Morning views

Growth data, RIL to set market course


MUMBAI: Stock market investors are anxiously eyeing economic readings worldwide in the week ahead for respite from the recent market turbulence caused by the debt crisis in select European economies.

That and the trend in index heavyweight Reliance Industries (RIL) will set the tone for the market this week. RIL shares gained 3% on Friday to close at Rs 1,040 after the positive court ruling. Brokers say that the stock is unlikely to rise sharply this week, but could stay firm as nervous investors switch money from mid-cap shares to large-caps like RIL. But for the strength in RIL, benchmark indices would have fallen more than 1.5% on Friday.

Analysts recommend buying shares of Anil Ambani group company Reliance Infrastructure, which fell 7% to Rs 979.70 on Friday after the Supreme Court verdict. “The stock is a buy at around Rs 970-980 as the impact of the gas case outcome on the company is expected to be limited,” said Siddharth Bhamre, head-derivatives, Angel Broking.

Edelweiss Capital, too, is positive on the stock. “Reliance Infrastructure’s sum-of-the-part (SOTP) based on this decision (Supreme Court) would be lower by Rs 210/share, at Rs 1,241. Considering the stock has already corrected by 8% to Rs 970/share, we recommend investors to use this as a buying opportunity,” the broking firm said in a note to clients.


MOre @ Growth data, RIL to set market course


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Bull's Eye: GVK Power, Finolex, Glenmark, Hexaware, Rel Capital
10 May 2010, 0719 hrs IST

JP Morgan maintain Overweight rating on GVK Power with a new price target of Rs 57.

Investors need to wait for more quarters before leaping into Cement sector
10 May 2010, 0609 hrs IST, Amriteshwar Mathur

With weak realisations and rising cost structure putting pressure on cement companies, investors will have to wait for a few more quarters to leap into the sector.

Investors can consider UTV software communications for long term
10 May 2010, 0607 hrs IST, Rajesh Naidu

UTV Software Communications has been diversifying into various business, including broadcasting, with the investment push by Walt Disney Company. Investors can consider the stock for a long term.

Investors may consider investing in ICICI Prudential tech fund
10 May 2010, 0602 hrs IST, Bakul Chugan Tongia

Investors daring to bet on single sector may consider investing in ICICI Prudential Technology Fund.

Firstsource Solutions looks attractive at current levels
10 May 2010, 0559 hrs IST, Ranjit Shinde

The worst seems to be behind for Firstsource Solutions. Given its prospects, the stock looks attractive at current levels.

Does market indicate an entry into a bull run
10 May 2010, 0558 hrs IST, Devangi Joshi

The last week’s 5% decline in the Nifty and the manner of the decline took us down the memory lane. At the end of March 2009, in the first derivatives diary for which I made a contribution.

Is market in troubled waters?
10 May 2010, 0545 hrs IST, Deepak Mohoni

The market declined last week, sending the Sensex 4.50%, or 789.60, points lower , and the Nifty 4.93% down. The CNX Midcap Index lost 3.62%.

Corporate round up: NDTV, Parsvnath, Allcargo Global
10 May 2010, 0540 hrs IST

New Delhi Television (NDTV) continued to make losses in the March 2010 quarter. This is the seventh consecutive quarter in which the company posted losses.

IOB: High NPA and slow business growth
10 May 2010, 0531 hrs IST, Karan Sehgal

High NPA and slow business growth have crippled the performance of IOB. Investors should sell the stock

Oriental Bank of Commerce: Investors should accumulate on dips
10 May 2010, 0524 hrs IST

OBC is back on fast track after absorbing the losses of Global Trust Bank. However, the stock has gone up already. Investors should keep a check on its price and accumulate it on dips.

