SEBI removes curbs on P-Notes ,RBI cuts CRR by 50 bps

Alert:Wall Street tumbles; Dow falls below 10000
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SEBI removes curbs on P-Notes
Sebi lifts curbs on P-Notes
P-note norms revised; no cap in ODIs
SEBI removes restrictions on P-Notes

ET:
The Securities and Exchange Board of India on Monday did a U-turn by doing away with the restrictions on issue of participatory notes by fore
ign institutional investors against securities, including derivatives, as underlying.
The move seems aimed at reversing the foreign fund outflows in recent times due to the credit crisis in the US and spread to Europe. The decision, as SEBI chief CB Bhave put it, was in view of the current market conditions. Bombay Stock Exchange’s today closed below the 12,000 mark. The 30-share index shed 724.62 points or 5.78 per cent to close at 11,801.70, but off the low of 11,732.97. National Stock Exchange’s 50-share Nifty settled at 3602.35, sharply down 215.95 points or 5.66 per cent from the previous day’s close. In October last year, the markets regulator had put a 40 per cent cap on FIIs’ total asset holding via participatory notes or overseas derivatives instruments and stopped them from issuing fresh P-notes or renewal of old ones. SEBI had given FIIs an 18-month deadline ending in March 2009 to do the needful. The moved was aimed to keep track of foreign flows into the country. However, the market regulator’s decision to scrap the restriction on P-notes holding can be debated in times when the world markets are faced with a liquidity crisis and plumbing lows. There could only be a short-term bounce back and a long-term benefit for the market, say marketmen. There could hardly be any major trend reversal in the market as FIIs are pulling out persistently from the emerging market like India, on the worries that most of the major economies heading towards recession following the liquidity crunch, said a senior official with a global investment firm. “However, the move is positive for long-term but in this environment we don't think any major positive change in the domestic market until and unless global crisis settles down.” According to Amitabh Chakraborty, president-equity, Religare Securities, “This should be a positive for the market, although majority of the FIIs are way below the 40% limit today, and hence sufficient headroom already exists for FII investment through the P-note route. FII eligibility criteria remain unchanged.” “We believe that a short term bounce back is likely, as the US is in an oversold zone and a sharp relief rally is possible there, but we remain cautious. While a short term spike of 10 to 15 percent in Sensex can't be ruled out, we are seeing market bottoming out at about 9000-10000, given our Sensex earnings estimates of 10-12% in FY2009 and historically market had bottomed out at about 9-10x forward earnings,” Chakraborty said of the markets. However, Anand Tandon, director of equities, Brics Securities, was sceptical about the SEBI move having any great impact on the markets, “One thing you need to understand that global situation is the dominant factor now. The impact of removing restrictions on overseas derivative instruments would be virtually a muted one considering the unprecedented global financial crisis. It seems to be pertinent move considering the current market situation, but I doubt that it would trigger massive inflows of FIIs. Though it signals of almost an ‘all-norms-relaxed’ move, the situation in the US is still gloomy and impact of which cannot be ruled out the domestic market movement,” Tandon said. The market’s fall from 21206.77 on Jan 10 this year started with trouble brewing in the US following defaults on home loans or the sub-prime crisis and spreading to financial institutions having exposure to this market. G Venkatramani, executive director, Nextgen Capital, said, “This could trigger a short-term recovery in the market but would not hold the downtrend for a long as the global markets are still wobbling with negative vibes though the domestic fundamentals are still sound.” According to Euromax Capital Services, “As the asset value has been falling sharply, this 40 per cent is really very less for the market. Thus, SEBI's move should be taken as a positive one, but a greater impact is less possible due to meagre liquidity in the system.”
SEBI revises P-note norms; lifts 40% cap in ODIs

Sebi revises P-note norms, scraps ODI restrictions

The Sebi Board met today in the backdrop of the global financial turbulence. The meeting took stock of the impact of the turbulence on the Indian capital markets and evolve suitable policy responses.
CB Bhave, Chairman, Securities and Exchange Board of India (SEBI), said norms on participatory notes have been revised and the limit on overseas-derivative instruments (ODIs) in both cash and derivates will be removed. “The 40% cap on assets under custody in cash market will be removed,” he said.
Earlier, in October 2007, the Sebi had banned fresh issue of P-Notes by FIIs. This was done to check the significant flow of foreign funds into the Indian stock markets. The excess liquidity was difficult for the financial market regulators to handle.

Here is a verbatim transcript of CB Bhave's address to media persons. Also see the accompanying video.

We had received a lot of feedback from various stakeholders. The Board considered all the views that had been received as well as the proposal that we had put up. It has been decided that the SME exchange can be either in the form of a new exchange, or an exchange trading platform of an existing exchange, and that there will be competition in this area. So, it is not going to be one exchange that would be licensed by us to be set up as an SME exchange.

The board also decided that the eligibility criteria would be made public by us. Then the exchange, which is newly setup for this purpose, or an exchange that is proposing to setup an existing exchange, which is proposing to set up a platform, can apply and Sebi will then consider those applications.

The board also considered the issue of norms that we have laid down for shareholding by individual shareholders in the demutualised stock exchanges. Again a discussion paper on this was put out by Sebi. As you are all aware the proposal in that discussion paper was to enhance this limit from 5% to 15% for some category of shareholders.

So, the board approved this limit from 5% to 15% for six categories i.e. public financial institutions, stock exchanges, depositories, clearing corporations, banks, and insurance companies.

It also discussed the issue of the entire framework that governs the participation in our markets by what we call FIIs, or foreign institutional investors. The board was of the view that the entire structure needs a comprehensive review. For this purpose, it was decided that we will put out a policy paper, which will be in the public domain for receiving comments from people.

The board also reviewed the decisions of October 2007 with regard to the offshore derivative instruments, or Participatory Notes as they are popularly called. It was decided at that time that these decisions would be subsequently reviewed on the basis of the data that we receive.

On the basis of this review, the board decided that the restrictions on ODIs on derivatives will be removed. Also, the restrictions on having only 40% ODI in the cash investments will also be removed. So, both restrictions that were put for offshore derivative instruments have been decided to be removed. They are no longer applicable.

