799.45 after opening at a high of 10,405.39.

National Stock Exchange’s Nifty ended at 2938.65, down 6.66 per cent or 209.6 points. The 50-share index hit a low of 2,919.45 from high of 3,147.20 in the day.

The cut was not so severe for secondline stocks. BSE Midcap and Smallcap indices ended 3.41 per cent and 2.51 per cent lower respectively.

Among frontline stocks, Jaiprakash Associates (-12.21%), Sterlite Industries (-11.03%), Tata Steel (-10.98%), Hindalco Industries (-10.18%), DLF (-10.15%) and BHEL (-9.65%) were the worst hit.

ITC, up 0.06 per cent, was the lone gainer in the 30-share index.

All the sectoral indices ended in the red. BSE Realty Index plunged 10.25 per cent, BSE Metal Index closed 8.42 per cent lower and BSE Power Index declined 7.70 per cent.

Though the markets are range bound and taking cues from the movement in Asian markets, improvement in industrial growth may provide some positive sentimental impact on Wednesday. Industrial growth is expected to have risen 5-7 per cent in September from the 13-year low of 1.3 per cent in August.

But drying volumes are a cause of concern for the market. Monday’s surge came on lower volumes. According to NSE website, total traded value today was Rs 8,821.63 crore, so far the lowest this month.

Market breadth on BSE was extremely weak with 1,766 declines against 759 advances.

Decline in US stocks futures were pointing to a low opening later Tuesday. Dow Jones stock futures were down 1.27 per cent, S&P 500 futures were 1.20 per cent lower and Nasdaq stocks futures fell 1.35 per cent.

ONGC to make offer to acquire Imperial in 28 days

Armed with all regulatory approvals from the Russian authorities, ONGC Videsh Ltd — the foreign arm of state-run Oil & Natural

Gas Corporation (ONGC) — is all set to make a "firm" offer to Imperial En-ergy's shareholders in the next 28 days. The Russian government paved way for the $2.58 billion acquisition on Tuesday, after it allowed OVL to own a company that holds oil and gas assets in Russia.

Accord-ing to the Russian law, a foreign government-owned company requires approval of the Russian authority before acquiring a ownership stake in a Russian entity. On Monday, the Russian Federal Anti-Monopoly Service (FAS) had already given OVL a clean chit from anti-monopoly regulations, the other mandatory pre-condition for making a formal offer.

"With this approval , OVL has fulfilled the both pre-conditions for making a formal offer. We have already informed the London Stock Exchange (LSE). We will post the offer (to the Imperial shareholders) within 28 days, from now," a senior official in the government, who didn't wish to be identified, told ET .

On September 5 this year, the company had announced that it had sought the Russian government's approval regarding the two manda-tory pre-conditions required to be met before making a formal acquisi-tion offer. While the first pre-conditions was related to the approval by the governmental commission of the Russian Federation with respect to restrictions on the ownership of a Russian entity by entities con-trolled by a foreign government. The other was related to the anti-monopoly regulations.

PF monopoly loss prompts SBI to demand higher fee

SBI is demanding a higher fee for collecting provident fund (PF) deposits. The move comes after the Employees Provident Fund

Organisation (EPFO) clipped the bank’s monopoly over the management of the Rs 30,000-crore EPFO corpus.

Currently, SBI charges Rs 1.50 on every Rs 1,000 deposited as monthly fee from EPFO subscribers. The bank now wants EPFO to hike this fee to Rs 5 per Rs 1,000 deposited, an issue that is likely to figure at the next financial and investment committee (FIC) meeting of EPFO. If SBI gets a green light, it would substantially raise the costs of collecting pension funds for the organisation.

The PF contributions of the four crore plus subscribers of EPFO are deposited by their respective employers in local branches of SBI. EPFO identifies one ‘link branch’ of SBI in a state from where the collected funds are remitted to the Organisation’s account. For such transactions, SBI charges Rs 1.50 on every Rs 1,000 deposited. In case an employer deposits money in a non-linked SBI branch, the bank charges a higher sum of Rs 2.50 per Rs 1,000 for remitting it to EPFO via the link branch. The bank now wants to raise it to Rs 5 on every Rs 1,000 deposit for both direct as well as such indirect transactions, a senior EPFO official told ET.

SBI also wants EPFO to pay it for all other additional services that it provided the organisation. At present, SBI is assisting the EPFO in its pilot project on online deposit of PF for a group of companies situated in Gurgaon. Besides, SBI has also made it clear that any extension or replication of the the project will come for a fee.

SBI currently has monopoly in collecting PF deposits for EPFO. Though, a proposal to enroll other public sector banks is under EPFO’s active consideration, it is yet to take a final call. As a part of this move, it has already initiated talks with other 10 nationalised banks.Enrollment of other nationalised banks would help EPFO bring down the its own collection expenses, the official said.

However, since multiple collection will also increase paperwork for EPFO, like cross-checking of details in cheques, the organisation is being cautious in its approach.

SKS Microfinance mops up Rs 366 cr

SKS Microfinance on Monday announced that it has raised $75 million (Rs 366 crore) from a host of investors including Sandstone Capital,

SKS investors, Kismet Capital and SVB India Capital Partners (an affiliate of Silicon Valley Bank).

This was the fourth round of fund raising by the Hyderabad-based micro-finance firm. Edelweiss Capital was the advisor to SKS. ET reported about the fund-raising in its online edition on Monday, a few hours before the announcement. SKS has provided micro-loans of Rs 4,729 crore to 3.3 million poor households across 18 states in 50,000 villages and urban slums of India. Its members have maintained a 99% repayment rate. The new equity investment will help SKS expand its reach to 8 million members over the next two years.

Vikram Akula, founder and CEO of SKS Microfinance, said: “The fact that this investment has come during the global economic meltdown is proof of the confidence that investors have in SKS.” In February, it had raised Rs 124 crore from UNITUS, Vinod Khosla, Infocom Ventures, SKS Capital, Sidbi, Tejas Ventures, Sequoia Capital, Yatish Trading, SVB India and Columbia Pacific.

Prior to that, it had collected Rs 53 crore in March 2007 and Rs 14 crore in March 2006. Last month, Swadhaar, a Mumbai-based micro-finance institution has raised $3 million from Michael and Susan Dell Foundation, Accion and Unit Equity Fund.

Ficci for bailout scheme to textile industry

Ficci today responded to the Prime Minister’s appeal not to resort to retrenchment in the face of the current economic meltdown by throwing the ball into the government’s court. It asked for a bailout package for the labour-intensive textile sector to head off massive job cuts.
Pointing out that growth of the textiles industry has come down from eight per cent in 2005-06 to merely 0.8 per cent in April-August 2008-09, Ficci warned of large-scale lay-offs if the government did not implement swiftly a special package for the industry.
It said that the profitability of Indian textiles industry fell by over 99 per cent in June 2008 quarter and investment in the current year (for April-July) dipped by 66 per cent compared to the year-ago period.
Therefore, a special package has become imperative to save the industry from the current economic crisis, Ficci argued. It also favoured moratorium for one year on term loans and increased drawback rates along with export credit at international rates for the textiles industry.
Extension of sunset clause for export oriented units (EOUs) for five years, release of pending funds of last year under Technology Upgradation Funds Scheme (TUFS) and reduction of excise duty on man-made fibres are some of its other demands. Under the sunset clause, EOUs are entitled for income tax exemptions for a period of 10 years that is expiring by March 2009.
The industry body contended that given the profitability position of textile industry currently, it would not be right to withdraw this benefit next year as a result of which tax for EOUs would be around 34 per cent after expiry of the benefit.
It also demanded imposition of 10 per cent import duty on man-made fibres; and sought seven per cent duty free scrips as a refund of state taxes.

Satyam to buy Motorola’s software unit in Malaysia

Satyam Computer Services has decided to acquire US mobile maker Motorola’s software development centre (SDC) in Malaysia.

Satyam will absorb the centre’s 128 employees and take over the units assets as part of the deal.

The acquisition is expected to create synergies and boost India’s fourth-largest software exporter’s competitiveness in Malaysia and Asia Pacific. However, Satyam officials declined to divulge financial details of the deal that is expected to be completed by December end.

The SDC is part of Motorola’s Home and Networks Mobility business and focuses on network management system development.
“This strategic acquisition will integrate and strengthen Satyam’s product engineering services to network equipment providers and operators in the areas of element management, mobile solutions, and access networks,” said Satyam Technology Infrastructure business unit head Nishith Mathur.

Motorola is an existing customer of Satyam. After recording $397-million loss in the third quarter last month, the mobile maker had announced that it would cut costs by $800 million next year. The new deal is part of the company’s decision to exit from non-core business.

Singapore tech help for CESC network

RPG Enterprises flagship CESC Ltd today inked a pact with Singapore Power to revamp its distribution network in Calcutta. The company will invest Rs 2,000 crore over the next 3-5 years to reduce accidental disruptions in electricity supply.

Under the one-year agreement, the Singapore firm will provide technological inputs to improve CESC’s distribution system.

CESC vice-chairman Sanjiv Goenka said the move was aimed at upgrading the company’s network to global standards. “It is an aspirational move. Don’t expect the outage (accidental disruptions) to reduce overnight,” Goenka said.

“It was not so difficult to increase the plant load factor (capacity utilisation). Here, you have to motivate 8,000 employees to work in a different fashion than they did. There are many external issues (power theft) to be tackled as well,” he said. The agreement with Singapore Power can be renewed after a year. “We will review our association then and decide on the next move,” Goenka said.

Ong Boon Hwee, chief operating officer of Singapore Power, and Sumantra Banerjee, managing director of CESC, were also present at the announcement of the deal here today. CESC will have to shell out Rs 6 crore to the Singapore firm.

Bharat Forge intends to form a Joint Venture with Alstom Group

Bharat Forge Limited (BFL), the second largest forging company in the World and part of Kalyani Group – a US $ 2.4 billion conglomerate, intends to setup a joint venture company with Europe-based Alstom Group, for manufacturing state-of-the-art supercritical power plant equipment in India.

Alstom is a global leader in power generation and rail infrastructure and sets the benchmark for innovative and environmentally friendly technologies. The firm provides turnkey integrated power plant solutions and associated services for a wide variety of energy sources, including hydro, gas, coal, nuclear energy.

The arrangement between Alstom and Bharat Forge involves setting up of two companies. The alliance would setup first JV Company for manufacturing of core turbine and generators while the other for manufacturing of all the auxiliaries.

The proposed Joint Venture will design, engineer, manufacture and deliver turbine and
Generator Island of 600-800 MW supercritical range with a total installed capacity of 5 GW per annum.

In addition, both the partners have also agreed to explore manufacturing of turbines and
generators in sub-critical range as well as for gas and nuclear applications.

In a press release, both companies jointly stated that they would disclose other information regarding proposed JV such as the manufacturing program, investment size and location, etc. only after getting necessary regulatory approvals in India and Europe.