Nifty seen slipping below 5,000

Wkly Tech Analysis: Long-term support in sight

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NIIT Technologies

SGX Nifty jumps

Alembic

Weekly Review - May 10 2010

Allcargo Global

Ultratech Cement

Reliance Power Ltd

Value Guide - May 2010

Biocon Ltd

RCF

Aditya Birla Nuvo

Cipla

Weekly Watch - May 10 2010

LIC Housing Finance

Src: ET and DP blog etc

Mukesh Ambani wins family gas feud

Mukesh Ambani wins family gas feud

(FILE) In this picture taken on January 12, 2009, chairman of India's Reliance Industries Mukesh Ambani gestures as he speaks during the innauguration of the Vibrant Gujarat Investment Summit in Ahmedabad. The Supreme Court ruled in favour of billionaire Mukesh Ambani on May 7, 2010, in his dispute with his younger brother over a family agreement to divide the country's richest gas find, his lawyer said. (AFP)

More @ Mukesh Ambani wins family gas feud

Supreme Court favours RIL in gas dispute

NEW DELHI/MUMBAI: The Supreme Court has handed out an emphatic victory to Mukesh Ambani’s Reliance Industries (RIL), ruling that it need not supply gas to a company owned by estranged brother Anil at a previously agreed price, putting the profitability of many power plants of the younger sibling under threat and tightening government control over gas pricing.

The ruling is a setback for Anil, chairman of the eponymous Anil Dhirubhai Ambani Group (ADAG), who wants to build more than 10,000 mw of power plants across the country using gas from RIL. But the ruling would help RIL avoid potential losses it might have incurred had it lost the case, forcing it to sell gas at a lower price of $2.34 per million British thermal units (mmBtu) mentioned in the family MoU that formed the basis of the division of RIL in 2005.

In 2007, the government set a price of $4.20 per mmBtu, prompting RIL to say it would not be able to sell at the 2005 price. In a conference call after the verdict, Anil Ambani said he would not file a review petition. The only whiff of a positive outcome for the ADAG chairman was the court’s direction that RIL and Reliance Natural Resources (RNRL) should begin negotiations for a fresh gas supply agreement within eight weeks.

The negotiations, to be initiated by RIL, should end within six weeks from the day the talks begin, the court ruled. Such an agreement would have to be in consonance with government policy, it said. The RNRL scrip crashed 23% while RIL rose in a falling market.

“We direct both the parties to renegotiate to sort out the differences, but within the government’s policy of Gas Utilisation Policy and the EGoM decisions,” said Chief Justice KG Balakrishnan and Justice P Sathasivam in their separate rulings. Another member of the bench, Judge B Sudershan Reddy, said the MoU was not relevant at all, though he too directed the brothers to negotiate again.

The ruling, at its core, strongly reaffirmed the government’s right to set gas prices and to decide on its allocation. It said government policy would prevail over private contracts such as the family settlement, a position that could adversely impact private investment in sectors like minerals where the government is heavily involved.

A mechanism is provided under the PSC between the government and the contractor (RIL, in the present case). The PSC shall over-ride any other contractual obligation between the contractor and any other party," said Justice Sathasivam, writing the majority verdict.

As the case has dragged on through various courts, the government has tightened its control over the sector, not only approving the price but also directing the producer of the gas as to who it should sell to. This has suited RIL in this particular case, though it remains to be seen if the state would be willing to raise prices in line with the international prices.

RIL stressed its fealty to government policies in a statement issued on Friday evening. "The judgement recognises the dominant role of the production sharing contract and has upheld the policies formulated by government under which it has the authority to regulate the production and distribution of natural gas... In view of the judgement, RIL can only sell at the price approved by the government and only to the entities who have been allocated gas under the Gas Utilisation policy," the statement said. One possible outcome of the SC ruling might mean that a similar agreement between state-run utility NTPC and RIL for gas is also under a cloud after the verdict, though the circumstances of that case are somewhat different. NTPC lost nearly 1% to close at Rs 201.65.

Doubts over negotiations

In the post-verdict conference call, the younger Ambani was characteristically pugnacious seizing on some of the court’s observations on the need for a new gas supply agreement.

"The...court has also directed that suitable arrangements for gas supply should not only be suitable for RIL but also the shareholders of RNRL..(we) look forward to ..secure gas supply for the Group’s power plants in line with the Supreme Court order," Mr Ambani said.

But the ground rules for tweaking the MoU is far from clear and could set the stage for further legal tussles, belying hopes of RIL’s lawyer Harish Salve that the ruling from India’s highest court would encourage the warring brothers to put their bitter and seemingly unending feud behind them. "Price of gas has been upheld at $4.20 and there isn’t any change in that. Within that framework, the court has asked the two parties to renegotiate," said Mr Salve, the legal heavyweight who shepherded RIL’s case to a successful conclusion.