The board in October 2007 had also decided that we will expedite the process of registering FIIs and sub-accounts so that people come and directly register here in the Indian market. It reviewed that position as well and it was reported to the board that during the last 11 months – October 31, 2007 till now – 397 FIIs and 1,160 sub-accounts have been registered. So, we found that that process is going on smoothly.

These were three important decisions that were taken in the meeting today.

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RBI cuts cash reserve ratio by 50 basis points
CRR cut by 50 bps; Bankers don't see cheap loans soon
RBI cuts CRR by 0.5%
Industry hails CRR cut
RBI cuts CRR by 50 bps to 8.5%
RBI cuts CRR by 50 bps to 8.5%, effective October 11

MUMBAI: The Reserve Bank on Monday slashed by 0.50 per cent the rate of mandatory deposits that banks need to keep with it to ease the tight liquidity position, a move that may induce banks to lower commercial lending rates. The new Cash Reserve Ratio (CRR) of 8.5 per cent will be effective from October 11 and would unlock about Rs 20,000 crore into the banking system, RBI said. This is the first time in almost three years that the bank has relaxed its tight monetary policy stance that it had adopted to contain inflation. The move, which comes in the backdrop of inflation easing below 12 per cent and outflow of foreign capital, is aimed at infusing more funds in the financial system.

==================================
Other TOP stories:
FIIs shed equities worth Rs 2,051 cr
Mkts at 2-yr low: What are experts saying?
Rupee at 5-½ year low as shares slide
Crude oil prices tumble to 8-month low
Wall Street tumbles; Dow falls below 10000
Govt earned Rs 1,47,197 cr in I-T

London stocks slump 8.65%
Investor's wealth below Rs 40 trillion
Falling Re to pull down IT Q2
'Capitulation phase of bear mkt for '08 on'
Thermax bags Rs 450 cr order for captive power plant
D-Street meltdown: 162 stocks hit 52-week lows

SEBI does a U-turn on P-notes as market hits bottom
SEBI does U-turn on P-notes; move could trigger short-term bounce
BNP Paribas' 12-month Sensex target 9476
Nikkei falls to 4-year lows, economy worry hits hard
Brazilian stocks massacred, triggers two trading suspensions

RBI - our banks are ok !
Wall Street tumbles
Term - credit default swap
RBI cuts CRR by 50 basis points
Sebi removes curbs on P-notes
Rupee slides again / RIL, Reliance Capital, RPL October 2008 futures at...
Asian Markets Consolidate Losses As Financial Worr...
Post Session Commentary - Oct 6 2008
Bail-out approval fails to raise spirits
Market tumbles as global financial crisis spreads
Nervousness may continue

Stock Technical Levels
Daily News Roundup - Oct 6 2008
Mountains of worry! Weekly Technicals - Oct 6 2008
GAIL India Q2FY09 Fertlizer Preview
ULIPs vs Mutual Funds
Mahindra Holidays & Resorts files DRHP
Bajaj Hindustan India Utilities
Is India insulated ?


Source:ET,MC,BS,Sify,Rediff,Deadpresident blogs etc

Sensex plummets 725 pts on global weakness, Sensex at 2 year low

Sensex plummets 725 pts on global weakness

Indian market tanks over 5%

It was a long trip down south for benchmark indices Sensex and Nifty today as the bears thronged the ring at the opening bell and remained busy trampling down stocks cutting across sectors right till the end of the session.
Stockometer
The passage of the $700 billion bailout bill did nothing to lift the sentiment in global markets. The Wall Street had ended on a weak note last Friday after trading firm till the final hour. Asian markets went into a tailspin on doubts about the effectiveness of the bailout package in reviving the financial sector from the current turmoil. European markets crashed as well.
Top gainers
With the reporting season just a few sessions away and fears of heavy fall in revenues for the quarter ended September 2008 haunting the sentiment, investors appeared least inclined to pick up stocks today.
Worst losers
The Sensex crashed to 11,732.97, its lowest level in more than two years. It ended the day 11,801.70 with a massive loss of 724.62 points or 5.78%. The Nifty closed 5.66% or 215.95 points down at 3602.35. It touched a low of 3581.60.

BSE CD went down by 11%. The Realty and Metal indices tumbled 9.91% and 9.27% respectively. BSE CG and Power lost around 7.25%. Oil & Gas index ended 6.14% down. The IT and Teck eased by 5.82% and 5.62% respectively. BSE Healthcare, FMCG, Bankex, PSU and Auto lost 3.5% - 4.8%.

Midcap and smallcap stocks were slaughtered. BSE Midcap lost 7.13% and Smallcap ended lower by 6.92%. The market breadth was very weak right through the session. On BSE, only 281 stocks posted gains. 2369 stocks declined and 27 stocks ended flat.

Selling was so widespread that not even a single Sensex stock ended on a positive note today. Among Nifty stocks, Tata Communications (2.35%), BPCL (1.95%) and GAIL India (0.75%) bucked the weak trend and ended with gains.

Sterlite Industries (down 15.25%) was the biggest loser in the Sensex. Reliance Infrastructure (down 13.9%) was sold heavily in the final hour of trade. Jaiprakash Associates (down 13.55%) had another miserable outing. Tata Steel lost over 11%. DLF ended 10.3% down. Tata Power closed with a loss of 10.15%. Reliance Communications and Grasim Industries closed lower by 9.95% and 9.5% respectively. BHEL lost 7.45%.

Reliance Industries slipped by around 6.75%. Ranbaxy Laboratories lost 6.55%. Larsen & Toubro, Wipro, Satyam Computer Services, Tata Consultancy Services, HDFC Bank, HDFC, ITC, Infosys Technologies and Tata Motors lost 5% - 6.5%.

ACC, Bharti Airtel, Hindustan Unilever, ICICI Bank, Mahindra & Mahindra, Maruti Suzuki, ONGC and State Bank of India ended lower by 2% - 4.25%. Hindalco and NTPC also closed with sharp losses.