Existing telecom operators may have to pay more for 3G

Existing telecom operators may have to pay more than the new players eyeing the 3G space, in the form of annual charge for the 3G spectrum. A committee chaired by Department of Telecommunications (DoT) Joint Secretary J S Deepak has recommended that an operator having 2G spectrum and 5 Mhz of 3G spectrum should pay an incremental 1 per cent more than the applicable slab rate for 2G spectrum.
The committee, which was set up to suggest annual spectrum charges for 3G, has recommended that due to the efficiency in capital expenditure and synergy in operations, operators having 2G spectrum and acquiring 5 Mhz of 3G spectrum should be charged at a higher rate.

GSM 2G operators get 4.4 MHz and CDMA players get 2.5 Mhz of start-up spectrum with their telecom licences, on which they have to pay an annual fees of 2 per cent of their aggregate gross revenue (AGR). For spectrum up to 6.2 Mhz, the operators have to pay 3 per cent of their AGR, while for spectrum up to 8 Mhz they have to pay 4 per cent of their revenues and so forth.

Therefore, for a stand-alone 3G operator, the rate will be equivalent to the 5 Mhz slab rate of 2G spectrum or 3 per cent of the AGR. But operators having both 2G and 3G spectrum will have to pay one per cent over and above the present 2G slab rate.

Recommendations of the committee will be discussed in the Telecom Commission meeting to be held tomorrow. The committee has, however, ruled out the possibility of segregation of 2G and 3G revenues, as proposed by GSM operators.

The committee has also taken into consideration the recent proposal of Union Minister for Communications and IT A Raja, which came after his meeting with Finance Minister P Chidambaram and Prime Minister Manmonhan Singh, to raise the existing annual charges for 2G spectrum.

During the meeting of two ministers, it was also decided that spectrum usage charges up to 8 MHz would be increased by 1 per cent of the AGR. Above 8 MHz, the charges would be increased by 2 per cent of AGR for each of the respective slabs. The proposal will be discussed by the Telecom Commission in its meeting. If approved, it will be effective from January 1, 2009.

In case these revised rates are levied, the committee recommends that the annual spectrum charges for an operator with both 2G and 3G spectrum be the same as the operator with only 3G spectrum. The one-year moratorium given to the operators with only 3G spectrum will not be applicable to operators with 2G and 3G spectrum.

The Telecom Commission will also deliberate on the contentious issue of the quantum of the one-time charge for spectrum above 6.2 MHz, in addition to the licence fees. The committee has proposed that the Spectrum Enhancement Charge would be computed on the basis of the entry fee for the service area divided by 6.2. The same would be updated on the basis of the prime lending rate of the State Bank of India. Raja had earlier indicated that this price could be set at Rs 4,000 crore.

If the move is approved by the commission, operators like Bharti Airtel, Vodafone and Idea Cellular, who posses spectrum above 6.2 Mhz, will have to submit the fees by March 31, 2009. In future, operators seeking spectrum beyond 6.2 Mhz will have to pay the charge at the time of allotment.

Slowdown hits steel sector

With the impact of the global financial crisis having slowed down economic growth all over the world, the Indian steel companies are also feeling the heat. Taking a cue from European steel giant Corus that has decided to cut production by 30 per cent, leading steel producers have decided to resort to production cuts following decline in demand for the commodity.

Many steel companies, including Sajjan Jindal-owned JSW, Essar Steel and Ispat Industries have announced various measures to counter the slowdown in demand and economy in an effort to prevent any further pile up of inventory. With prices softening over the last few weeks, companies are making every effort to clear the backlog which has gone up as buyers have withheld bulk orders anticipating a further correction in rates.

Integrated steel maker Jindal Steel and Power also said it was looking to bring down the cost of production and ease other input pressures on the company’s margin. According to company director (Finance), Sanjay Maru, the company was working on cost cutting measures among other measures in the present market conditions. However, Steel Authority of India Limited (SAIL) has decided against any such move and will continue to pursue its plans. The company has not cut production but led the industry in lowering prices. Steel prices have declined from the high of $1,250 a tonne in March-April this year to $500 a tonne, in the international market.

In line with the softening global trend, Indian firms have also reduced steel prices to about Rs. 32,000-36,000 a tonne from the high of Rs. 55,000 a tonne earlier this year. State-run Rashtriya Ispat Nigam had cut steel prices by a maximum margin of up to Rs. 8,500 a tonne.

SAIL, JSW Steel, Ispat Industries, Essar Steel also slashed rates in the range of Rs. 4,000-6,000 a tonne to ward off the threat of cheaper shipments from China and Ukraine. However, there has been no word on the issue from Tata Steel.

Export have contracted in October

It’s not official yet. But indications are exports in October will contract by 15 per cent, prompting the government to admit that the country may miss the $200-billion target set for this fiscal.

The decline will be the first in five years, and, according to director general of foreign trade R.S. Gujral, if petroleum products are excluded, the decline is steeper at 20 per cent.

Barring petroleum and a few other categories, exports fell across most segments, including engineering.

Labour-intensive industries — textiles, gems and jewellery, and handicraft — suffered huge reverses in October.

According to officials, more details will be available only in December, when the government comes out with official statistics for October. Between April and October this year, export growth dipped to 21.5 per cent from 30.9 per cent between April and September.

Gujral said India would miss the export target for this fiscal, given the slowdown in the global economy. He, however, hoped exports would surpass last year’s figure of $162 billion.

In a study released yesterday, industry chamber Assocham had said the country would miss the export target by 20 per cent. Besides the slowdown, the chamber felt high ocean freight rates and the government’s curb on certain items would hurt exports.

According to government data, trade deficit in April-September this fiscal was $59.7 billion. Research firm Dun and Bradstreet said deficit for the current fiscal was expected to be around $121 billion. “Financial measures such as a reduction in the cash reserve ratio, statutory liquidity ratio and the repo rate by the Reserve Bank of India, perhaps, have not yet benefited the small and medium exporters,” Gujral said.

With the impact of the global slowdown expected to last one more year, the government is working on measures to boost exports from labour-intensive industries as it wants to prevent large-scale layoffs.

“There are already buyers out there in the US markets who are facing credit squeeze, and the impact is all pervasive, from gems and jewellery to engineering goods. The only exception is petroleum, which is going to show about 10 per cent growth,” he said.

A high-powered committee set up by Prime Minister Manmohan Singh is reviewing the situation to come out with a policy response.

Officials said the government was planning to spend up to Rs 25,000 crore on infrastructure and rural employment guarantee programme to boost growth and create jobs for people who may be thrown out of work.

Ganesh Kumar Gupta, president of the Federation of Indian Export Organisations, said the government should intervene immediately to ensure liquidity.

Though the depreciation of the rupee has helped, exporters need more support such as reduction in the rate of interest for exports and a greater allocation to small and medium enterprises under the market development assistance programme.

NBFC loan sanctions down 50%

Loans given by non-bank finance companies (NBFCs) have dropped sharply in the past two months as they have been busy repaying their

short-term obligations to mutual funds (MFs). In a report released on Monday, credit rating firm Crisil has said the decline in disbursements was as high as 70% in one case, with the average at around 50% for NBFCs rated by it, pointing to the severity of the business shrinkage.

A Crisil analysis of 33 rated NBFCs accounting for almost 30% of the sector, indicated that most of these NBFCs, especially asset finance companies, have significantly slowed down disbursements due to a lack of funds.Average monthly disbursements during September and October are estimated to be half of the disbursements in August.

NBFCs’ share in the overall retail finance space has reduced over the past few years. This is largely because banks with cheaper access to funds are dominating this segment. They now account for more than two-thirds of retail finance disbursements, up from about 20% in 2002. This trend is not expected to reverse.

NBFCs’ balance sheets have a significant asset-liability mismatch; more than 50% of NBFCs’ borrowings have maturities
of less than one year, while most of the assets have tenures of about three years. Further, the dependence on MFs for short-term funding has been high: Crisil-rated NBFCs’ estimated borrowings from MFs have increased to more than 45 per cent of total borrowing as of September 30, 2008, from 30% as on March 31, 2006. Increasingly facing redemption pressures, Crisil has said that MFs are no longer lending to the NBFC sector, and are withdrawing their existing exposures as these mature.

The recent measures announced by the Reserve Bank of India (RBI), allowing NBFCs increased access to funding, is expected to ease their debt servicing pressures, but will not address the longer-term issue of business growth.

While the going has been difficult for the sector, CRISIL nevertheless sees NBFCs’ business and financial profiles generally stronger today than they were during the crisis of the late 1990s. In addition, many NBFCs have strong parentage, enhancing their credit strength. CRISIL believes that the NBFC business model will change over the long term, with a focus on product innovation, and a move towards the originate-and-sell model.

Sensex surges on China stimulus

The Bombay Stock Exchange sensitive index, Sensex, surged by over 570 points on Monday to regain the 10000-level on buying support sparked by strong global trends, bolstered by China’s multi-billion dollar stimulus plan for its economy.

The bellwether index closed higher by 571.87 points, or 5.74 per cent, at 10536.16 from 9964.29 against last Friday. The National Stock Exchange index Nifty also spurted by 175.25 points to 3148.25.

Marketmen said stocks moved to the positive zone on firm overseas trends which were bolstered by China’s stimulus plan and anticipation that governments elsewhere would follow suit.

Reliance Industriesrecorded handsome gains on reports that the company might slow work at the special economic zone because of global financial turmoil. The breadth of the market was attractive as 28 shares in the Sensex were higher and two recorded losses Metal segment index gained the most, by 562.50 points, or 10.92 per cent, at 5714.83 with sector majors Tata Steel, Jindal Steel and Sterlite Industries posting handsome gains. Capital goods sector was the second best performer by rising 483.02 points to 8118.43.

L&T consortium bags Mumbai monorail project

A consortium led by Larsen & Toubro (L&T) with Scomi Engineering Bhd, Malaysia, has bagged a Rs. 2,460-crore order from the Mumbai Metropolitan Region Development Authority (MMRDA) to implement the country’s first monorail system in Mumbai.

The project involves design, construction, installation, testing and commissioning and integrated testing, including train trial with initial operation and maintenance (O&M) from Gadge Maharaj Chowk (Jacob Circle) to Wadala (about 11 km) and Wadala to Chembur via Mahul (about 9 km) corridor on a lumpsum turnkey (LSTK) basis. The monorail will have 18 stations enroute and the project is to be completed in 30 months.

This will be the first monorail system in India and is expected to ease congestion in the highly crowded Jacob Circle, Wadala and Chembur area. It will provide interconnectivity to the existing suburban railway (Mahalaxmi and Lower Parel station of Western Railway, Currey Road, Dadar and Wadala station of Central Railway) and forthcoming Metro Rail as part of the multimodal transport system and on being commissioned is expected to ease congestion in the areas.

A modern urban transport system, the cars move on a single beam in an elevated corridor. The design makes it possible to execute the project on a fast-track as it requires a small footprint and facilitates implementation with minimal demolition of structures.