But a senior ADAG official said the price of $4.20 was applicable for a five-year period between 2007 and 2012. "Any power plant that we build will come up after that, so the price of $4.20 has no relevance for us," said the official, who spoke on condition of anonymity because of the sensitivity of the matter. "The government would have to eventually fix the price and it is certainly won’t be in a hurry to do so given that our gas-fired power plants are years away."

"RIL will renegotiate the gas supply agreements with RNRL in the manner and within the timeframe stipulated by the court. While the MoU may be kept in mind during the process of renegotiation, it is clearly held that the MoU is not binding," the statement from RIL said.

RIL gains, ADAG stocks crash

The Supreme Court ruling, though a victory for Mukesh Ambani, will not bring much additional monetary benefit for RIL, where investors had already factored in the $4.2-a-unit pricing for all the 80 mmscmd gas from the KG basin. Even in the worst case scenario, it might have had to supply ADAG companies only after 3-4 years when they begin operations.

RIL shares gained 2% to close at Rs 1,033.85 on Friday in a falling market, which sank with the rest of the globe due to the European crisis.

"Cash flows would (have been) negatively impacted by $700 million annually for selling 28 mmscmd of gas at $2.34/mmBtu as against $4.20 per mmBtu," Ambit Capital said in a note to investors.

RIL and its partner in the field, Niko Resources, are forecast to earn $10.63 billion in sales from the gas field. The government may earn $16.57 billion as its share of revenues from the KG-D6 field.

Shares of RNRL and Reliance Power run by Anil crashed as investors began to count the danger of owning stocks without much business. Both the companies’ fortunes were partly tied to the gas supply from RIL.

RNRL crashed 23% to Rs 53 and Reliance Power, which has the record of the biggest initial public offer in the country, tumbled 9% to Rs 140. The stock has lost 69% from its IPO price, adjusted for splits.

Reliance Power planned to build nearly 25,000 mw of power based on the assumptions that it may get gas from RIL at the agreed price. The biggest of them was at Dadri in Uttar Pradesh. In the conference call, though, Anil Ambani reiterated that he was committed to building 8,000 mw of capacity fired by gas, but he did not elaborate.

The ruling could also lead to a bigger blow to RNRL, the company that was supposed to get the gas and trade on it if SC had upheld the lower court ruling. While a favourable ruling would have given it a profit of Rs 3,000 crore a year, the absence of it makes it a near shell company with just some under-developed coal bed methane blocks and petroleum exploration licences.

There are no significant operations in both the segments to forecast revenues or profits, so there are no analyst forecasts.

The ruling dents, at least to some extent, hopes of Anil Ambani to establish a business empire comparable to his brother with power generation at the heart of it. When the brothers split with an agreement brokered by their mother Kokilaben Ambani in 2005, it was agreed that a specified amount of gas would be supplied to the younger Ambani at a particular price for his power plants. Subsequently, Mukesh’s RIL said it will not be able to do so given its agreement with the government on sharing of gas with the government. The matter was then taken to court.

Reliance Industries, the nation’s most valuable company, operates the biggest gas reserves in the Krishna-Godavari basin off the coast of Andhra Pradesh. The field known as KG-D6 has the peak capacity to produce 80 mmscmd. While RIL operates the field, the government decides the price and the quantity to be sold to various customers is laid down in the production sharing agreement. The gas was discovered before the split was formalised.

RIL m-cap up by Rs 7,500 cr; ADAG loses Rs 9,000 cr

Reliance Industries wins apex court verdict in gas row

Renegotiation may start next week: Prasad

Reliance Natural leads market down

It's a severe setback for Reliance Natural Resources

RNRL vs RIL — Government, the real victor

RIL wins it for market, helps avert a crash

Src: Economictimes, DP blog and Business-standard

Dow Jones Crashes; RIL-RNRL Case SC Verdict eyed

Wall St. rollercoaster: Stocks fall nearly 10 pct

Dow sees biggest percentage loss since 1987 on Europe fears

SC judgement on RIL-RNRL gas dispute on Friday


RIL-RNRL verdict: 2 derivatives strategies to play the stocks

US stocks plunge as trading glitch suspected

U.S. stock plunge raises alarm on algo trading




Mukesh Ambani Stocks(RIL, RIIL) and ANil Ambani Stocks (RNRL, Rpower, Relinfra, Relcap, Relmedia, Rcom) and Also NTPC are in Focus.