Suzlon Energy went down by 13.8%. Cairn India slipped by over 11%. Unitech, Reliance Petroleum, Ambuja Cements, Reliance Power, HCL Technologies, Nalco, Zee Entertainment, Idea Cellular, ABB, SAIL and Sun Pharmaceuticals lost 4% - 9%. Hero Honda, Siemens, Cipla and Power Grid Corporation also declined sharply.

Spice Telecom tumbled by over 30% today. Praj Industries, Aban Offshore, Chambal Fertilizers & Chemicals, Shriram Transport, GVK Power, JSW Steel, HDIL, Hindustan Construction Company, Century Textiles, Jindal Steel, India Bulls Financial Services, Phoenix Mills, IB Securities and Bombay Dyeing lost 13% - 20%.

Monnet Ispat, S Kumar's Nationwide, ICSA, Great Offshore, Sterlite Technologies, Gitanjali Gems, Shopper's Stop, Kansai Nero, Shree Precoated Steel, Prakash Industries, Madhucon Projects, Orbit Corporation and Motherson Sumi were some of the big losers in the midcap space.

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Sensex @ 2-yr low

The Sensex opened with a negative gap of 242 points at 12,284 on the back of negative cues from the global markets. The NSE Nifty is down 216 points at 3,602.The US markets on Friday tumbled despite the House of Representatives clearing the $700 bn revised bailout package. As a result of which Asian markets were down 3-4% on an average at the opening bell.
Eventually, most of the asian markets like Hang Seng, Nikkei, Straits Times, Shanghai Composite and Seoul Composite indices ended with losses in the range of 4-6% each.
Bank home, the index too witnessed unabated sellling and tumbled below yet another psychological mark of 12,000, to a low of 11,733 - down 793 points from the previous close. The Sensex finally ended with a significant loss of 725 points (5.8%) at 11,802.
In the process, the index has shed 9.6% (1,254 points) in the last two trading sessions, and is down a whopping 41.8% (8,484 points) so far this year.
The BSE Realty index slumped almost 10% (330 points) to 3,000. The Metal index plunged 9.3% (780 points) to 7,636. The Capital Goods and Power indices tumbled over 7% each to 9,495 and 2,066, respectively.
The market breadth was extremely negative - out of 2,677 stocks traded, 2,369 declined, 281 advanced and 27 were unchanged on Monday.
BIG LOSERS...
Sterlite slumped over 15% to Rs 335. Reliance Infrastructure tumbled 14% to Rs 638, and Jaiprakash Associates [Get Quote] plunged 13.5% to Rs 100.
Tata Steel [Get Quote] crashed 11% to Rs 350. DLF, Tata Power [Get Quote] and Reliance Communications [Get Quote] dropped around 10% each to Rs 302, Rs 798 and Rs 300, respectively.
Grasim [Get Quote] shed 9.5% at Rs 1,591. BHEL crumbled 7.5% to Rs 1,449.
Reliance, Ranbaxy [Get Quote] and Larsen & Toubro slipped around 6.5% each to Rs 1,642, Rs 246 and Rs 1,083, respectively.
Wipro [Get Quote] and Satyam [Get Quote] dropped over 6% each to Rs 320 and Rs 294, respectively.
TCS [Get Quote], HDFC Bank [Get Quote], HDFC and ITC declined around 5.5% each to Rs 619, Rs 1,202, Rs 1,965 and Rs 180, respectively.
Infosys [Get Quote] and Tata Motors [Get Quote] were down over 5% each at Rs 1,318 and Rs 314, respectively.
MOST ACTIVE COUNTERS
Reliance topped the value chart with a turnover of Rs 381 crore followed by Reliance Capital [Get Quote] (Rs 244 crore), Axis Bank (Rs 141 crore), ICICI Bank [Get Quote] (Rs 119 crore) and Tata Steel (Rs 117.70 crore).
Debutant 20 Microns led the volume chart with trades of around 1.30 crore shares followed by IFCI (1.06 crore), Reliance Natural Resources [Get Quote] (1.04 crore), Reliance Petroleum [Get Quote] (71 lakh) and Jaiprakash Associates (59 lakh).

Source:ET,Sify

Week Ahead: Another test of support at 3,800

Week Ahead: Another test of support at 3,800

If the market closes below 3,715, it could lose another 200 points landing between 3,500-3,550.

A pattern of crash, recovery and another crash saw the Nifty back at 3,818 points for a week-on-week loss of 4.19 per cent. The Sensex eased to 12,526 points for a loss of 4.39 per cent. The Defty was down 5.19 per cent with the rupee diving below the 47 mark.

Volumes were low and declines outnumbered advances by a hefty margin. The FIIs were massive sellers which contributed to pressure on the rupee. Indian institutions were token buyers. The Nifty Junior lost 4.47 per cent while the Midcaps 50 lost 5.33 per cent and the BSE 500 lost 4.78 per cent. Incidentally both Sensex and Nifty hit respective 52-week lows of 12,153 and 3,715.

Outlook: Prospects are bearish. But it’s possible that support at the current levels will hold. If so, the Nifty will range-trade between 3,715-4,150. If the market closes below 3,715, it could lose another 200 points landing between 3,500-3,550.

Rationale: The new lows confirmed an intermediate downtrend is in force. The breach of support at 3,800 on intra-day basis also suggests that sellers are becoming more powerful than buyers at that level. This makes it likely the market will make a downside breakout with a target projected to 3,500.

Counter-view: The intermediate downtrend has been in force since mid-July when the market hit a peak of 4,650. Since then, it’s been lower highs and lower lows. After six weeks, the downwards momentum may ease, though this is unlikely in a long-term bear market. If the market does trade up but it will run into resistance between 4,000-4,150. A serious recovery is most likely closer to settlement when short covering would be present.

Bulls & bears: Metals were among the worst performing sectors in a week when around 1,000 stocks touched their respective 52-week lows. Tata Steel, Sterlite, Sail, Nalco, Jindal and Hindalco all did badly. Banks saw wild swings after ICICI was the target of rumours of bankruptcy and other bank stocks also saw selling followed by recovery. The Bank Nifty eventually lost just 0.6 per cent.