Other advantages include greater reliability, high manoeuvrability, lower cost and an eco-friendly design. It has sleek exteriors and its air-conditioned cars add to customer comfort.

Markets crash again on inflation news

The markets have drifted lower again, after showing smart recovery, due to news of an increase in the inflation numbers. It stood at 10.72% for the week ended October 25 as against 10.68% during the earlier week.

Reliance Industries, Bharti Airtel, Infosys, SBI, Tata Steel, Sterlite Industries, ONGC, HDFC Bank, ICICI Bank, HDFC, SAIL and Tata Motors are dragging the frontline indices.

The Nifty closed below 3000 mark and the Sensex slipped below 10,000 level. Metal stocks led this crash followed by oil, telecom, technology, banking and auto stocks. Midcap and small cap stocks were also under pressure.

Frontline indices had opened with huge gap down and remained weak till the afternoon. After 1:30 pm, indices had started recovery and was near to Wednesday's close, but more than expected increase in Inflation numbers pushed the markets sharply lower again.

The Sensex closed at 9746, down 373 points and the Nifty fell 102 points to 2,892, (provisional).

Inflation came in at 10.72% for the week ended October 25 as against 10.68% in previous week. This was more than expectations, as CNBC-TV18 was estimating inflation at 10.45%.

AOL advertising revenue falls while Google gains

AOL suffered another setback in its bid to become an advertising-focused company as online ad revenue dropped 6 percent during the third
quarter, while its chief rivals saw gains despite a weak economy.

The $33 million decline compared with the year-ago period, disclosed as parent company Time Warner Inc. released its earnings report on Wednesday, marked AOL's first drop since it began distancing itself in late 2004 from its roots as an Internet access provider. Ad revenue grew 41 percent in 2006 and 18 percent in 2007 and was flat the first half of 2008.

Google Inc earlier reported a 28 percent third-quarter gain in online advertising revenue, while Microsoft Corp saw a 15 percent jump. Even the struggling Yahoo Inc. had a small increase of 1.2 percent.

During a conference call, Time Warner executives said the $33 million decline reflected the loss of an exclusive partnership with Apollo Group Inc, which owns the for-profit University of Phoenix. Revenue from Apollo alone was down $55 million, offset by $29 million in gains from acquisitions.

The company also blamed general declines in online display advertising, something much of the industry has seen because of the economy. Time Warner had expected to begin seeing benefits in the third quarter from new technologies and a reorganization earlier this year to address missteps integrating $1 billion worth of corporate acquisitions into a single ``Platform-A.''

Analysts say it was too early to assess whether integration has succeeded. Chuck Richard, an analyst with Outsell Inc., said the Apollo loss ``masks any ability to make a strong judgment about ongoing stability or growth trends.''

Dave Hallerman, senior analyst at eMarketer, said Time Warner executives ``blamed Apollo in the last report and the one before that as well. Maybe it's true, but it's a theme.'' Company officials suggested the Apollo loss will weigh down revenue in the fourth quarter and, to a lesser degree, the first quarter of next year as well.

"The most significant year-over-year drag that it's going to have in the growth rates is really going to be in the fourth quarter," said John Martin, Time Warner's chief financial officer. "We did have some Apollo money in the first quarter of this year. But the numbers trail off pretty materially."

That means that starting in the second quarter of next year, AOL won't be comparing revenue with a year-ago period flush with Apollo dollars. AOL lost 634,000 Internet-access subscribers during the quarter, ending with 7.5 million, 72 percent fewer than the 26.7 million it had at its peak six years ago.

AOL's dial-up subscribers have been shifting to competing high-speed services, and the decline in paying subscribers has accelerated since AOL in 2006 began giving away features it once reserved for paying subscribers to boost its ad-supported Web sites.

Time Warner is working to split AOL's access and advertising businesses operationally by next year, a move that would make it easier to sell off one or both.

The company has been in continual discussions with both Yahoo and Microsoft over AOL's Web sites and ad operations, while rival access provider EarthLink Inc. is seen as a leading candidate for the remainder of AOL.

Time Warner CEO Jeffrey Bewkes declined comment on specific discussions but said the company was open to any "strategic opportunity to put AOL in a stronger position."

Referring to Wednesday's announcement that Google had pulled the plug on an advertising partnership with Yahoo in the face of antitrust concerns, Bewkes said: "the opportunities or possibilities remain open for this whole business to restructure itself."

Slowdown to last 15 months: Nasscom chief

The economic slowdown resulting from the global financial crisis is expected to last not more than 15 months. However, additional jobs will get created in India during the period, a senior official said. "This slowdown will last for another 12 to 15 months and yet we will add jobs," chairman of India's apex IT body Nasscom Ganesh Natarajan said.

He said only 200,000 jobs were created this year against the expected 270,000 jobs due to the slowdown.
"What this slowdown in effect means for India is that the domestic companies would be a little more watchful when they recruit. The next six months would be difficult for IT companies," he said.

"IT industry growth would be 22 percent as compared to last year's 29 percent. This seven percent drop is not because there is no demand. It only means that the demand is not being translated into business. India's economic growth could come down to seven percent yet opportunities will still be there," said Natarajan, who is also the Global CEO of Zensar.

He said serious work is being done through IT solutions and the global companies cannot afford to lose Indian services. "As far as IT or BPOs are concerned there is nothing to worry."On the global financial crisis which has hit the US extensively, Natarajan said: "The US companies went a bit extreme in outsourcing. However, the US will still maintain its global leadership."

To a question, he said the rupee will stabilise at 42 to 43 a dollar in a year or two though it could reach 56 before that.Natarajan was here Monday evening to deliver the convocation address at the 6th Convocation of Nirma University of Science and Technology.

Suzlon may face legal action if it buys Martifer stake in REpower

Suzlon Energy might face legal action from lenders if the company goes ahead with the acquisition of balance stake of Portuguese company Martifer in REpower Systems AG to gain access to the European markets.

On Tuesday, Suzlon and Martifer said they were negotiating a schedule for the wind energy major to buy 22.48 per cent stake of Matifier in Germany's REpower.

Suzlon shares closed 20.57 per cent higher at Rs 55.40 on BSE on the news.

Suzlon had agreed to complete the purchase of Martifer's stake in Repower for 270 million euros ($344 million) by Dec 15, 2008.

A source familiar with the development said, Suzlon is exploring options to sell its stake to private equity firms to raise funds for the REpower acquisition.

Analysts tracking Suzlon said if the Martifer sale cannot be pushed back, we expect Suzlon to breach its debt covenants, potentially resulting in legal action from its lenders.

Suzlon has debt equity ratio of 1:1 at present and as per the agreement with its lenders (debt covenant) it has to maintain this ratio. So if the company goes ahead with the deal, there is every possibility that it may exceed this ratio and will result in breach of the company's debt covenants, another analyst said.

“The punitive action might be in the form of high interest rates or recall of sanctioned loan,” he added.

Earlier, Suzlon decided not to try to exercise the domination and profit transfer agreement with REpower due to opposition from lenders who will be financing the next round of growth plans for REpower.

Suzlon had announced a $360 million rights issue to buy Martifer's stake in REpower. The issue was subsequently called off because of the poor response.

However, many analysts are also of the opinion that with Suzlon struggling to bag any orders in the last six months, next stage of growth at Suzlon would be powered by REpower. However, the company has to get the domination control of over 90 per cent in REpower to use its technology and which can only happen when the company picks up the 22 per cent stake of Martifier.

At present Suzlon has 66 percent stake in REpower which, according to German law, doesn't allow the company to exercise domination over a company.

Rupee appreciates 0.69% to Rs 48.62 vs USD

The Indian rupee rose to a three-week high of 48 per dollar on Tuesday, a move dealers said was on some inflows into the local stock market and an unwinding of long dollar positions by banks.

At 3:10 p.m. (0940 GMT), the partially convertible rupee was at 47.99/48.00 per dollar, its strongest since Oct. 14 and 1.3 percent stronger than 48.64/65 at Monday's close.

Dealers said there were some inflows coming into the stock market but most of the rupee's rally was helped by an unwinding of long dollar positions by banks on the back of easing in the non-deliverable forward rates.

One-month non-deliverable forward contracts PNDF were quoting at 48.28/38 per dollar, much below 51-52 levels seen last week. 

Shrinking finance is the order of the day

Job cuts are the order of the day in finance. The shrinkage may mark a welcome reversal of a long-running trend.
Finance has been a growth industry for six decades. In 1947, the sector accounted for 2.3% of US gross domestic product, or GDP. In 2007 it was 8.1%, and the increase has been remarkably steady.
To listen to some politicians, finance may sound like a bad thing. That’s wrong. Banks, brokers and their ilk collect money from those who have and distribute to those who need. But finance helps the economy in much the same way a police force or an army helps keep the peace. Finance is a cost—not a benefit—of maintaining a complicated economy.
Some policemen and soldiers think the glamour and danger that come with their jobs make them worthwhile. Some financial types, especially those at the top of the heap, are similarly enthusiastic.
But how many of them really earn that generous keep by increasing economic efficiency?

The answer probably can’t be calculated precisely, but any gains have to be set against three sorts of harm.
First, a distressingly large portion of activity in the financial world is little more than gambling. As in organized gambling, the losses in financial trading are actually a bit greater than the gains, because the house takes its share. In recent years, the financial house—brokers, exchanges, fund managers—has augmented its gains by playing from the inside.
The second problem is that finance works primarily with credit, and credit has been expanding dramatically. The ratio of debt outstanding to GDP in the US has risen from 161% in 1974 to 354% in mid-2008.
Finally, there is a psychological, even a moral, problem with finance. A country gets rich by making stuff, not by seeming to make money from money. But when people see huge financial profits, they tend to want more of them.
So will the US, and the world, decide that it has had too much of this not particularly good thing?
Not necessarily, since a four-decade trend has the momentum of a speeding train. But the current hurricane of financial destruction might just be strong enough to derail it.
There’s more than money involved. For at least a generation, finance has been taken up as a career by a large proportion of the world’s most talented people. If more of the best and the brightest were to take up careers in industry, education or the arts, everyone would be better off.

OPEC crude price falls to $57.65

The price for crude oil produced by the Organization of the Petroleum Exporting Countries (OPEC) fell to $57.65 Friday, the oil cartel said Monday.

One barrel (159 litres) of OPEC crude cost $2.27 less on Friday than on Thursday, when it stood at $59.92.

The price of OPEC oil has fallen 60 percent since the start of July, when it stood at $140.73.

OPEC calculates an average basket price based on 13 important brands produced by its members.

Will the oil production cut help Opec again?

Last Friday, the Organization of the Petroleum Exporting Countries (Opec) decided to cut production by 1.5 million barrels daily— or 75 million tonnes (mt) a year— in the hope that it could arrest the fall in oil prices. It may be recalled that crude oil prices plummeted from a peak of $140 (Rs6,972) a barrel in July this year to just $64.34 last Friday. Despite the announcement, prices kept climbing down to $63 at the time of writing this column.

