Securities in ban period for trade date December 19, 2007- F&O segment

The derivative contracts in the below mentioned securities have crossed 95% of the market-wide position limit and are currently in the ban period. It is hereby informed that all clients/ members shall trade in the derivative contracts of said securities only to decrease their positions through offsetting positions. Any increase in open positions shall attract appropriate penal and disciplinary action in accordance with the Circular No. NSCC/F&O/C&S/365 dated August 26, 2004.

1	ALOKTEXT
2	APTECHT
3	ESSAROIL
4	GITANJALI
5	IFCI
6	NAGARFERT
7	POWERGRID

RCF smells a goldmine, plans to sell city land

MUMBAI: Amid spiralling realty prices, it’s difficult to resist a deal when you are sitting on large tracts of unused land. But it can be a tough call when the landowner is a state-owned firm sensitive to controversies that a land deal could spark. So, what do you do? Take the first baby steps to cash in on a booming property market. The government-controlled Rashtriya Chemicals and Fertilisers (RCF) is doing just that. The fertiliser major, which owns about 800 acres in and around Mumbai, is initially planning to develop a commercial complex over about 200,000 sq ft that will be used partially for in-house purposes while the rest will be sold commercially. The company board has already approved the decision to build the commercial complex — to be tentatively called Priyadarshini II — and has called for a panel of architects for designing the project. RCF would develop the complex on its own and would not tie up with any developer for the complex that would come up adjacent to the company’s existing office building at Chembur. It’s the latest of Mumbai-based companies planning to develop surplus, unutilised land available with them to gain from firm land prices. Sources close to the development said response to this project would be used by the company to chalk out future development plans subsequently. Although the company owns about 800 acres of land, most of it houses RCF’s factory and residential areas. Despite repeated efforts, senior officials at RCF declined comment. “The company doesn’t want to go all out with the move... It would prefer to sell small parcels over a long time period,” said a source. RCF owns large tracts of land as per norms for a chemical and fertiliser company. The company makes and markets a wide range of chemical fertilisers and a series of industrial chemicals through its plants at Trombay and Thal. RCF’s move is in line with the trend seen among large corporate houses who initially sold land and subsequently tied up with developers to jointly build projects. According to a real estate company, recent difficulties in tying up finances for buying land have forced developers to team up with companies owning land. The developer contributes a small equity while the land ownership remains with the company. Once the project is developed by the developer, the proceeds from the commercial sale could be divided between the two. In the case of government-owned firms like RCF, there are also options of leasing out portions of land to manufacturing companies who are pressed for space and can’t buy land due to high prices. During the past two years, more than 25 companies, including Bata India, Indian Hume Pipe and Gulf Oil Corporation, have either sold or developed their real estate assets. “This trend is not peculiar to India. Globally, companies have done it from time-to-time. Even in India, several companies have done it in the past. The difference is, it is more visible now,” said an analyst with an European brokerage. “At best, such activities would constitute 5 to 10% of the total real estate development activity,” he added. Sharp demand for houses and commercial spaces have led prices of land to double in the past two years, especially in cities such as Mumbai, where land availability is at a premium. The market also seems to have got a whiff of RCF’s proposed plans as shares of the company have already hit the upper trading limit twice in the past week. On Tuesday, RCF shares again ended 4.9% up at Rs 88.65 on the BSE.

India's Big Three Tech Firms

Shares of India's three biggest tech and outsourcing companies by sales -- Infosys Technologies, Tata Consultancy Services and Wipro -- have had a tough year. But some analysts say now is a good time to buy their stocks, if investors can handle some near-term volatility.

A sharp appreciation of the rupee against the dollar and fears of a U.S. slowdown, amplified by the credit crisis, have hammered tech companies' shares even as the broader Indian stock market has hit record highs. Infosys's Mumbai-listed shares are down 26% this year, TCS is down 14% and Wipro is off 19%. Meanwhile, the Bombay Stock Exchange's benchmark index, the Sensex 30, is up 45%.

There are grounds for optimism. Fears over a strong rupee's impact on earnings could be overdone, analysts and investors say. Some industry watchers also say the Indian government might extend a tax benefit that has helped tech companies' profits. Many analysts also believe the three big Indian tech companies will continue to post solid earnings as they win bigger jobs from global clients.

"It's good to buy these tech stocks with the expectation that within nine to 12 months select stocks are going to give you returns in excess of 20%," says Viju George, senior technology analyst for Edelweiss Securities, a financial-services firm in Mumbai. He's advising clients to buy Infosys and TCS, which he sees as best-positioned to increase their market shares of the global services industry.

Just over 10% of the $400 billion-to-$450 billion-a-year global technology-services market is now outsourced to foreign service providers, industry watchers estimate. Indian companies have more than 70% of that market segment. Analysts say the outsourcing trend will grow as companies look to cut costs; that should help offset the impact of a possibly weaker U.S. economy.