FMCG majors like HUL, ITC and Colgate held their ground. Pharma stocks such as Dr Reddy’s, Sun Pharma and Lupin did well and even Ranbaxy looked to have bottomed. Real estate and other rate sensitive stocks such as automobiles, financial institutions and NBFCs generally lost ground.

However two-wheelers like TVS and Hero Honda did much better than four wheelers. The IT industry continues to suffer from fears of US recession and the CNX IT lost 3.3 per cent. The trader’s choices next week vary from shorts, to stocks that may be bottoming, to the odd defensive holding.

Hind Unilever
Current Price: Rs 256.7
Target Price: Rs 265

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Despite a reduction in trading volumes, HUL has held its price gains in a weak market. It may have completed a breakout when it closed above Rs 255. The stock has a potential upside till Rs 265 and a downside till around the Rs 245 levels. Keep a stop at Rs 250 and go long.

ICICI Bank
Current Price: Rs 504.35
Target Price: Rs 550

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The stock saw amazing gyrations between a low of Rs 460 and a high of Rs 565 as it generated high volumes. It has support close to the current price and is most likely to settle into range trading between Rs 500 and Rs 560. Keep a stop at Rs 495 and go long, intending to book profits above Rs 545. If Rs 495 is broken, the next support is Rs 480.

Lupin
Current Price: Rs 770.2Target Price: Rs 810

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The stock has made an upwards breakout on a volume expansion. It faces resistance between Rs 770 - Rs 780 and it has a possible upside till the Rs 810 levels. Keep a stop at Rs 760 and go long. Be prepared to wait up to 10 sessions while it traverses Rs 770 - Rs 780.

Tata Steel
Current Price: Rs 393
Target Price: Rs 380

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The stock has made a downside breakout on heavy volumes. It has a target projection of Rs 380 and this may be exceeded due to high volume. However, any pullback is likely to lead to a bounce till the Rs 420 levels so, there are risks involved in going short. Keep a stop at Rs 400 and go short. Book partial profits at Rs 380. If the Rs 400 stop is broken, go long with a target of Rs 420 and a stop at Rs 395.

TVS Motor
Current Price: Rs 35.65
Target Price: Rs 42
The stock is testing resistance at Rs 36 and if it closes above Rs 36.5, it is likely to have a target of Rs 42. Volumes have been on the high side, which is a good sign in a breakout situation. Keep a stop at Rs 34.5 and go long. Increase the position between Rs 36.5 and Rs 37.5.
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INVESTOR GUIDE frm ET

Bank, energy stocks ease blow for MFs6 Oct, 2008, 0549 hrs IST
NAVs of actively managed diversified stock funds slumped in September, but most of them outperformed the benchmark stock index, cushioned by cash and a softer fall in bank and energy stocks.

The bear grip tightens 6 Oct, 2008, 0546 hrs IST, Deepak Mohoni
The indices remain in the intermediate downtrend which started from the BSE Sensitive Index’s September 8 high of 15,107.

Pressure continuously mounting on Nifty 6 Oct, 2008, 0543 hrs IST, Shakti Shankar Patra
The pillar on which the five-year bull market was built - something that had come to the Nifty’s rescue even during the current crisis - is now busted.

Hedge, private equity funds head for the rocks 6 Oct, 2008, 0534 hrs IST
Forced deleveraging and potential global recession mean the whole range of alternative investments, including real estate and commodities, are very vulnerable.

Hindalco's rights issue: A good investment opportunity 6 Oct, 2008, 0528 hrs IST, Santanu Mishra
Strong fundamentals and a good offer price make Hindalco’s rights issue a good investment opportunity. But if its share price falls well below the offer price, investors will be better off buying the stock from the open market

Even dividend can generate better returns 6 Oct, 2008, 0525 hrs IST, Karan Sehgal
Investing in select stocks from a purely dividend point of view can generate better returns in the long run than investing in the seemingly high interest-paying fixed deposits

Ipca Labs contemplates huge expansion plans 6 Oct, 2008, 0518 hrs IST, Kiran Kabtta
Ipca Labs has an integrated business model with huge expansion plans. Investors can consider the stock based on its growth & value prospects

Good time to begin systematic investing 6 Oct, 2008, 0513 hrs IST
It is too early to make positive predictions about the tsunami that has hit global financial markets. But as things get back to normal slowly, the surroundings will change for the better. This is a good time to begin systematic investing.

Slowing economy may offer respite to retail sector 6 Oct, 2008, 0507 hrs IST, Supriya Verma Mishra
A slowing economy may offer some respite to the domestic retail sector. Falling rentals now provide a glimmer of hope to players who are on an expansion overdrive and experimenting with new formats

The grim scenario of Rupee 6 Oct, 2008, 0500 hrs IST, Ramkrishna Kashelkar
From moving in a fairly stable range over the past three years, the rupee suddenly finds itself swerving around in a rather rocky terrain.

Source: Economic Times, Business standard.

SEBI may ease PN curbs to pep up Dalal St

SEBI may ease PN curbs to pep up Dalal St

The government and financial regulators are set to ease some of the restrictions imposed on foreign portfolio investors last year. The move is part of an effort to bolster capital inflows which have been slowing down lately, according to persons familiar with the matter. Capital market regulator the Securities & Exchange Board of India (SEBI) is likely to discuss a proposal to this effect at its board meeting on Monday.