Opec likes to believe that it can arrest the fall in oil prices. It realized its clout four decades ago, when it suddenly increased the price of oil, giving the world its first oil shock. Then it did so again in 1996-97 when it hiked the price of oil by $6-10 a barrel. This continued periodically, and prices went up in 2007 as well. But the increase in prices during October 2007 and July this year was dizzyingly steep . Till the decline began.

Opec wants prices to stay above $80 a barrel—almost at the level they were at in October 2007. Venezuela wants them at $95. Iran, which subsidizes oil prices at home, wants them high, because they fund its military plans. But the markets have currently kept them at the same levels they were in March-April 2007.

So will the production cutback work? There are two views. Opec believes it will. But many market watchers say they won’t. The primary reason is the declining clout of Opec. Over the past four decades, the organization’s share in the world’s oil production has declined from three-fourths to just 40%.

Moreover, thanks to the attractiveness of oil prices, even at $40 a barrel, the prices are attractive enough for many more countries to keep investing huge amounts for discovering and producing more oil and gas. And this investment trend continues with increasing ferocity, especially in Russia, Kazakhstan, the Arctic regions, India, Indonesia, Malaysia (where many Indian companies have taken up exploration and drilling rights) and offshore regions of both North and South America. This is likely to push down Opec’s share even further. It is the classic Achilles heel of producer monopolies. When prices become attractive, other producers emerge, creating more supply and more competition, thus further weakening a monopoly.

Many market watchers agree. “We expect oil prices to remain around $70 a barrel,” says Yudhishthir Khatau, managing director, Varun Shipping Co. Ltd, whose ships are largely in the oil and gas transportation business. He, like many market watchers and economists, says that three factors will not allow oil prices to climb much higher in the near future. First, oil stocks in most countries are healthy. Second, because this is the lean season for oil consumption, though prices could strengthen during the winter months. Third, recession in Europe, China, and the US may force reduced offtake of oil.

RNRL mulls Rs 12,000 cr capex for cement, shipping foray

Anil Ambani-controlled Reliance Natural Resources plans to enter cement manufacturing and shipping activities with an investment of Rs 12,000 crore.

"We will invest Rs 10,000 crore in cement business and Rs 2,000 crore in shipping," RNRL Vice-Chairman Anil Singhvi said on the sidelines of the company's annual general meeting here today.

"Our foray into cement and shipping will take 3-4 years period," Singhvi said.

Earlier at the meeting, RNRL Chairman Anil Ambani said that "we are actively considering entering into cement manufacturing with 20-million tonnes capacity".

For supporting its ambitious cement business, RNRL is looking to run a shipping service. It will help the company in transporting raw materials and finished products. At present, RNRL is engaged in sourcing, supply and transportation of various fuels along with exploration, production and distribution of gas.

"We will foray into shipping business with six ships to start with. It will operate between Indonesia and Krishnapatnam (in Andhra Pradesh), carrying coal from Indonesia," Ambani said.

"We re-positioned RNRL as a complete fuel management company, covering exploration, development and production, sourcing and supply, transportation and distribution activities," he said.

"We are now equipped not just to meet the fuel requirements of our group companies but of a wider market."

ABG Shipyard bags Rs 2,377 cr order for rigs

Private sector ship builder ABG Shipyard Ltd on Friday said that it has bagged a Rs 2,377.41 crore (480 million US dollar) order for building two rigs from Essar Oilfields Services Ltd, Mauritius.

These self-elevating jackup rigs would have the operating capacity of up to 350 ft. Water Depth and a drilling depth capacity of 30,000 ft, ABG Shipyard said in a filing to the Bombay Stock Exchange.

These rigs are designed for year-- round Gulf of Mexico and 50-year return period North Sea environment in accordance with American Bureau of Shipping (ABS) assessment criteria, it said.

The innovative features of this design include increased storm criteria, extended reach cantilever, lightweight, an efficient drilling package, and F&G's Advanced Rack Chock System.

The rigs also includes single point discharge system and high preload system, it added.

The company is a wholly owned subsidiary of Essar Shipping & Logistics Ltd with its main focus on offshore and onshore drilling activities.

Shares of the company closed at Rs 117, up 1.39 per cent from the previous close on the BSE.

Steel cos give mixed reaction about export duty reduction

Government's decision to cut export duty by 15 per cent on long steel products, mainly used in the construction sector, got a mixed response from the steel industry.

While a section of steel producers feel the move would not help the industry much as it has come at a time when demand and prices of the alloy have nosedived in global market due to financial recession, others contend it saying it would open up avenues for foreign shipments.

"The duty roll back would not have a substantial impact, as volume of exports of long products from India is minimal," SAIL Chairman S K Roongta said.

Nevertheless, he termed the move as a "right one", saying it would provide a little respite to the industry, which can think of exporting some quantities.

Of India's total steel exports of around 7 million tonne in the last fiscal, long products contributed just over 25 per cent.

Industry watchers, however, said the duty roll back would to some extent benefit producers like SAIL, RINL and Tata Steel, which account for 30 per cent of the total market in the organised sector.

"It is a welcome move. We had made a request for this to the government keeping in mind the unprecedented situation in the world, which has also affected the Indian steel sector," RINL CMD P K Bishnoi said.

He, however, added that much more needs to be done by the government to give a fillip to the domestic steel industry, which is passing through toughest of the times due to slump in demand and falling prices.

India's economic growth prospects remain strong: S&P

: The international credit rating agency Standard & Poor's on Friday said that India's growth prospects would remain strong on account of buoyancy in its investment climate and good government debt market, notwithstanding the global financial meltdown.

"Given the buoyant private and public investments with some progress in economic reforms, India's business environment is likely to improve in the years ahead, notwithstanding the current dislocations in global credit markets," S&P said in a statement on Friday.

Reaffirming the investment grade rating (BBB-) for India, the rating agency said: "It reflects India's strong economic growth prospects and its deep government debt bond, which helps accommodate its weak fiscal position."

S&P retained its 'BBB-' long-term and 'A-3' short-term sovereign credit ratings on India. The outlook on the long-term rating also remains stable.

These ratings suggest that India can meet its financial obligations in both the short and long run debts.

Earlier in July, global credit rating agency Fitch downgraded India's credit outlook from stable to negative citing deteriorating fiscal position of the government on account of increasing oil and fertiliser subsidy bill.

"Its (India's) economic growth has benefited from higher consumption and private investment, due to a growing middle class and favourable demographics," said S&P's credit analyst Takahira Ogawa in the note.

FIIs invests Rs 1,237 cr in equities

Reversing their selling spree Foreign Institutional Investors on Friday invested in equities worth Rs 1,237.21 crore, amid the barometer i

ndex gaining over 740 points.

FIIs invested in shares worth Rs 4,129.22 crore and sold stocks valued Rs 2,892.01 crore, resulting in a net investment of Rs 1,237.21 crore, as per provisional data available on the BSE.

According to information available on Sebi website, FIIs offloaded shares valued Rs 848.59 crore during the week.

However, domestic institutional investors shed stocks worth Rs 116.10 crore on the bourses.

Among other categories, brokers sold shares worth Rs 145.66 crore on behalf of their clients and retail investors and non-resident Indian entities sold stocks worth Rs 1.44 crore.

Meanwhile, proprietors purchased equities worth Rs 29.22 crore on the day's trade.

The Bombay Stock Exchange benchmark index Sensex settled at 9,788.06 points, up 743.55 points or 8.22 per cent.

Capex plan for 2nd half of FY09 Rs 970 crore: Suzlon

Suzlon Energy has announced its Q2FY09 numbers. Its Q2 standalone net profit stood at Rs 16.98 crore as against Rs 355 crore.

The company's standalone revenues stood at Rs 2,226.25 crore versus Rs 1,687.46 crore.

Suzlon Energy has reported (excluding Hansen and REpower) consolidated net loss of Rs 130.5 crore versus Rs 374.80 crore. Its revenues went up at Rs 4,181 crore versus Rs 3,137 .45 crore.

Key takeaways from Suzlon Energy's Press release:

Order book at Rs 14052 crore.
Capex plan for 2nd half of FY09 is Rs 970 crore.
Its MTM loss on Zero coupon bonds and forward contracts stood at Rs 230 crore versus gain of Rs 26 crore.
MTM is notional as it is due to rupee depreciation, so adjusted for the same; net profit stood at Rs 66.72 crore versus Rs 348 crore.
Its total income Rs 2264.66 crore versus Rs 1718.73 crore on YoY basis.
Its debt is of Rs 1200 crore.
65% - 70% is forex loan which is at libor + 400 bps
Rest is rupee loan which is at 12%.
Have Rs 400 crore equity part already from IDFC PE.
No cancellations till now post edison.
Have completed root cause analysis; V3 turbines working well.
Debt: suzlon level 8900 crore & group level 8400 crore.
Working capital: flat.
Quiet a few discussions on; order book robust – near future strong.
Debt costs gone up; working capital and forex gone up
India and German rules – German rule: cannot consolidate till we get domination; cannot do selective consolidation – so left out both Hansen and repower
236 MW in India
1200 MW US
500 MW China
184 MW Australia
357 MW Europe and rest of world
India 236 MW; total at 2500 MW
Stiffness not right; had to add one more layer to make it durable.
Retrofit programme - 90% to be completed by March.
1500 mw in h2 and 1000 mw in FY10.

Rupee gains 0.4% to US49.46/$

The currency recovered 1.7% from an all-time low of 50.29 it touched on Oct. 27, trimming this month`s loss to 5%.


Rupee strengthened the most in three weeks on signs that global credit crises are improving as central banks from the U.S. to Japan cut interest rates and pump funds into the financial system. Standard & Poor's maintained India's investment-grade credit rating, citing ``strong economic growth prospects.'' The BSE Sensex posted its biggest weekly gain since April 2001.

The rupee climbed 0.4% to 49.4575 a dollar at 5 p.m. to close, from 49.675 on Oct. 29, according to the reports. Indian markets were closed yesterday for a holiday. The currency recovered 1.7% from an all-time low of 50.29 it touched on Oct. 27, trimming this month's loss to 5%, the report stated.

The BSE index gained 12.5% this week, rebounding from a three-year low it touched this month. The rupee has weakened more than 20% during the current year, the second-worst performer after the South Korean won of the 10 most-active Asian currencies, as foreign funds sold a record US$12.8bn more local assets than they bought.

Foreign-exchange reserves fell US$15.5bn in the week ended Oct. 24, the most on record, to US$258.4bn, according to the RBI data. The drop indicates the Reserve Bank of India sold dollars to stem the currency's decline.

The Bank of Japan today cut its benchmark interest rate to 0.3% from 0.5% following a Federal Reserve reduction of half percentage point to 1% on Oct. 29.
China reduced borrowing costs for the third time in two months earlier this week after India reduced its lending rate on Oct. 20 for the first time since 2004.