As dominant players, TCS and Infosys stand to benefit if there is another wave of outsourcing amid U.S. economic trouble. Further, the Indian companies can gain by moving up the value chain and handling more complex jobs. Rather than "mere maintenance work," clients now outsource "newer and newer streams" of tech requirements, Mr. George notes.

To be sure, some analysts have seen India's big tech companies as attractive for a while, yet the stocks have continued to slide. Mr. George cautions that these shares have a potential downside of 10% to 15% from current levels, as valuations yo-yo on news of the U.S. economy. A large chunk of the Indian giants' revenue is still from American customers, though they are trying to boost their non-U.S. sales.

But Mr. George contends that "the risk of a slowdown is very much captured in current valuations," barring a full-fledged U.S. recession.

Even if customers' tech budgets come under pressure, there could be a silver lining for the Indian firms that get outsourced work, says Chennai-based Sukumar Rajah, chief investment officer for equities at the Indian arm of U.S. fund company Franklin Templeton. "Any sharp economic slowdown could result in increased outsourcing by Western firms to protect margins," he argues.

Mr. Rajah expects "well-managed Indian IT companies will do well in the medium to long term." Franklin Templeton holds Infosys, TCS and Wipro shares in a number of its equity funds.

So far, outsourced work is increasing as a proportion of corporate tech budgets, says analyst Pankaj Kapoor at ABN Amro Equities in Mumbai. In recent years, the global technology-services industry has grown at an annual rate of 5% to 6%, industry watchers say. But the Indian tech-services industry on its own is growing at around 35% a year. So, even if there is little or no increase in overall corporate tech budgets, Indian companies are likely to increase their market share.

One factor holding down tech stocks -- the rupee's appreciation against the dollar -- also appears to have abated somewhat, says Sanjay Sinha, chief investment officer at SBI Mutual Fund. The rupee has strengthened nearly 13% against the dollar in 2007, but the steepest gains came earlier in the year.

Upcoming US reports may add to market turbulence

BL Research Bureau

Indian markets succumbed on global cues on Monday after a resilient performance last week. Most global markets reversed last Tuesday after the Federal Reserve reduced interest rates by a minimal 25 basis points. The US markets received another blow on Friday when the US consumer price index surged 0.8 per cent in November, the largest one-month gain since September 2005.

The Dow Jones Industrial Average tumbled 1.3 per cent on that day on fears that the Federal Reserve would once again turn its attention to inflation fighting ruling out the possibility of further interest rate cuts. Indian stock markets moved in tandem with the other Asian markets .

There are many important events lined up over the next two weeks that can cause the Indian stock prices to remain edgy. A slew of economic reports are scheduled to expected out of the US this week; the more important among them being the housing report, the GDP figures and the Core PCE numbers.
Beleaguered brokerages

These apart, some of the beleaguered brokerage firms such as Bear Stearns, Goldman Sachs and Morgan Stanley will report their quarterly numbers this week. Any bad news from these companies will exacerbate the negative sentiment prevailing in the credit and financial markets.

The Bank of Japan is meeting on the 19 and 20 this month. Investors will keenly watch the outcome of this meeting across the globe as any change in the interest rates in Japan could seriously destabilise the yen carry-trade.

The event that is looming large in the domestic calendar is the expiry of the December contracts in the futures and options segment.

Due to two intervening holidays, our markets have to rollover an extremely heavy series in just six days. The unwinding of the positions in the derivative segment can cause downward pressure on stock prices in India.

Videocon to hive off businesses

Mumbai: Videocon Industries Ltd announced on the BSE that the company plans to create separate verticals for its power, oil and natural resources businesses. “We will have different verticals for thermal power, oil & gas and mining of natural resources including coal and renewable energy and solar energy,” said a company official.

These verticals will be housed in one or more Special Purpose Vehicles wholly owned by the company.

When asked whether shares in the SPVs will be allotted to existing shareholders and the same listed on the stock exchange, the company official refused to clarify. “We are taking this step to strengthen the company and its global assets. We want to create a strong energy vertical and all our steps are aimed towards that,” he said.

Further information on the matter will be released only in January, he added.

Some companies, in the past, issued shares in the hived off of business and listed them on the stock exchange in order that the shareholder wealth is completely impounded both pre and post restructuring of the businesses. A case in point is that of Reliance Industries which allotted shares to the shareholders in the telecom business when the latter business was hived off as part of the family settlement.

The company has allotted 1,018,523 shares at a price of Rs 448.59 per equity share through conversion of 10,350 Foreign Currency Convertible Bonds, according to a BSE release. Also, the company has allotted 1,349,726 shares at a price of Rs 477 per equity share through conversion of 13,900 FCCBs.

Videocon’s scrip on Monday closed on the BSE at Rs 616.15 down 5.04 per cent from the previous day’s close of Rs 648.85.