Foreign institutional investors (FII), who were barred from holding more than 40% of their assets in participatory notes (PNs), could be given some flexibility on this count in the backdrop of the changed scenario in the domestic financial market. The 18-month deadline — ending in March 2009 — to unwind certain PN positions is also likely to figure at the meeting, sources close to the development said. In October 2007, Sebi had placed a ban on either fresh issuance or renewal of PNs by foreign portfolio investors or their sub-accounts in cases where the underlying Indian securities were derivatives. These investors were then directed to wind up their current position over 18 months. It was also decided then to cap the percentage of PNs or offshore derivative instruments (ODIs) outstanding at 40% of the total assets under custody of a registered foreign portfolio investor. One option could be to extend the March 2009 deadline for winding up of positions in cases where PNs have been issued with derivatives as the underlying. A more rigorous know your client (KYC) norm may also be imposed to address concerns relating to money laundering and terrorism financing, if the proposal to ease the current restrictions goes through. With the seizure of credit markets abroad and the attendant squeeze on liquidity , capital inflows into India, be it in the form of portfolio inflows, foreign borrowings or private and venture capital, has been hit over the past few months. Foreign institutional investors (FIIs) have so far taken out close to $10 billion, while foreign borrowings have aggregated close to $10 billion so far compared to net borrowings of $22 billion during the last fiscal. Foreign direct investment (FDI) flows though have been robust at over $10 billion in the first quarter of this fiscal. Sceptics say impact of PN rules change limited However, given the assessment of significantly lower inflows over the next couple of quarters, the government, Sebi and RBI are considering whether to ease the October 2007 restrictions imposed on FIIs in the form of a ban on issuance of ODIs or PNs as they are popularly known, a person close to the development said. ODIs or PNs are derivatives issued against an underlying Indian security, which could be shares or derivatives, by foreign portfolio investors registered in India to overseas investors who are not registered here or seek to trade anonymously.


At that time, the government had defended the move, saying it was aimed at moderating inflows . Large inflows put pressure on monetary policy managem
ent in terms of containing growth of money supply (created through release of rupee funds into the system for mopping up of dollars) and the risk of higher inflation.

“The scenario has changed now. We need to weigh global factors and attract inflows,” said a person associated with the review exercise. Even in October 2007, the finance minister had said that there was no move to completely ban PNs and that the restrictions were to moderate inflows. He had said that the move was in the interests of all categories of investors. However, in the past, RBI had made it clear its discomfort on the issue of PNs and when inflows soared to over $10 billion in September 2007, sought a ban on fresh or incremental issuance of PNs. RBI’s concern also related to the identity of the beneficiary of this instrument.

The central bank has consistently been sceptical about PNs compared to Sebi and the finance ministry. After the ban came into force, the share of PNs in total portfolio inflows is reckoned to have fallen from over 51% in August 2007 to almost half. Since January 2008, the Indian market has fallen in line with global trends. Morgan Stanley estimates that capital inflows have declined to $30-35 billion during April-August 2008 compared with $108 billion in the fiscal year 2008. There are enough sceptics who feel that tweaking the rules now may not have much of an impact in the short term. Their reasoning is that given the redemptions being faced by many hedge funds and the fact that some of the biggest issuers of PNs — such as Merrill Lynch — themselves are in trouble, the impact of a change in policy could be quite limited. But there are others who counter this by saying that the growth story is still attractive.

Coupled with this is the fact that the market is perceived as well-regulated. The data collected after imposing restrictions on PNs would be placed before the board on Monday. Though, the board had held some discussions on the matter at its last meeting also, it wanted to deliberate more on the issue before taking a decision.

Policymakers are of the view that capital flows should be eased to take some pressure off the rupee which has been slipping against the dollar. The finance ministry has already eased some restrictions that were imposed on external commercial borrowings last year in order to increase capital flows into India as well as address the fund requirement of the corporate sector. Sources in the government also said more measures that could boost capital flows into the country could be considered.

Source:ET

Bear Market Analysis 2008 Part 1,2

Bear Market - 2008 - Part 1

Global markets are in midst of a severe sell off. We are in a terrible bear market, and the question we need to ask - Is this the repeat of bear market of 2000-2002?The answer is may be YES.There is amazing similarity you can spot on charts between what is happening now and what happened in 2000-2002. The image below is the Nifty weekly chart of 2000-2002 period -

As you can see in the chart above, the 2000-2002 bear market was not only painful in terms of price correction but also time correction. Here are some facts -

* Nifty peaked in Feb 2000

* It then took 8 months for the market to slide to 200 week moving average. The price correction was 36% and it happened between Feb 2000 and October 2000.

* The market then bounced back from 200 week moving average - 20% bounce. This was Oct-Feb period - generally goo d p eriod of equities* The market then tumbled below 200 week moving average in March 2001.

* The market sharply tumbled 30% on break below 200 week moving average.

* Time Correction - It took 29 months for market to recover once market slipped below 200 week ma. It was a painful slow recovery.

* Every rally below 200 week ma got arrested at 200 week ma during those 29 months of recovery.

* The bull market resumed when market finally broke out above 200 week ma in August 2003.

Ironically now, a similar story is getting played out in 2008. FYI - 200 week moving average = 3648. This level also coincides with 50% retracement of bull run from 920 to 6300.
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Bear Market - 2008 - Part 2

Let's compare 2000-2002 period with current period of 2008 and what scenarios can play out of it's the exact repeat of 2000-2002 period.

(A)2000-2002 Bear Market (B) 2008 bear market
Assume A as 2002 bear mkt, and B as 2008 bear mkt.

A)Nifty peaked in Feb 2000
B)Nifty peaked in Jan 2008

A)It took 8 months for the market to slide to 200 week moving average (Feb 2000 to October 2000)
B)Nifty is about to touch 200 week ma and it's already 9 months (Jan 2008 - Sep 2008)


A)Price correction to 200 week ma from peak = 36%
B)Price correction to 200 week ma from peak = 42% (not reached to 200 week ma)

A)There was 20% bounce after market touched 200 week ma and it happened during Oct-Feb which is goo d p eriod of equities.
B)May Happen ...It means market may bounce from 3650 to 4500 levels in next 3-4 months...pre- election/ seasonal rally

A)The market then tumbled below 200 week moving average in March 2001.
B) The next wave of correction may come in Feb-March 2009 just before elections and market can slip below 200 week ma

A)The market sharply tumbled 30% on break below 200 week moving average.
B)Quite possible during elections - Nifty can tumble 20 to 30% below 200 week ma

A)Time Correction - It took 29 months for market to recover once market slipped below 200 week ma. It was a painful slow recovery.
B)The real bear market painful period may come in 2009-2010 period and bull market may resume in 2011.