S&P today indicated that the global financial crisis won't hurt Asia's third-biggest economy as India's ``business environment is likely to improve in the years ahead.'' GDP may grow by as little as 7.5% in the year to March 31, the slowest pace in four years, RBI added.

The gap between the onshore spot rate and the 12-month non- deliverable rupee forwards narrowed to 4.3675 from 5.625 on Oct. 29. The spread widened to a record 7.2525 rupees on Oct. 27. Non-deliverable contracts are used for currencies that can't be freely converted and are settled in dollars.

IOC Q2 net loss at Rs 7,047 cr

Indian Oil Corp, the nation's biggest oil firm, today reported a net loss of Rs 7,047.13 crore for the second quarter ended September 30, 2008, mainly on account of huge revenue loss on sale of petrol, diesel, LPG and kerosene.

IOC posted a net loss of Rs 7,047.13 crore in July-September quarter as against a net profit of Rs 3,817.75 crore in the same period previous year, the company said in a statement here.

The losses were despite the company receiving Rs 14,473.54 crore by way of discounts on purchase of crude oil and produced from companies like Oil and Natural Gas Corp (ONGC) and Oil India Ltd and Rs 25,082.38 crore by way of oil bonds from the government.

Government compensates refiners IOC, Bharat Petroleum and Hindustan Petroleum for half of their revenue loss on sale of petrol, diesel, domestic LPG and kerosene below the production cost by way of oil bonds. Another one-third of the losses are met by companies like ONGC and OIL.

Despite these, BPCL on Thursday posted a net loss of Rs 2,625.17 crore in second quarter on top of Rs 1,066.70 crore in April-June. HPCL ended Q1 with a loss of Rs 888.12 crore.

"Consequent to non-revision of retail selling prices in line with international prices, the company has suffered net under-realisation (net revenue loss after taking bonds and upstream assistance into account) of Rs 12,271.03 crore during April-September," IOC said. It had suffered Rs 3,507.74 crore net under-realisation in the same period last year.

IOC said net sales or income from operations grew by 50 per cent to Rs 74,322.01 crore in July-September quarter on increased fuel sales.

Govt to raise LIC's paid-up capital to Rs 100 cr

The Union Cabinet on Friday approved a proposal to table a Bill in Parliament to increase the paid-up capital of state-run Life Insurance Corporation (LIC) from Rs 5 crore to Rs 100 crore to bring its capital structure on a par with other players.

LIC is governed by a separate Act — the LIC Act, 1956 — which fixed its capital at Rs 5 crore. This has created disparity in the insurance industry as other players need a minimum of Rs 100 crore as per the rules of the Insurance Act, 1938.

So, the government has to amend the LIC Act to make its provisions with regard to capital consonant with the Insurance Act.

Besides increasing capital to Rs 100 crore, the amendment will also give flexibility to the government to further enhance LIC’s capital base as per solvency requirements.

The Bill will be tabled in the Lok Sabha when Parliament reconvenes in December.

Growth in volumes seen compensating for fall in Bharti's Q2 ARPU

Growth in volumes across mobile and non-mobile businesses has helped Bharti Airtel to post a “decent” second-quarter performance.

The company reported 27 per cent rise in consolidated net profit at Rs 2,046 crore for the September quarter of 2008 against Rs 1,614 crore in the corresponding quarter year ago.

Analysts said the results were largely in line with market expectations while attributing the increase in net profit to growth in volumes across business verticals.

“The company's wireless business has seen healthy growth of volumes despite a fall in average revenue per user (ARPU). This has helped Bharti post better results,” Gaurav Dua, head of research at brokerage firm Sharekhan, said.

ARPU for Q2 stands at Rs 335 compared to Rs 366 a year ago, but the company recorded a growth in its non-mobile business at 43.03 per cent against 37.5 per cent in the year-ago quarter.

Bharti Airtel had 80 million subscribers at the end of the quarter, up by 57 per cent a year ago. About 77.5 million of these are mobile phone users.

The company added 8.09 million mobile users in the September quarter, according to data provided by Cellular Operators Association of India, an industry body representing companies providing services based on global system for mobile communications.

The company had added 7.39 million mobile users and 7.50 million users overall in June quarter. It added 6.17 million mobile and 6.30 million overall subscribers in the September quarter last year. Besides mobile, Bharti Airtel also provides fixed line and direct-to-home services to retail customers.

The company also suffered a small forex loss due to the depreciating rupee. A senior IT analyst from Khandwala Securities attributed the loss mainly to the fact that the company imports “a large part of its equipment.”

Kotak, Uco Bank, J&K Bank & ING Vysya Bank Q2 results

Kotak Q2 PAT falls 33.33% to Rs 161 cr

Kotak Mahindra Bank today said its consolidated profit after tax (PAT) fell over 33 per cent to Rs 160.97 crore during the second quarter of 2008-09, from Rs 241.45 crore during the same quarter last year. Its total income went up by 2.08 per cent during the quarter to Rs 1,849.52 crore.

During the period, interest income went up by 30.34 per cent to Rs 1,092.89 crore. Non-tax provisions rose by 26.95 per cent to Rs 65.95 crore during the second quarter this year from Rs 51.95 crore during July-September 2007.

On a standalone basis, the bank’s PAT fell by 36.51 per cent to Rs 47.86 crore during July-September 2008. Total income was 12.98 per cent higher at Rs 806.77 crore in the second quarter this year.

Uco Bank’s net jumps 36% to Rs 150 crore

Kolkata-headquartered Uco Bank today reported a net profit of Rs 150.09 crore for the quarter ended September 30, 2008, as against Rs 110.53 crore in the corresponding period last year, a growth of 35.79 per cent. The total income of the bank in the second quarter was Rs 2,187.98 crore, compared with Rs 1,734.19 crore during the corresponding period last year, an increase of a little over 26 per cent.

J&K Bank Q2 net profit up 7.53%

Jammu & Kashmir Bank today said its net profit grew by 7.53 per cent to Rs 115.92 crore for the July-September quarter from Rs 107.8 crore in the corresponding quarter last year. Total income stood at Rs 788.81 crore in the quarter, as against Rs 664.77 crore last year. For the six months ended September 30, the bank’s net profit rose by 10.17 per cent to Rs 210.48 crore.

ING Vysya Bank Q2 net rises 2%

ING Vysya Bank today reported a 2 per cent rise in its second quarter net profit at Rs 47 crore, thanks to a net write-back of Rs 9.8 crore in provisions and contingencies due to reclassification of a non-performing asset against a charge of Rs 21.6 crore. Total income went up 29.5 per cent to Rs 655.2 crore during the second quarter of 2008-09.

PNB Q2 net up 31% to Rs 707 cr

Despite a steep rise in non-tax provisions, Punjab National Bank (PNB) on Friday said its second quarter net profit rose 31.31 per cent to Rs 707.09 crore, compared with Rs 538.48 crore during the July-September quarter of the previous financial year.

The bank’s total income went up by 35.16 per cent to Rs 5,313.18 crore during the quarter ended September 2008. Interest income rose by 34.28 per cent to Rs 4,650.40 crore during the second quarter this year, as against Rs 3,463.07 crore in the same period last year.

During the quarter, PNB improved its net interest margin (NIM), which is the difference between interest earned and interest payments, to 3.78 per cent, as against 3.48 per cent during the quarter ended September 2007, PNB Chairman & Managing Director K C Chakrabarty said at a press conference. He said that the target was to maintain NIM at these levels during the remaining quarters.

The public sector bank’s non-tax provisions were over four times higher at Rs 317.74 crore, as against Rs 77.86 crore during the second quarter last year. The higher provisions were on account of the farm loan relief scheme and other non-performing assets (NPAs), Chakrabarty said.

The bank’s net NPAs, as a percentage of assets, fell to 0.42 per cent at the end September 2008, as against 1.86 per cent at the end of the second quarter last year. Total net NPAs were estimated at Rs 544.73 crore at the end of September 2008, compared with Rs 1,868.26 crore.

For the six-month period ended September 2008, PNB reported a 27 per cent rise in net profit at Rs 1,219.50 crore, compared with Rs 963.55 crore during July-September last year. Total income rose 28 per cent to Rs 9,907.80 crore during the first half of the current financial year.

The bank has been able to deploy credit as per its objectives and comply with regulations as it was not constrained by liquidity concerns, Chakrabarty said. The bank’s shares closed 4.50 per cent higher at Rs 420 on the Bombay Stock Exchange.

IMF chief to propose new regulation strategy

The International Monetary Fund will propose a new regulatory strategy at next month's meeting of the Group of 20 nations on the financial crisis, IMF chief Dominique Strauss-Kahn told French daily Le Monde on Thursday.

Strauss-Kahn also said he was more worried about the global economic slowdown and its social impact than about volatility on stock markets, which he expected would calm down as the effects of European and U.S. bank rescue packages sunk in.

Strauss-Kahn said the IMF should not be considered simply as a "fireman" that comes to the rescue of distressed countries at times of emergency, but that the Fund also wanted to be a "mason" with a role in rebuilding economic growth.

"The IMF's role as the coordinator of global regulation must be reaffirmed," Strauss-Kahn said.

"To that effect, I will propose at the G20 a plan for a new governance, or a 'global regulation strategy', based on five principles," he told the newspaper.

These would include a new type of loan to relieve short-term liquidity problems in some economies, and an increase in IMF resources which Strauss-Kahn said were insufficient to meet requirements over the medium term.

Other principles were to understand how economic policies had contributed to repeated "bubbles" that hurt economies when they burst, to oversee new financial regulation, and to devise a new, simpler and more efficient global economic "architecture".

US economy shrank in 3rd qtr as consumers retreat

The U.S. economy shrank at a 0.3 percent annual rate in the third quarter, its sharpest contraction in seven years as consumers cut spending and businesses reduced investment in the face of rising fears that recession was setting in.

The Commerce Department said the third-quarter contraction in gross domestic product was the steepest since the corresponding quarter in 2001 though it was slightly less than the 0.5 percent rate of reduction that Wall Street economists surveyed by Reuters had forecast.

More spending by the government partly offset a sharp retreat by consumers.

The third-quarter contraction was a striking turnaround from the second quarter's relatively brisk 2.8 percent rate of growth. It occurred during financial market turmoil that has heightened worry about a potentially lengthy U.S. recession.

Consumer spending, which fuels two-thirds of U.S. economic growth, fell at a 3.1 percent rate in the third quarter -- the first cut in quarterly spending since the closing quarter of 1991 and the biggest since the second quarter of 1980. Spending on nondurable goods -- items like food and paper products -- dropped at the sharpest rate since late 1950.

"We are being held up here by government spending, which added 1.1 percentage points to GDP growth," said Robert Brusca, chief economist with Fact And Opinion Economics in new York. "The GDP number doesn't reveal the weakness because (of) the impact of international trade. ... it's a warning how weak the economy is."

Continuing job losses coupled with declines in the value of stocks, other investments and housing prices have put consumers under severe stress. The GDP report showed that disposable personal income dropped at an 8.7 percent rate in the third quarter -- the steepest since quarterly records on this component were started in 1947 -- after rising 11.9 percent in the second quarter when most of economic stimulus payments still were flowing.