Src: Moneycontrol, Economictimes, Yahoofinance

RIL, RNRL shares to remain in focus on Friday

RIL, RNRL shares to remain in focus on Friday

MUMBAI: Shares of Reliance Industries and Reliance Natural Resource Ltd (RNRL) will remain in focus tomorrow as the Supreme Court is likely to deliver its verdict on gas pricing and supply dispute between the two companies, say analysts.

Marketmen said Reliance Industries and RNRL stocks, which saw profit booking today, are likely to affect investor sentiment and the movement of the market tomorrow.

"The market is keenly awaiting the judgement of RIL-RNRL case and the verdict would have significant impact on investor sentiments. Both the stocks would be in the focus," Geojit BNP Paribas Financial Services Research Head Alex Mathews said.

"Once the decision is out it will be good for the market, whichever way the verdict goes, as it will remove the uncertainty," Purpleline Investment Advisors Director & CEO P K Agarwal said.

Shares of RIL today closed nearly one per cent down at Rs 1,010.90, while RNRL shares fell marginally to Rs 68.35 on the Bombay Stock Exchange.

"The Supreme Court's verdict would certainly have impact on the movement of the market. RIL, being a heavyweight stock, would guide the movement in the key indices," Bonanza Portfolio Assistant VP (Research-Equity) Avinash Gupta said.

The dispute between Reliance Industries and RNRL, the companies led by billionaire brothers Mukesh Ambani and Anil Ambani, is over supply of 28 million cubic meter of gas a day to RNRL by RIL.

Also Read

→ Reliance to come up with unlimited local, STD call schemes

→ Reliance stock is flat: Deepak Mohoni

→ Reliance to be one of the front line movers in future: Avinash Gorakshekar

→ Reliance BIG TV launches HD-ready set top boxes

RNRL is seeking gas from RIL's KG-D6 gas fields at USD 2.34 per mmBtu, 44 per cent lower than the government set price, for its proposed 7,800 MW power plant at Dadri.

While, RIL's contention is that it cannot sell gas at a price less than USD 4.20 per mmBtu as set by the government and to customers other than those identified in accordance with the Gas Utilisation Policy (GUP).



SC judgement on RIL-RNRL gas dispute on Friday

NEW DELHI: The Supreme Court will deliver tomorrow its verdict on the gas pricing and supply dispute between energy companies RIL and RNRL. ( Watch )

A three-judge bench headed by Chief Justice K G Balakrishnan, who will be demitting office on May 11, had reserved its judgement in the lawsuit after arguments concluded on December 18.

The dispute between Reliance Industries (RIL) and Reliance Natural Resources Ltd (RNRL), the companies led by billionaire brothers Mukesh Ambani and Anil Ambani, is over supply of 28 million cubic meter of gas a day to RNRL by RIL.

RNRL is seeking gas from RIL's KG-D6 gas fields at $2.34 per mmBtu, 44 per cent lower than the government set price, for its proposed 7,800 MW power plant at Dadri.

RIL's contention is that it cannot sell gas at a price less than $4.20 per mmBtu as set by the government and to customers other than those identified in accordance with the Gas Utilisation Policy (GUP).

Also Read

→ RIL-RNRL: What SC verdict could mean for investors

→ RIL-RNRL verdict: 2 derivatives strategies to play the stocks

→ Book profits in RNRL: Sandeep Wagle, APTART Technical Advisory Services

→ Avoid Reliance Industries and RNRL: Deepak Mohoni, trendwatchindia.com

The Bombay High Court had last year upheld RNRL's claim for gas as made out in a family agreement that split the Reliance business empire between the two brothers.

The Apex court heard the case for 26 days since October 20. It also witnessed the recusal of Justice R V Raveendran from the Bench after hearing the matter for six days on the ground that he held shares of both RIL and RNRL.