A)The bull market resumed when market finally broke out above 200 week ma
B)200 week ma can be a pivot point for next bull run

It means we may see a strong bounce in next 3-4 months before we see another sharp correction.

Source: Deadpresident blog, StateoftheMarket.net
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Other Deadpresident articles:

Oil slips after job report, $700B bailout
Maharashtra Seamless
Q2FY09 Oil Field Services
Jupiter Biosciences
Weekly Wrap - Oct 6 2008
Cement Sector Update
Havells India
Essar Oil
HDIL
Satyam Computer Services
Futures and Options - Oct 4 2008

Lanco Infratech
Banking Sector
Maruti Suzuki
ABB
IT Sector
Reliance Communications
Aban Offshore
TCS

Video - Interview with Warren Buffet
State Bank of India
RBI to Banks - tell us how much you are losing!
Q2FY09 IT Earnings Preview
Q2FY09 Pharma Earnings Preview
Q2FY09 Auto Earnings Preview

More @ http://deadpresident.blogspot.com

RIL dips 8.5 pc on bourses, touches 52week low

RIL dips 8.5 pc on bourses, touches 52-week low

Shares of India's largest private sector firm Reliance Industries on Friday plunged as much as 8.50 per cent during the day and witnessed an all-time low of Rs 1745.10 on the bourses. On the Bombay Stock Exchange, RIL opened on a weak note today at Rs 1,875 and then lost further ground and touched an intra-day low of Rs 1745.10, a dip of 8.50 per cent over its previous close.

On the National Stock Exchange, the scrip opened at Rs 1959, up by Rs 52.3 from its previous close and the company soon lost its ground and touched a 52-week low of Rs 1,745.65.

Ashika Stock Brokers' Research Head Paras Bothra said "The dip in RIL stock was largely because of the declining trend in crude oil prices which is hovering around USD 94 per barrel. Besides, refining margin is down across the world and because of unwinding of hedge funds." On the volume, front good movement was witnessed as over 1.06 crore shares exchanged hands on NSE and 366.01 lakh shares got traded on BSE.

Reliance Industries, which has a 14.52 per cent weightage in the Sensex, dragged the 30-share index down. The BSE barometer index opened weak fell further to record a loss of 529.35 points at 12,526.32 as funds turned aggressive sellers in heavyweight stocks including market leader Reliance Industries and IT bellwether Infosys Technologies. Other major oil refining firms also had a bad day on the bourses. State-run Oil and Natural Gas Corporation was down 2.23 per cent at Rs 1,019.60, Reliance Petroleum was at Rs 137.40 (down 2.24 per cent) and Indian Oil Corporation was quoted at Rs 400.30 (down 0.58 per cent).

RIL promoter holding dips by 6 pc in Q2
Reliance founders convert $3.6 bn warrants
IOC awaits changes in tax laws to buy diesel from RIL
RIL warrant conversion ups promoter stake to 49%
Reliance Industries seeks sops to sell fuel in India
RIL to begin test runs of Jamnagar refinery in few days
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Other TOP stories:
Tata puts a full stop to the Singur story
West Bengal govt shattered by Tatas' pullout
Motown divided over Tatas' Singur pullout
Singur Pangs: Nano project may drive into Bhuj

Inflation rate trims to 11.99 pc
Historic bailout bill passes Congress; Bush signs-
Stocks end lower amid worries after House OKs plan
Wells Fargo agrees to buy Wachovia, Citi objects
US sees private investments in N-sector

Web18 launches horizontal portal In.com
Nuke reactor imports in 8 months
Oil falls after US bailout vote
TCS close to buy Citi's BPO arm
We always evoke worst perception, criticism: ICICI Bank

R S Lodha passes away in London
Emami sweetens its open offer price for Zandu to Rs 16,500
Nuclear power in India could increase 15 fold: Study
L&T buys 4.2% stake in Kalindee Rail
Ambani-Spielberg JV by Jan, likely to set up studio in LA

Pinc initiates 'buy' on Nelcast for target Rs 104
Analysts' picks: Jindal Steel & Power
Analysts' picks: Cairn India
Heard on the street
Analysts' picks: Lanco Infratech
Analysts' picks: NTPC

Source:ET,Sify,Yahoo Finance etc

Sensex ends 529 pts down on weak global cues

Sensex ends 529 pts down on weak global cues
Investors world over lose $10 trillion so far this year

After staying at the sideliness for a couple of sessions, the bears staged a comeback and went on a rampage today. The Wall Street had closed on a highly negative note yesterday despite the Senate approving a revised bailout package for the financial sector. Asian markets followed suit today and this prompted the bears to storm the Indian bourses when trade commenced this morning.
Stockometer
Concerns over high inflation, declining growth and fears of some disappointing quarterly numbers from India Inc weighed in so heavily that the market easily ignored the passage of the Indo-US civilian nuclear pact by the US Senate.

While the Sensex, which plunged to a low of 12,472.61 in late afternoon trade, ended the session at 12,526.32 with a loss of 529.35 points or 4.05%, the Nifty settled at 3818.30 with a loss of 132.45 points or 3.35%. The Nifty touched a low of 3804.35 this afternoon.