U.S. stock index futures and the dollar extended gains on the better-than expected GDP data, while U.S. government debt prices extended losses.

Separately, the Labor Department said weekly claims for new unemployment benefits continued at a lofty 479,000 last week, a level that signals weak hiring prospects and is likely to intensify consumer anxiety.

Consumers cut spending on durable goods like cars and furniture at a 14.1 percent annual rate in the third quarter, the biggest cut in this category of spending since the beginning of 1987. Car dealers have said that sales have virtually stalled, in part because tight credit makes it hard for even creditworthy buyers to get loans.

Businesses also were clearly wary about the future, cutting investments at a 1 percent rate after boosting them 2.5 percent in the second quarter. It was the first reduction in business investment since the end of 2006. Inventories of unsold goods backed up at a $38.5-billion rate in the third quarter after rising $50.6 billion in the second quarter.

The third-quarter GDP number would have been worse except for a surge in federal government spending, which shot up at a 13.8 percent annual rate. That was more than double the second quarter's 6.6 percent rate of increase and was the strongest since the second quarter of 2003 when the war in Iraq began.

Prices were still rising relatively strongly in the third quarter, with the personal consumption expenditures index up at a 5.4 percent annual rate, the sharpest since early 1990. Even excluding volatile food and energy items, core prices grew at a 2.9 percent rate, up from the second quarter's 2.2 percent rise.

However, oil prices peaked in July and many commodity prices have begun to ease. The Federal Reserve indicated on Wednesday when it slashed interest rates again that its concern for the future was focused more heavily on weak growth than on inflation.

TVS Motor July-Sep net slips, sees tough times ahead

TVS Motor Co Ltd, India's third-largest two wheeler maker, reported a 12.6 percent fall in July-September profit and added it expects adverse market conditions to continue for the next 18 months.

The Chennai-based firm reported a net profit of 104 million rupees compared with 119 million rupees in the same period last year, while revenue rose 23 percent to 10.3 billion rupees.

Adverse retail financing, a global credit crunch and concerns of world-wide slowdown is expected to hurt the Indian two-wheeler industry in coming months, Chairman Venu Srinivsan told Reuters.

"We are seeing in the next 18 months at least a 10 percent decline in two wheeler industry sales," Srinivasan said on Thursday. "The key thing is to conserve cash and keep costs down, we also have to keep a tight control on capital expenditure."

Last week, Srinivasan told Reuters that the firm was cutting down its annual investment plans to about 750 million rupees from over 1 billion rupees annually over the next two years.

"We will be looking to curb material costs as commodities have softened a bit in the past one month, we will also look to control interest depreciation," he said on Thursday.

However, the Chennai-based firm would not look at cutting jobs in the near term, he added.

The current quarter witnessed "a challenging environment caused by increasing input material costs, general inflationary trends and lack of availability of retail finance," TVS said in a statement on Thursday.

"We do not expect market conditions to improve before January, 2010," Srinivasan said.

TVS Motor's year-ago quarter had a benefit of 102 million rupees, which includes a gain of 293.4 million rupees on restatement of overseas loans and expense of 191.4 million for launch of motorcycle variants.

Motorcycle sales rose to 181,000 units during the quarter compared to 144,000 units a year ago. Scooters clocked sales of 77,000 units compared to 76,000 units. Exports rose 52 percent to 55,000 units in the quarter.

Shares of TVS Motor ended down 3.47 percent at 29.25 rupees on Wednesday. The markets were closed on Thursday on account of a local holiday.

SREI Infra Q2 falls 21 pct on interest costs, taxes

Private sector lender for infrastructure projects and equipment SREI Infrastructure Finance Ltd on Thursday said July-September profit fell 21 percent on higher interest costs and taxes.

Net profit for the quarter fell to 261.8 million rupees from 331.8 million rupees in the same period a year ago even as total income rose to 2.43 billion rupees from 1.62 billion a year ago.

"Higher borrowing costs from banks have impacted profits," Chairman and Managing Director Hemant Kanoria told reporters in a news conference. Financial expenses rose to 1.17 billion rupees from 884.5 million, the company said in a statement.

The firm's tax expenses also rose to 1.37 billion rupees, from 47.7 million rupees on higher provisioning for deferred taxes, Kanoria said.

During the quarter, it disbursed loans worth 25 billion rupees, up from 15 billion rupees in the same period a year ago.

"We do not see any slowdown in infrastructure investments and expect lending to the sector to grow in the next quarter," Kanoria said without elaborating.

Shares in the company ended 7.08 percent up at 46.90 rupees in the Mumbai market on Wednesday. The stock market was closed on Thursday for a festival holiday.

Crude Oil Rises as Interest Rate Cuts May Spur Economic Rebound

Crude oil advanced on speculation interest rate cuts in the U.S. and China may spur a global economic recovery and increase demand for fuels.

Oil rose above $70 a barrel for the first time in a week after the U.S. and China, the world's top two energy users, reduced rates yesterday. Stocks rallied around the world and U.S. index futures climbed after the rate cuts, aimed at boosting bank lending and economic growth.

``There's a good chance the rate cut will help the economy to grow again,'' said Wolfgang Kraus, chief energy and commodities trader at BayernLB in Munich. ``We've seen from the corporate side massive buying interest'' and ``that's normally a good indicator they see limited downside risk.''

Crude oil for December delivery climbed as much as $3.10, or 4.6 percent, to $70.60 a barrel on the New York Mercantile Exchange. It traded at $68.45 as of 11:51 a.m. London time. Yesterday, crude oil jumped $4.77, or 7.6 percent, to settle at $67.50 a barrel.

Oil prices have tumbled 52 percent since reaching a record $147.27 on July 11 and are down 22 percent from a year ago.

Crude prices also climbed as the dollar fell to a one-week low against the euro. The U.S. currency slipped to $1.3082 per euro, the lowest since Oct. 21, from $1.2963 late yesterday.

Investors often purchase crude oil and other dollar-priced commodities when the U.S. currency drops because of their use as an inflation hedge.

Nigeria Reduces Exports

Nigeria will trim crude oil shipments in November and December by 5 percent to comply with the output cut announced by OPEC last week, according to the national oil company. The Organization of Petroleum Exporting Countries reduced its target by 1.5 million barrels a day after meeting Oct. 24.

Oil ministers from Iran and Venezuela said this week that OPEC will probably meet again before the group's next scheduled gathering in December to consider a second production cut.

The MSCI World Index added 2.6 percent to 948.59 in London, advancing for a third day, the longest winning streak in two months. Commodities such as gold and corn were buoyed by a drop in the U.S. dollar and a rebound in equities after borrowing costs were reduced to alleviate a credit freeze and spur growth.

Brent crude oil for December settlement increased as much as $2.88, or 4.4 percent, to $68.35 a barrel on London's ICE Futures Europe exchange, and last traded at $66.29. The contract yesterday gained $5.18, or 8.6 percent, to $65.47 a barrel.

U.S. inventories of crude oil and distillate fuel, a category that includes heating oil and diesel, rose last week, an Energy Department report yesterday showed.

Crude oil stockpiles climbed 493,000 barrels to 311.9 million barrels in the week ended Oct. 24, the department said. A 1.55 million-barrel gain was forecast, according to the median of 12 analyst estimates before the report.

Inflation eases to 10.68%

Inflation fell below 11% to 10.68% during the week ended October 18 from 11.07% a week earlier.Earlier, a poll showed that the inflatio

n rate was expected to have eased below 11% in mid-October for the first time in almost five months, thanks to falling commodity prices.

Eleven economists forecast a median 10.82% rise for wholesale price index based inflation rate in the 12 months to October 18, compared with 11.07% a week earlier, the slowest annual rise since late May.

"Everything has fallen," said Kaushik Das, an economist with Kotak Mahindra Bank. "Oil prices fell sharply, the manufacturing index has come down and even the food and commodity prices which were pushing up inflation have started coming down."

The wholesale price index rose 11.07% in the 12 months to October 11, below the earlier week's annual rise of 11.44%. Inflation for the week ended August 16 was revised up to 12.82% from 12.40%.

In early August, the inflation rate had hit 12.91%, the highest reading since annual numbers in the current data series became available in April 1995. It jumped into double digits after a hike in government-controlled retail fuel prices in June.

Commenting on the current economic scenario, the finance minister recently said that although inflation was still high, the rate of price rise would moderate further as global commodities and fuel prices continue to soften.

The government will also continue to take steps to moderate inflation and cut wasteful expenditure as it expects its fiscal deficit to swell beyond the 2008/09 target, the finance ministry said.

Fed cuts key interest rates by 50 bps to 1%

The US Federal Reserve has cut its benchmark interest rates by 0.5% to 1%, matching a half-century low. The Federal Open Market Committee, or FOMC, in its statement however, said the downside risks to growth remain. But it also believes that the recent actions should improve credit and growth.

Unitech sells 60% for Rs 6120cr

Realty major Unitech on Wednesday announced a landmark deal in which it sold a majority 60% stake in its telecom venture Unitech

Wireless for Rs 6,120 crore ($1.23 billion) to Norway-based Telenor.

Telenor ASA is the largest Nordic phone company with mobile operations in 12 countries and over 150 million wireless subscribers. Outside the Nordic region, Telenor owns units in Ukraine, Russia, Hungary, Serbia, Montenegro, Pakistan, Malaysia, Bangladesh and Thailand. The Norwegian government is Telenor's biggest owner, with a 54% stake in the company.

Goldman Sachs advised Telenor on the transaction while Unitech was advised by UBS AG and Mumbai-based IDFC-SSKI Group.

This is the second major deal to be closed by a club of new GSM licensees. Earlier, Swan Telecom, which has telecom licenses in 13 circles, sold 45% stake to UAE-based Etisalat for $900 million.

Unitech was awarded pan-India mobile telecom licences for Rs 1,651 crore early this year and has been allocated GSM spectrum in 13 circles so far. The company plans to launch services in the first half of 2009.

According to Unitech, the alliance will benefit from Telenor's experience in both high growth and mature telecom markets and Unitech's reputation as one of India's most respected business groups.

Unitech Wireless says it will be investing over $3 billion over the next three years to become a successful pan-India operator. The company says it has recruited over 250 employees and established offices across several cities.

Incidentally, Telenor holds $2b equity in Pakistan's second largest mobile operator Telenor Pakistan. This is the largest FDI from Europe in any sector in Pakistan and represents a significant commitment by the company. Telenor Pakistan, which launched services in March 2005, currently serves over 18 million subscribers through a country-wide network.

Telenor Pakistan employs 2,500 people directly and 25,000 indirectly, 99.9% of which are local Pakistani nationals. It is expected that the Indian government will take a good hard look at this massive cross investment by Telenor in Pakistan given that telecom is a sensitive area and foreign investments usually invite scrutiny by security agencies in addition to FIPB clearances.