Src: Economictimes

RIL-RNRL: What SC verdict could mean for investors

RIL-RNRL: What SC verdict could mean for investors

MUMBAI: Share prices of Reliance Industries (RIL) and Reliance Natural Resources (RNRL) have reacted sharply ever since reports of Supreme Court's early verdict on the KG 6 basin gas dispute surfaced. According to marketmen, the apex court may pass judgment in favour of RNRL. The verdict is likely to have some sentimental impact on the stock market, as RIL is an index heavyweight.

Analysts are not expecting a major correction in RIL even if it loses the case whereas RNRL is expected to react sharply.

"If RNRL loses the case then it will only concern the company shareholders or bear a negative sentimental impact on ADAG group shares. But if the verdict is against index-heavyweight Reliance Industries, it can have a negative impact on the market. RIL may correct up to 5 per cent and move sideways for next few sessions," said DD Sharma, senior vice-president, equity, Anand Rathi.

"RNRL will turn volatile and move sharply in either direction once the judgment is out. If it wins the case then it may move 25-30 per cent on the upside. But if it loses the case then it will fall more than 50 per cent," Sharma added.

Siddarth Bhamre, Head – Derivatives & Investment Advisory at Angel Broking, is of the view that traders should avoid trading in futures as volatility in the RNRL stock will increase tremendously. He suggests taking positions ahead of the verdict.

Also Read

→ RIL, RNRL gas dispute all set for court finale

→ Avoid Reliance Industries and RNRL: Deepak Mohoni

→ Book profits in RNRL: Sandeep Wagle, APTART

→ Avoid fresh entry in RNRL at this point: Angel Broking

"If RNRL loses the case then there will be fundamental downside for the stock. Speculative traders can buy put options in case they expect the company to lose the case. If they expect RNRL to win the case then buy 70 call option," Bhamre added.

RIL and RNRL have been fighting a legal battle over the supply of 28 million units of gas for the next 17 years at $2.34 per unit to RNRL from the gas fields of Krishna-Godavari basin, which had been awarded to Mukesh Ambani's RIL as part of the New Exploration or Licensing Policy (NELP).

"We note that a decision on the ongoing RIL-RNRL gas case dispute in the apex court is expected soon. We would highlight that our base-case fair value of Rs 1,220 on factors (a) gas sales of 28mmscmd to RNRL at $2.3/mmbtu starting FY13E (b) Profit Petroleum (PP) calculation at $2.3/mmbtu.

Hence, our fair value would be at risk to the tune of Rs 48 (4% of TP) if the PP calculation for the disputed quantity is decided at $4.2/mmbtu. A favourable verdict would imply Rs 35 upside to our fair value," said Ambit Capital in a research note after Reliance Industries reported fourth quarter results. The brokerage has a ‘Buy' rating on the stock with target price of Rs 1220 per share.

In the past one-week, shares of Reliance Industries have fallen around 4 per cent while those of Reliance Natural Resources have galloped around 10 per cent. The shares are witnessing sideways movement ahead of the verdict.

At 11:20 am on NSE, shares of RNRL were up 0.29 per cent at Rs 68.70 whereas Reliance Industries was at Rs 1018.20, down 0.24 per cent.



What are the Ambanis fighting for? | The gas row


RIL-RNRL verdict: 2 derivatives strategies to play the stocks



Src: Economictimes.

Asia shares to drop on Greek woes

Asia shares to drop on Greek woes


WELLINGTON: Asian stocks are set to slide on Thursday, as ongoing fears that Greece's debt woes could spread to larger euro zone nations hit global markets.

The main US indices were between 0.6 per cent and 0.9 per cent lower, with resources and industrial stocks the hardest hit, as investors feared possible contagion from the Greek crisis could damage global growth.

The euro hit a 14-month low against the U.S. dollar and traditional safe havens such as the yen and US Treasuries gained as anxious investors eyed heavily indebted Spain and Portugal, while violent protests against austerity measures rocked Greece.

British and Europen shares fell by as much as 1.3 per cent, as banks continued to suffer, with rating agency Moody's saying it was reviewing Portugal's rating for a possible downgrade.