Top gainers Worst losers
Capital goods and power stocks did open well but they lost their way quickly and drifted down into the red. Metal stocks plunged on weak trend in global metal markets. Bank, information technology, oil and telecom stocks struggled for support. Pharma stocks, with the exception of a select few - Ranbaxy Laboratories, Dr. Reddy's Laboratories, Sun Pharmaceuticals, Lupin, Pfizer and Orchid Chemicals closed on a firm note - stayed in the red almost right through the session.
Scrip Scan Experts' Talk
Among Sensex stocks, only Ranbaxy Laboratories (4.85%), Mahindra & Mahindra (1.7%) and Hindustan Unilever (0.85%) closed on a positive note today. Ranbaxy surged on the back of reports that the US Department of Justice may withdraw a motion against the company in a local court in US.
Tata Steel ended with a huge loss of 10.2% at Rs 393.80. ICICI Bank lost 8.5% on heavy selling at the counter in afternoon trade. Sterlite Industries declined 7.8% and index heavyweight Reliance Industries went down by 7.65%.
Tips to book profits in stock markets! Click here
Tata Power lost 6.1%. HDFC closed with a loss of 5.55%. Reliance Infrastructure eased by 5.15%. Larsen & Toubro, Infosys Technologies and Bharti Airtel ended lower by 4.65%, 4.3% and 4.25% respectively. Reliance Communications, DLF, Tata Motors, Jaiprakash Associates, Wipro, ONGC and Tata Consultancy Services lost 2% - 3%.
Maruti Suzuki, Satyam Computer Services, HDFC Bank, BHEL, NTPC and State Bank of India also closed with sharp losses.
SAIL, Cairn India, Nalco, GAIL India, Zee Entertainment, Reliance Power, Cipla, Tata Communications, Unitech, Suzlon Energy and Reliance Petroleum were among the prominent losers in the Nifty index. BPCL, Sun Pharmaceuticals, Hero Honda and Power Grid Corporation closed with smart gains. HCL Technologies moved up by nearly 0.75%.
Aban Offshore, Spice Telecom, Jindal Steel, United Phosphorus, India Infoline, Gujarat Minerals, Glenmark Pharma, GVK Power, Century Textiles, Punjab Lloyd, Chambal Fertilizers & Chemicals, Oracle Financial Services, United Breweries, Praj Industries and Videocon Industries posted sharp losses today.
Midcap and smallcap stocks were hammered again. The market breadth was weak. On BSE, 1922 stocks closed lower. 671 stocks posted gains and 51 stocks ended flat.

US Stocks (Dow -348,Nasdaq -93) decline on unemployment, factory reports

Stocks decline on unemployment, factory reports

Stocks fall on unemployment claims, factory orders data as investors fear protracted downturn
NEW YORK (AP) -- Pessimism about a protracted economic downturn washed over the financial markets Thursday, sending stocks plunging and further tightening the credit markets. Reports on declining factory orders and a seven-year high in jobless claims stoked fears that the government's financial rescue plan won't ward off a recession, and the Dow Jones industrials skidded nearly 350 points.

Investors appeared to be settling in for a prolonged economic winter. The main concern is that the $700 billion bailout plan won't be enough to stimulate growth, and economic reports delivered Thursday show that the U.S. continues to struggle.

The government said the number of people seeking unemployment benefits rose last week and that demand at the nation's factories has fallen by the largest amount in nearly two years. The market is interpreting the Commerce Department report on factories as a sign that tight credit conditions are hitting manufacturers.

"The economy is what's driving this weakness," said Subodh Kumar, global investment strategist at Toronto-based Subodh Kumar & Associates. "I think now what's going on is a focus on the economic weakness in a whole bunch of areas."

He also said, "the next couple of days are going to be pretty intense politically" as Wall Street girds for another vote on the financial bailout plan. The bill that passed the Senate late Wednesday will be sent to the House as soon as Friday. The latest version of the bill adds $100 billion in tax breaks for businesses and the middle class and raises the limit on federal deposit insurance to $250,000 from $100,000.

Supporters are hoping the sweetened bill will be more palatable to some of the 133 House Republicans who rejected the measure in a vote Monday that took Wall Street, and many on Capitol Hill, by surprise.

Those in favor of the plan to let the government buy billions of dollars in bad mortgage debt and other now-soured assets say it will help unclog the world's credit markets. Banks are fearful of making loans, even to each other, because of worries they won't be repaid. That, in turn, is weighing on the economy, making borrowing more difficult and expensive for businesses and consumers alike.

The credit markets showed some increased strain Thursday. The yield on the 3-month T-bill, the safest type of investment, fell to 0.70 percent from 0.79 percent late Wednesday. The historically low yields indicate investors are willing to accept the smallest of returns to safeguard their money.

The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 3.64 percent from 3.74 percent late Wednesday.
The stock market is a leading economic indicator of sorts, because investors tend to buy and sell based on where they believe the economy will be six months or more in the future. Thursday's big drop points to a market increasingly resigned to further economic instability whether or not the bailout plan becomes law.

"There are a lot of people who think regardless of a bailout, there's still this economic data and the horror stories out there," said Todd Salamone, director of trading at Schaeffer's Investment Research. "Certainly, there's a negative psychology."

Investors might get another grim reading about the economy on Friday when the Labor Department releases its September jobs report, one of the most closely watched indicators. The report is expected to show a loss of 100,000 jobs, according to a median estimate from economists. That would be the ninth straight month that the economy has lost jobs.
The Dow fell 348.22, or 3.22 percent, to 10,482.85. The blue chips plunged nearly 778 points Monday, logged a partial rebound Tuesday and finished modestly lower Wednesday; still the Dow has had triple-digit swings every day this week, having fallen more than 200 during Wednesday's trading.

Broader stock indicators also fell sharply Thursday. The Standard & Poor's 500 index fell 46.78, or 4.03 percent, to 1,114.28, and the Nasdaq composite index fell 92.68, or 4.48 percent, to 1,976.72.
Light, sweet crude fell $4.56 to settle at $93.97 a barrel on the New York Mercantile Exchange. Gold and other commodities also declined during the session.

Billionaire investor Warren Buffett said the U.S. has been hit with an "economic Pearl Harbor," and the government must respond quickly. "That sounds melodramatic, but I've never used that phrase before. And this really is one," Buffett said in an appearance on the "The Charlie Rose Show" on PBS stations.