"India enjoys a forward-looking telecom regulation and an investment-friendly climate. By combining Unitech's strong presence as a trusted corporation in the Indian market with Telenor's successful experience at building and managing best in class mobile operations in Asia, we will together contribute to growing the industry and developing the mobile market in India," said Jon Fredrik Baksaas, Telenor Group President & CEO.

"We believe Unitech Group's local position and strengths coupled with Telenor's technical, operational and marketing expertise will form a winning team. Telenor's experiences from growth markets in Asia are also a great benefit for the partnership," said Sanjay Chandra, chairman, Unitech Wireless and MD, Unitech Ltd.

Chairman Chandra said approval for sale of 49% stake has already been received and the company would be approaching the FIPB (Foreign Investment Promotion Board) for approval for the remaining 11% equity sale.

M&M Q2 net dips 21% to Rs 227 crore

Mahindra & Mahindra on Wednesday reported a 20.7% decline in second quarter net profit at Rs 226.7 crore against Rs 285.9 crore in

the same period last fiscal, weighed down by costlier raw material and a foreign exchange loss. The utility vehicle and tractor major spent 24% more for steel, rubber and other raw materials in the quarter after commodity prices gained. Total raw material costs increased to Rs 2349.7 crore from Rs 1889.8 crore in Q2 of 2007-08.

Net sales for the company in the July-September'08 quarter grew to Rs 3092.9 crore from Rs 2704 crore in the same quarter last year.

The global financial market turmoil affects growth prospects and uncertainties are continuing, Mahindra said in a statement on Wednesday. Mahindra will focus its attention on controlling expenses and improving efficiencies. The company said it incurred a foreign exchange loss of Rs 118 crore in the July-September '08 period because of the rupee's decline against the US dollar. The rupee fell 9.2% in the three months through September, its biggest quarterly loss since March 1992.

In the automotive sector M&M's export during the quarter grew 6.6% to 2,941 vehicles. Shares of M&M were trading at Rs 305.05, up 23% in the late afternoon trade on the BSE.

Global recession hits Bangalore hard

Global recession has begun to hit Bangalore hard, especially in the city’s famous information technology (IT) industry. This has been brought to light by the recent industry monitor survey conducted by the Confederation of Indian Industry (CII) – Southern Region.

The CII’s bi-annual report, published on Tuesday, says Karnataka's IT industry has witnessed a fall of about 5 per cent in manpower utilisation and employment levels dropped by 3 to 5 per cent during the April-September 2008 period.

The report also said that there was also a decline of 2-3 per cent in pricing (billing) during the first half of the current financial year as against the last half of the previous financial year. However, IT industry revenue and overseas billing increased by five per cent.

The report said that the decline in demand due to the economic crisis in the US and also the decline in demand from regions like Europe are the major concerns for the industry.

There’s good news yet. Industry leaders predict that demand for services from the IT sector would go up by 5 per cent during October 2008-March 2009 and revenue would also go up by 3 to 5 per cent. Overseas billing during this period may go up by 3 per cent during the period, according to industry predictions.

NTPC to form JV with NPCIL for nuke foray

The board of NTPC, the country's largest power generator, has approved a proposal to form a joint venture company with Nuclear Power Corporation of India (NPCIL), the country's only nuclear power producer, enabling NTPC to diversify into the civilian nuclear energy.

The proposed joint venture company will be the first non-NPCIL nuclear power generation initiative in the country, following the Nuclear Suppliers' Group waiver. According to the proposal, the JV firm would initially set up a 2,000-MW nuclear power plant.

NPCIL will hold a majority stake of 51 per cent in the JV company, while NTPC will own the remaining stake.

“The investment to flow in the JV company will be dependent upon the cost of setting the power project, with a 70:30 debt-equity ratio. At least two reactors are planned to be installed under the project,” said NTPC Chairman and Managing Director R S Sharma.

Further details on the project will be finalised after the JV company is incorporated, Sharma added.

Last month, the 45-member NSG had given its nod to the India-specific waiver to drop a ban on nuclear commerce. Experts believe that the move has opened up a new window of nuclear commerce for India with other countries and will help the country meet its planned target of about 20,000 MWe (mega-watt equivalent) of nuclear power by 2020 and 36,000 MW by 2030.

“This is surely going to be the first non-pure NPCIL project and sends a positive signal for further developments. But it will be dependent upon the technology that the reactors use, whether it will be sourced from outside or is going to come from NPCIL,” said a senior analyst of an accounting and consultancy firm.

When asked whether the JV company is planning to buy nuclear reactors from overseas manufacturers, Sharma declined to comment.

But he said the JV firm would be formed by the end of the current year. Another executive of the company confirmed that the capacity of the nuclear power project will be about 2,000 to 3,000 MWe. “The power plant will have a capacity of 2,000 MW, which can go up to 3,000 MW, depending upon the capacity that is finalised for the two individual reactors,” he said. The executive also added that the two rectors to be set up will be light-water reactors (LWRs).

At present, only the state-owned NPCIL produces nuclear power in India. It has an installed capacity of 4,020 MWe and produced 16,930 million units of electricity in 2007-2008.

The current average cost of building a nuclear plant is between Rs 7 crore and Rs 8 crore per MW, which means a 2,000-MW plant would require an investment between Rs 14,000 crore and Rs 16,000 crore, around 33 per cent higher than a thermal plant with a similar size.

Cairn India net up on currency gains

Cairn India, which discovered the largest oil reserves in India in the last 30 years, reported an over 12-fold increase in consolidated net profit in the third quarter ended September 2008, as the company gained from higher crude oil prices and a depreciating rupee.

Net profit increased to Rs 293.32 crore during the quarter, up from Rs 23.2 crore in the quarter ended September 2007.

Profit (including that of subsidiaries) rose to Rs 293 crore ($59 million) from Rs 23.24 crore a year earlier

Output in the third quarter was the equivalent of 65,566 barrels of oil a day compared with 75,280 barrels a day a year earlier

Cairn India, along with partner ONGC, will increase production at the Mangala, Bhagyam and Aishwariya fields in Rajasthan, to 175,000 barrels a day from 150,000 barrels

Sales rose 21 per cent to Rs 321 crore

Cairn will start oil production at its biggest field in Rajasthan next year at a time when falling global oil prices are curbing earnings from its older fields

Total income rose 75.32 per cent to Rs 526.17 crore (Rs 300.11 crore). It was higher as other income rose nearly six fold to Rs 205.54 crore. Other income includes investments made by the company in mutual funds and fixed deposits in banks, a company official said.

“Higher oil prices coupled with gains from investments helped us record higher profits,” said Rahul Dhir, chief executive officer of Cairn India.

The company gained Rs 87.34 crore during the quarter as the rupee depreciated against the dollar. The company also gained Rs 97 crore from its mutual fund investments and Rs 20 crore as interest on its bank deposits.

Net sales increased 20.62 per cent per cent to Rs 320.63 crore (Rs 265.8 crore) in the quarter as higher selling price of crude oil offset the lower production of oil and gas.

Expenditure fell 28.76 per cent to Rs 165.69 crore (Rs 232.6 crore). Its lower expenditure was because the Cairn India drilled fewer wells in the quarter compared to a year-ago period, said Dhir.

Cairn’s planned capital expenditure of around $2 billion will not be affected due to the current financial crisis hitting the markets worldwide, as the company has adequate cash balance and sanctioned credit lines from financial institutions, said Dhir.

At the end of September 2008, Cairn India has a cash balance of $670 million and an approved loan limit of $850 million.

World will struggle to meet oil demand

Output from the world’s oilfields is declining faster than previously thought, the first authoritative public study of the biggest fields shows.

Without extra investment to raise production, the natural annual rate of output decline is 9.1 per cent, the International Energy Agency says in its annual report, the World Energy Outlook, a draft of which has been obtained by the Financial Times.

The findings suggest the world will struggle to produce enough oil to make up for steep declines in existing fields, such as those in the North Sea, Russia and Alaska, and meet long-term de­mand. The effort will become even more acute as prices fall and investment decisions are delayed.

The IEA, the oil watchdog, forecasts that China, India and other developing countries’ demand will require investments of $360bn each year until 2030.

The agency says even with investment, the annual rate of output decline is 6.4 per cent. 

The decline will not necessarily be felt in the next few years because demand is slowing down, but with the expected slowdown in investment the eventual effect will be magnified, oil executives say.

“The future rate of decline in output from producing oilfields as they mature is the single most important determinant of the amount of new capacity that will need to be built globally to meet demand,” the IEA says.

The watchdog warned that the world needed to make a “significant increase in future investments just to maintain the current level of production”.

The battle to replace mature oilfields’ output could even offset the decline in demand growth, which has given the industry – already struggling to find enough supply to meet needs, especially from China – a reprieve in the past few months.

The IEA predicted in its draft report, due to be published next month, that demand would be damped, “reflecting the impact of much higher oil prices and slightly slower economic growth”.

It expects oil consumption in 2030 to reach 106.4m barrels a day, down from last year’s forecast of 116.3m b/d.

The projections could yet be revised lower because the draft report was written a month ago, before the global financial crisis deepened after the collapse of Lehman Brothers.

All the increase in oil demand until 2030 comes from emerging countries, while consumption in developed countries declines.

As a result, the share of rich countries in global demand will drop from last year’s 59 per cent to less than half of the total in 2030.

This is the clearest indication yet that the focus of the industry on the demand – not just the supply – side is moving away from the US, Europe and Japan, towards emerging nations.

Financial Meltdown to Global Depression : Prepare for a hard landing

Please watch below Nouriel Roubini giving a speech

'Panic' May Force Market Shutdown on October 23, 2008, in five parts:

Nouriel Roubini is Professor of Economics at the Stern School of Business, New York University, and Chairman of RGE Monitor (www.rgemonitor.com)

Part 1


Part 2


Part 3


Part 4


Part 5

Suzlon says accident breaks turbine blade in U.S.

 Wind turbine maker Suzlon Energy Ltd said on Friday there has been an accidental breakage of a blade on a turbine in the United States.

The company was investigating the cause of the accident but other turbines were functioning without interruption, the company said in a statement to the stock exchange.

Shares in Suzlon plunged 39 percent to 47.25 rupees in a Mumbai market that was down nearly 10 percent.

OPEC Agrees to First Crude Production Cut in Two Years

OPEC agreed to cut oil production for the first time in almost two years to arrest a steep fall in oil prices. Oil ministers of the 13 OPEC nations made their decision at a meeting today at the group's Vienna headquarters. The following table lists the agreed production cuts announced today by OPEC's member states. The figures are in barrels a day.

The Organization of Petroleum Exporting Countries decided to lower supply by 1.5 million barrels a day from November, oil ministers said today at the end of a meeting at the group's Vienna's headquarters. The reduction will be from the existing quota for 11 members of 28.808 million barrels a day.