Asian stocks listed on Wall Street fell 0.8 per cent, while MSCI's measure of Asia Pacific stocks excluding Japan was 1.9 per cent lower.

Japanese markets will be open for the first time this week after being closed for the "golden week" series of public holidays.

Japanese shares look likely to match the sharp losses seen on global equity markets over the past few days, with Nikkei futures traded in Chicago 380 points below the last closing level in Osaka.

Australian shares are also set to open lower, with share price index futures down 54 points to 4,637, a 37 point discount to the underlying S&P/ASX 200 index close on Wednesday.

More @ Asia shares to drop on Greek woes

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Patni promoters, PE co plan to sell stake to Japan's NTT

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Heard on the Street


Godrej Consumer zooms 9% on fund talk
Shares of Godrej Consumer surged 9% to close at Rs 307.90 on Wednesday, defying the bearish trend in the broader market. According to grapevine, the company is looking to raise between Rs 600-1,000 crore by way of a qualified institutional placement (QIP) to part finance likely acquisitions in the future, including the purchase of Sara Lee’s stake in its joint venture. Analysts tracking the company say Godrej Consumer may also acquire a hair colour firm in Latin America shortly.

A highly placed official of the Godrej Group is learnt to have been in Singapore recently to meet some foreign institutional investors and appraise them of the company’s plans for the recent acquisitions (one in Indonesia and the other in Nigeria). Buzz is that Godrej Consumer may be able to sell shares to institutional investors at a slight premium to the market price. This is in contrast to most qualified institutional placements by companies in recent times, which had to be deferred till the stock price cooled down to levels that were palatable to fund managers.

On the BSE, 3.68 lakh shares on Godrej Consumer were traded, compared to its two-week daily average volume of 1.27 lakh shares. A fund manager with a sizeable stake in the company said the stock was not exactly cheap at current levels. “The robust earnings growth in 2009-10 was helped to a significant extent by favourable raw material prices. The growth rate for this year will be healthy, but not as strong as it was last year,” the fund manager said. He added that investors will be closely watching the company’s strategies to maximise gains from its recent acquisitions. That will be the deciding factor in the stock getting re-rated hereon, he said.


‘ Friendly circles’ stock up RIL ahead of SC verdict
Reliance Industries shares saw good amount of buying interest at lower levels on Wednesday. The stock fell to an intra-day low of Rs 1,000, but climbed to Rs 1,020.75 at close, flat over the previous close. Dealers tracking the counter said the rebound was driven by support from “friendly circles”. Fund managers are awaiting the Supreme Court verdict on the gas dispute before taking a call on the stock, brokers said.

While foreign funds were heavy sellers, domestic fund managers used the declines in many other stocks to take up fresh positions or add to the existing positions, they said. Buzz is that there was good demand for shares of JSW Steel and Jindal Steel and Power. The Big Daddy of domestic institutions, a foreign fund that has trouble getting sleep, and a private insurer ‘Fun Life’ are said to have together picked up close to 10-12 lakh shares of JSW Steel. Also, the Big Daddy is learnt to have picked up around 5 lakh shares of Jindal Steel and Power.

South Indian Bank recovers from audit scare
SOUTH Indian Bank shares stabilised on Wednesday after crashing nearly 14% in the past couple of sessions. The fall was triggered after the bank said that it missed recording the interest expense on a special deposit scheme due to an accounting error. This dragged down the bank’s profits in the last quarter as the excess earnings for the first nine months had to be adjusted.

The move prompted some analysts to downgrade the stock. When contacted, VA Joseph, managing director and chief executive said: “The scheme was not linked to our IT system. This has been accounted at the end of the year now and steps have been taken to see that this does not recur.” But analysts are wondering how an error of such magnitude missed the attention of the bank and its auditors for three quarters.

Contributed by Santosh Nair

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Spare some trouble

Shoppers Stop

Idea Cellular

Biocon

Src: Economictimes, DP blog

Wall St slips on European debt worries; Dow down 225 pts

n the US markets it was the worst percentage slide since February & has put the S&P 500 at a one month low and just above its 50-day moving average.

Volatility spiked to more than a two-month high as a result. The CBOE volatility index spiked more than 20% to about 24.