The Labor Department reported Thursday that initial claims for unemployment benefits rose by 1,000 last week to a seasonally adjusted 497,000, above expectations for a 475,000 increase. That's the highest seen since the immediate aftermath of the Sept. 11, 2001, terrorist attacks, and unnerved investors worried about not only about strains in the financial market but also the effect on the broader economy.
Beyond employment, the government reported that orders for manufactured goods fell by 4 percent in August from July. Economists had expected a 2.5 percent decline. It is the biggest drop since a 4.8 percent decline in October 2006.
The dollar was higher against other major currencies, particularly the euro, even after the European Central Bank left interest rates unchanged. Higher interest rates in Europe generally make the euro more attractive to investors than the dollar.
The ECB left its key interest rate unchanged amid concerns over inflation but explored the option of lowering the rate as the financial crisis increasingly affects the continent. The central bank is also weighing a bailout of the region's financial system, similar to what U.S. lawmakers are considering.
That raised the question of whether policymakers globally might be less focused on fighting inflation, and instead trying to come up with short-term solutions to stimulate the economy.
"At some point, you have to face the realities that we have some serious problems and there aren't going to be any quick fixes," said Ryan Larson, head of equity trading at Voyageur Asset Management. "Even if bailouts pass, the fact remains that it might get credit flowing again but won't solve the broader issues out there."

The Russell 2000 index of smaller companies fell 33.92, or 5.05 percent, to 637.67.
Declining issues led advancers by a 3 to 1 margin on the New York Stock Exchange, where consolidated volume came to 6.16 billion shares, up from 5.59 billion on Wednesday.
Overseas, Japan's Nikkei stock average fell 1.88 percent. Britain's FTSE 100 fell 1.80 percent, Germany's DAX index fell 2.51 percent, and France's CAC-40 lost 2.25 percent.

Oil falls below $94 on falling global demand
BoA sues Lehman units over collateral
Bailout bill in House for final nod
Fed may consider rate cuts: Report
Greenspan sees early end to crisis

Source:ET,Yahoo finance

Send Free SMS via Google SMS Channels;Google InQuotes

Google Labs India Launch Google SMS Channels & InQuotes today

Today is a big day for Google India users as Google just launched Google SMS channels and Google In Quotes. The Google SMS channels is for Indian Mobile users allows them to get updates via SMS.It is a major announcement by Google to uproot the market players like SMSGupShup (by Webarro) which allows you to create free group SMS across India.Google as always has went one step ahead by introducing the blog feed updates, that can now be sent to mobile phone users. All the India readers of this blog are welcomed to join Digital World SMS Channel by Google to get all updates here directly in your mobiles.Apart from that you can also join or create MS groups for news alerts, weather updates etc. and off course do group SMS with friends too. All these services are free for both Publishers and Subscribers.On the Other hand Google has also launched Inquotes where the computer search engine quotes famous people of India whose quotes have appeared in a publication or national daily on the keywords of your choice.You can also create Google SMS Channels for your blogs or websites or groups at Google SMS Channels
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FAQs: http://labs.google.co.in/smschannels/help#create_channel

Learn more about SMS ChannelsFor subscribers »For channel owners »

Google Search results http://www.google.co.in/search?hl=en&q=google+sms+channels&start=0&sa=N

Google SMS Channels: Send SMS Text Messages to your Group for Free

Google India Launches SMS Channel Service Technology and Business ...
Techmeme: Google SMS Channels: Send SMS Text Messages to your ...

Google SMS Channels : Sends Blog updates & other information to a ...

BlogoWogo - The Blog Network Google Labs India Launch Google SMS ...

» Send Free Group SMS with Google SMS Channels

Digg - Google SMS Channels - In India (Google Labs)

Send free sms to friends with google sms channels

Send SMS to your Group for Free with Google SMS Channels
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19. How do I create a channel? What are the different ways to publish content to a channel?

To create a channel on the website, click the Create channel link on the right hand side on the main page.You need to specify following information to create a channel:Name: Name of the channel.Description: A brief description of channel in less than 100 characters.Category: Channel category.Location: If a channel is specific to a city, you can specify the city name.Source (optional): You can get your channel updates from Blogger or Google Groups or Google News or RSS/Atom feeds from any supporting web site. This field is optional. You can post messages via the web front end or the phone with or without a source selection.Blogger: Enter the blog name that you want to use as a source for channel posts/updates. For example: To get updates from the Official Google Blog ( http://googleblog.blogspot.com/ ), enter googleblog in the text box after selecting Blogger as the source.Google Groups: Enter the Google group name that you want to use as a source for channel posts/updates.For example: To get updates from Google Maps Group (http://groups.google.com/group/Google-Maps), enter Google-Maps in the text box after selecting Google Groups as the source.Google News: Enter one or more keywords of interest for Google News based updates for the entered keywords. For example: to get Google News based updates for keywords "global warming", enter global warming in the text box after selecting Google News as the source.RSS/Atom feed: Enter the RSS/Atom URL address in the text box. For example: to get Google News RSS based updates, enter the RSS feed URL "http://news.google.com/?output=rss" in the text box. You can preview your channel content by clicking on the 'preview' button. The content should appear inside the image of the phone on the right.Allow publishing by: This stores the preference around who can publish posts to the channel. By default, only the channel creator is allowed to publish to a channel. You can also select the "Any subscriber" option that permits publishing by any subscriber of the channel (not just the creator).Who can subscribe: By default, a created channel is open for subscription by any registered user and hence is also referred to as a public channel. If you want to allow subscription to your channel only via invitations sent by you, you can select "By invitation only" option. Note: "By invitation only" channels are also referred to as private channels because they do not appear in search results. No one can join a private channel on their own.To create a channel using phone, send the following SMS to 9870807070:'CREATE 'For example you can create a channel for traffic information in Bangalore with the following command: CREATE TrafficBangalore traffic information for Bangalore.This will create a "public" channel (anyone can subscribe to a public channel) with name TrafficBangalore.You can change the properties by using the MODIFY command as below:To make the channel "private" (only allow people to subscribe by invitation by the owner) send the following SMS to 9870807070:'MODIFY PRI'To make a channel "public", send the following SMS to 9870807070:'MODIFY PUB'To make channel publish privilege limited (only the owner can publish), send the following SMS to 9870807070:'MODIFY PRISEND'To allow all subscribers to publish to a channel send the following SMS to 9870807070:'MODIFY PUBSEND'Please note you are automatically subscribed to every channel that you create.

Source:Indiaeduscholar, all webs sources