Production Cut

Algeria                       71,000 Angola                        99,000 Ecuador                       27,000 Iran                         199,000 Kuwait                       132,000 Libya                         89,000 Nigeria                      113,000 Qatar                         43,000 Saudi Arabia                 466,000 U.A.E.                       134,000 Venezuela                    129,000  TOTAL                      1,500,000

The last time OPEC decided to slash official quotas was at a December 2006 meeting in Abuja, Nigeria. The 500,000 barrel a day cut took effect in February 2007, expanding an earlier reduction agreed in October. The cuts were reversed later in 2007 as oil rallied.

Yet moments after the decision was announced, the price of Brent North Sea crude sank to 62 dollars per barrel for the first time since March 2007.

Crude futures in London and New York have plunged close to 60 per cent from record highs of above 147 dollars a barrel reached only three months ago when supply concerns sent prices soaring.

OPEC President Chakib Khelil told reporters that the cartel's output reduction would not impact inflation or economic growth.

"There's not going to be any impact on inflation. No impact on growth," he said following the cartel's decision.

Maruti Q2 net down at Rs 296 cr

 Maruti Suzuki India Ltd reported a 37 per cent fall in quarterly net profit on Friday, as high raw material prices and higher depreciation outweighed higher sales.

Maruti said net profit fell to Rs 296 crore ($59.2 million) in its fiscal second quarter to September from Rs 467 crore in the same period a year earlier.

Net sales rose to Rs 4806 crore from Rs 4547 crore, it said in a statement.

That compared with a forecast of a net profit of Rs 369 crore on net sales of Rs 4738 crore in a Reuters poll.

Maruti, 54.2 per cent owned by Japan's Suzuki Motor Corp, holds almost half the Indian car market, with models such as the best-selling Alto and Swift hatchbacks, and has been shifting consumers to premium models such as the DZire sedan.

High cost of raw materials such as steel have hit its margins, while firm interest rates, rising inflation and a fuel price hike have dented demand in Asia's third-largest economy.

Japan leads Asian shares' plunge , Indian Markets to see huge losses

Japan's benchmark Nikkei has fallen by 5.52% in morning trading, and at one point was 7.59% down on the day.

South Korea's Composite Stock Price Index opened down nearly 6%, and Hong Kong lost 4.7%.

The falls came as new figures showed Japan's trade surplus plunged 94% in the last year due to weak exports and soaring energy import costs.

Meanwhile, the White House has said a global summit to tackle the financial crisis will be held next month.

The meeting will debate the reforms needed to avoid another financial crisis and look at the progress currently being made.

Leaders from the G20 group of nations - the world's leading industrialised countries and major developing nations - will attend.

'Risk factor'

In Tokyo, the Nikkei fell sharply as soon as the markets opened, and at one point was trading at 8,016.61, its lowest level for more than five years.

The plunge came in the wake of Wednesday's trading on Wall Street, which lost 5.69%.

"Rapid fluctuations in the stock and currency markets are risk factors to the economy," said Jun Matsumoto, a deputy chief cabinet secretary, at a Tokyo press conference.

In Seoul, the Korean won lost 5% of its value against the dollar.

'Rapid deterioration'

Job cuts at Yahoo and drugs firm Merck have increased economic concerns in the United States.

Investor sentiment was also hit by warnings from both UK Prime Minister Gordon Brown and Bank of England Governor Mervyn King that Britain was most likely now entering its first recession in 16 years.

Stocks were also dragged down by commodity stocks tracking weaker oil and copper prices.

Crude prices were down to 16-month lows on signs of falling demand. US light crude was down $5.52 to $66.66, its lowest point since June 2007.

Brent was down $5.02 to $64.70. Opec is now expected to cut production when it meets on Friday to try to shore up prices.

Widespread sell-off

Wall Street's main Dow Jones index ended down 5.7% or 514 points to 8,519 on Wednesday, while in Europe, the UK's FTSE 100 lost 4.5%, and Germany's Dax fell 4.5%.

"It appears that investors are rethinking their assumptions about the depth and duration of the recession," said Fred Dickson, chief market strategist at DA Davidson.

"They are recognising that the credit crisis has taken an annoying economic slowdown into something far more serious."

Richard Hunter, head of UK equities at Hargreaves Lansdown Stockbrokers, said attention had turned from a banking crisis - which was now considered to have been largely averted - to the possibility of recession.

"The question is, how long and deep will it be?"

He said UK GDP figures, due to be released on Friday, were likely to be in negative territory and the market was "steeling itself".

Earlier in the day, stocks tumbled to 5 year lows at wall street as investors grappled with an increasingly dire outlook for the global economy following a raft of disappointing profits and outlooks from major U.S. companies.

Plummeting commodities prices sent energy and materials company shares sharply lower. Exxon Mobil was the top drag on the Dow, down almost 10 percent.

Boeing Co's shares fell 7.5 percent after the aircraft maker reported a steep drop in quarterly profit and warned it might need to provide financing to some of its customers in 2009.

AT&T's shares fell 7.6 percent after the top U.S. phone carrier posted a quarterly profit below Wall Street's forecasts as it grappled with pressure on wireless margins.

A plunge in emerging market assets and widespread deleveraging were seen as further signs the credit crisis that has plagued the United States and Europe has begun to hit developing countries. Stock markets around the world have fallen sharply over the last two days.

"The themes remain the same: concerns about global recession, deflation and concerns about significantly reduced worldwide demand," said Michael James, senior trader at regional investment bank Wedbush Morgan in Los Angeles.

The Dow Jones industrial average fell 514.45 points, or 5.69 percent, to 8,519.21. The Standard & Poor's 500 Index dropped 58.27 points, or 6.10 percent, to 896.78, its lowest level since April 2003.

The Nasdaq Composite Index was down 80.93 points, or 4.77 percent, at 1,615.75, closing at it lowest level since June 2003.

Futures and Options (F & O) Strategies

Option Strategies
There are various options strategies used in trading.

Long Call

This strategy consists of buying a Call in the hope that the value of the underlying security will increase. Buying a Call allows to buy a determined number of shares (normally, but not always, 100) at a determined price (strike) before (in some cases only at) a set date (expiration day – normally on the Friday following the third Thursday of the month).


Long Put

This strategy consists of buying a Put in the hope that the value of the underlying security will decrease. Buying a Put allows to sell a determined number of shares (normally, but not always, 100) at a determined price (strike) before (in some cases only at) a set date (expiration day – normally on the Friday following the third Thursday of the month).

Covered Call

In this strategy an investor sells a Call while at the same time owning an equivalent number of shares of the underlying stock. The objective is to earn income in neutral markets. If the stock is purchased simultaneously with selling the Call, the strategy is commonly referred to as a "buy-write".

Long Call Spread

This strategy consists of the purchase of a Call on a particular underlying stock, while simultaneously writing a Call on the same underlying stock with the same expiration month, at a higher strike price. Both the buy and the sell are opening transactions, and are always the same number of contracts. This is a moderately bullish strategy used to capitalize on a modest increase in price of the underlying stock. To make the maximum profit on the strategy, both of the options need to be in-the-money at expiration – have intrinsic value.

Short Call Spread

This strategy consists of the purchase of a Call on a particular underlying stock, while simultaneously writing a Call on the same underlying stock with the same expiration month, at a lower strike price. Both the buy and the sell are opening transactions, and are always the same number of contracts. This is a moderately bearish to neutral strategy. To receive the maximum profit on a credit spread, both of the options have to be out-of-the money at expiration – expire worthless.

Long Put Spread

This strategy consists of the purchase of a Put on a particular underlying stock, while simultaneously selling a Put on the same underlying stock with the same expiration month, at a lower strike price. Both the buy and the sell are opening transactions, and are always the same number of contracts. This is a moderately bearish strategy used to capitalize on a modest decrease in price of the underlying stock. To make the maximum profit on the strategy, both of the options need to be in-the-money at expiration – have intrinsic value.

Short Put Spread

This strategy consists of the purchase of a Put on a particular underlying stock, while simultaneously selling a Put on the same underlying stock with the same expiration month, at a higher strike price. Both the buy and the sell are opening transactions, and are always the same number of contracts. This is a moderately bullish to neutral strategy. To receive the maximum profit on a credit spread, both of the options have to be out-of-the money at expiration – expire worthless.

Straddle

This strategy consists of purchasing the same number of Call and Put options at the same strike price with the same expiration date. The objective is to take advantage of any sudden movement in the stock price regardless of direction. The maximum risk is equal to the cost of opening this strategy, the maximum gain is unlimited.

Strangle

This strategy consists of purchasing the same number of Call and Put options at different strike prices with the same expiration date. The objective is to take advantage of any sudden movement in the stock price regardless of direction. The maximum risk is equal to the cost of opening this strategy, the maximum gain is unlimited.

Butterfly

This strategy is made up of three sets of either Puts or Calls having the same expiration date but different strikes. For example, with the underlying asset trading at 100, a long butterfly strategy can be built by buying Calls (or Puts) at 95 and 105, and selling twice as many Calls (or Puts) at 100. The objective is to execute a potentially high yielding trade at a low cost where maximum profits occur where the stock finishes at the middle strike price at expiration. This strategy is often used to take advantage of low volatility stocks.

Condors

A condor consists of four options with four different strikes. The options all have the same expiration, and the strike prices are equal distances apart. Condors can be composed of all calls, all puts, or a combination of calls and puts – the latter referred to as an “iron condor”. A condor is very similar to a Butterfly, but the two options located in the center do not have the same strikes. Having a Strangle at the two middle strike prices widens the area for profit, but also lowers the maximum profit potential.

RBI slashes repo rate to shield economy

The Reserve Bank of India (RBI) unexpectedly slashed its key lending rate for the first time in more than four years on Monday in a fresh attempt to shield the economy from the global financial crisis.

Shares and the rupee initially jumped and bond yields fell after the RBI cut its repo rate by 100 basis points to 8.0 percent with immediate effect, just four days ahead of a scheduled policy review.

The move comes about two weeks after major central banks, including in the United States, Europe and China, cut interest rates in unison to try to restore confidence in markets.

Other Asian economies, including Taiwan and South Korea, have taken similar action following the financial storm unleashed by the collapse of Lehman Brothers.

India's policy makers have taken a slew of measures in recent weeks as foreign capital was pulled out of the stock market and as credit markets seized up as onshore liquidity evaporated in part because banks were wary of lending.

"Funding constraints, capital outflow and recessionary global conditions are likely to put pressure on the growth momentum and the central bank thus is looking to counter that drag," said Gaurav Kapur, senior economist at ABN AMRO Bank.

Prime Minister Manmohan Singh said growth could slow to 7.5 percent in 2008/09 from 9 percent last fiscal year as the turmoil took its toll on Asia's third-largest economy.

"The precise impact is difficult to estimate at this point since the depth and duration of the global slowdown remains uncertain," Singh told parliament after the rate cut.

The government also asked parliament to approve an extra $21.7 billion in spending in the fiscal year to March as its subsidy bill has gone up due to high fuel and food prices, and analysts said this would put pressure on public finances.

RIPPLE EFFECT

The 13-year federal bond yield f