Stocks were under pressure for the entire session on worries that the European debt crisis will spread. The market was buzzing with a fresh round of speculation that Spain might be next to need a bailout.

Also Read See how Asian markets are doing RSS feed for news Click here

At closing bell, the Dow shed 225.06, or 2%, to close at 10,926.77. The S&P 500 fell 2.4%, while the Nasdaq lost 3 percent.

Investors shrugged off a pair of encouraging US economic reports. Pending-home sales rose 5.3% in March, slightly better than expected, while factory orders jumped 1.3% in March, significantly better than the 0.1-percent drop expected.

European stocks erased their 2010 gain on concerns that Greece's debt crisis will spread through the region. The sovereign debt concerns led that caused Greece's Athex Composite to fall 6.7%, Spain's ibex to drop 5.4%. Portugal's general index gave up 3.8%.

The dollar hit a one-year high against the euro as investors worried that Greece may not pull off its austerity measures and that debt problems could spread to other countries.

Strength in the dollar and a sour tone in the stock market led to an over 2% drop in the CRB commodity index, its worst loss in three months.

Oil was one of the weakest commodities as it recorded its largest single-session loss in nearly three months. June contracts cracked 4% to USD 82.74 per barrel.

Gold was also lower after it gave up an early gain. The yellow metal slipped over a percent. The base metal slump continues with copper down to 7000 dollar per tonne levels.

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Top 5 picks | Mid-term picks

• Shree Renuka allots shares to farmers
• Titan: Stock seen too pricey for now
• Orient Paper: Realty pick-up helps
• Balrampur Chini: Volumes in better shape

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Daily News Roundup - May 5 2010

Worldly worries

Ambuja Cements

BGR Energy Systems

HDFC

Cadila Healthcare

Reliance Capital

Madhucon Projects

Infosys Technologies

Phoenix Mills

Cairn India

GVK Power and Infrastructure

Indiabulls RealEstate

Maharashtra Seamless

JSW Steel

Src: ET and DP blog and Moneycontrol.com

Europe debt fears hit mkts, Euro at year low

Europe debt fears hit mkts, Euro at year low


LONDON: European equities dived and the euro hit a new one-year dollar low on Tuesday, failing to win support after eurozone finance ministers agreed a 110-billion-euro (145-billion-dollar) Greek bailout.

In late morning deals, the London stock market slid 1.51 percent, Paris lost 2.04 percent and Frankfurt shed 1.36 percent. Elsewhere, Madrid tumbled 3.26 percent and Athens slumped by 3.71 percent.

In foreign exchange trade, the European single currency nosedived to 1.3088 dollars on Tuesday, plumbing the lowest level since April 28, 2009.

"Markets do not seem greatly impressed by the launch of the Greek rescue plan," said Unicredit analyst Marco Annunziata.

"The 110-billion-euro program... barely met expectations, without generating any positive surprise, and this probably helps explain the lukewarm reaction."

Over the weekend, eurozone finance chiefs approved an unprecedented three-year package of loans for Greece, struggling to shake off a crippling debt and deficit burden.

"The EU/IMF bailout of Greece provides enough funding for the next 12 months or so," said VTB Capital economist Neil MacKinnon.

Also Read

→ Gold hits 5-month high on Greece bailout concerns

→ IMF's dilemma: Help Greece, avoid villain label

→ Debt-hit Greece still spends billions on weapons

→ Greece's plan will convince markets: IMF

"However, the ability and willingness to bail out another eurozone fiscal miscreant is politically difficult," he added, hinting at other fiscally-challenged nations like Ireland, Spain and Portugal.

Of the 110 billion euros (145 billion dollars) to be made available to Greece, the eurozone would provide 80 billion and the International Monetary Fund 30 billion.

And in a policy U-turn, the European Central Bank agreed to accept Greece's junk-rated government bonds as collateral for loans.

In return, the Greek Socialist government will have to impose harsh austerity measures, as it seeks to slash its public deficit from nearly 14.0 percent of output last year to less than 3.0 percent by the end of 2014.

"The ECB's decision to suspend minimum collateral requirements for Greek bonds helps alleviate an imminent banking crisis but the ECB might find they end up doing this for other 'club Med' bonds," added MacKinnon.

More @ http://economictimes.indiatimes.com/markets/global-markets/Europe-debt-fears-hit-markets-Euro-at-year-low-against-dollar/articleshow/5890251.cms


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Govt for RIL cutting gas output for Petronet sake; RIL says no

Nifty ends below 5150 on weak global cues

HCL signs $500 mn IT deal with US pharma giant MSD




Src: EConomictimes

China may 'crash' in 9-12 months: Marc Faber

China may 'crash' in 9-12 months: Marc Faber


SINGAPORE: Investor Marc Faber said China’s economy will slow and possibly “crash” within a year as declines in stock and commodity prices signal the nation’s property bubble is set to burst.

The Shanghai Composite Index has failed to regain its 2009 high while industrial commodities and shares of Australian resource exporters are acting “heavy”, Faber said. The opening of the World Expo in Shanghai last week is “not a particularly good omen”, he said, citing a property bust and depression that followed the 1873 World Exhibition in Vienna.

“The market is telling you that something is not quite right,” Faber, the publisher of the Gloom, Boom & Doom report, said in a Bloomberg Television interview in Hong Kong on Monday.

“The Chinese economy is going to slow down regardless. It is more likely that we will even have a crash sometime in the next nine to 12 months.”

Also Read

→ Bubble forming in the property maket of China: Mark Matthews

→ Risk of asset bubbles in emerging mkts: IMF chief

→ China sounds alert over new asset bubbles in world economy

An index tracking Chinese stocks traded in Hong Kong dropped 1.8% on Monday, the most in two weeks, after the central bank raised reserve requirements for the third time this year.

The Shanghai Composite has slumped 12% this year, Asia’s worst performer, as policy makers seek to rein in a lending boom that’s spurred record gains in property prices. China’s markets are shut for a holiday on Monday.

Copper touched a seven-week low and BHP Billiton, the world’s biggest mining company, fell the most since February on concern spending in the world’s third-largest economy will slow and after Australia boosted taxes on commodities producers. Rio Tinto, the third-largest, slid as much as 6 %.

Chanos, Rogoff

Faber joins hedge fund manager Jim Chanos and Harvard University’s Kenneth Rogoff in warning of a crash in China. China is “on a treadmill to hell” because it’s hooked on property development for driving growth, Chanos said in an interview last month.

As much as 60% of the country’s gross domestic product relies on construction, he said. Rogoff said in February a debt-fuelled bubble in China may trigger a regional recession within a decade.


More @ http://economictimes.indiatimes.com/markets/global-markets/China-may-crash-in-next-9-12-months-Marc-Faber/articleshow/5887630.cms





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Heard on the Street: Tata Motors skids as US hedge offloads shares

Domestic fund goes ga-ga over Graphite India

An aggressive fund manager of a large domestic fund house is going bananas over Graphite India, a manufacturer of graphite electrodes.

According to the grapevine, this fund manager has bought a sizeable chunk of the stock recently, as he is betting on better prospects for the industry. On Monday, the stock, which has risen 16% in a month, closed at Rs 102, down almost 1% from the previous close.

According to analysts, growth of graphite electrodes, a key input in steel production through the electric arc furnace (EAF) route, will increase rapidly compared to EAF steel production in the next couple of years as steel manufacturers are stocking up graphite electrode inventory.

Further, the company is also expected to reap strong labour cost advantages as compared to its peers in the developed markets.

Tata Motors skids as US hedge offloads shares

Shares of Tata Motors snapped a three-day winning rally on Monday, ending at Rs 855.55, down almost 2%. According to the grapevine, a US-based hedge fund, whose Asia operations are run by a maverick fund manager, has offloaded a portion of their holding it had accumulated recently.

Brokers said the fund booked profits partly after the stock rose 6% last week compared to Sensex’s drop of 0.5%. The stock’s trating, which was a sell at most brokerages till recently, has been upgraded to a buy due to improvement in operations of Jaguar and Land Rover, which has been the cause of concern for most investors.

(Contributed by Apurv Gupta)

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Daily News Roundup - May 4 2010

Mumbai derailed, markets back on track

Biocon

Vijaya Bank

Subros

Indian Bank

Ashok Leyland Ltd

Src: Economictimes, DP blog and etc