DLF becomes India's second most valued private sector firm

MUMBAI: Real estate giant DLF on Friday pipped Bharti Airtel to become the country's second most valued private sector company after Reliance Industries, following a surge of over five per cent in its share price.

In an overall flat market, shares of DLF rose by 5.31 per cent at the BSE to close at Rs 1,063.70 - more than double its IPO price in less than six months of listing.

The company's market capitalisation surged to Rs 1,81,343 crore at the end of today's trading, marking a gain of about Rs 9,150 crore over the previous day.

This is second highest among private sector companies after country's most valued firm RIL, which has a market cap of over Rs 4,21,000 crore.

This is estimated to have swelled DLF chairman Mr K P Singh's wealth to more than $40 billion (about 1,60,000 crore). Last month, Mr Singh was named as world's richest realtor with a wealth of $35 billion by Forbes magazine.

Forbes had calculated Mr Singh's wealth on the basis of DLF share price on November 2, since when the scrip has gone up by 14.3 per cent. Today's rally, which followed reports that DLF was mulling over listing its various subsidiaries, made it the count ry's fourth most valued firm across both private and public sector companies.

RIL is followed by two public sector companies ONGC and NTPC in the market capitalisation league at over Rs 2,62,000 and Rs 1,99,000 crore respectively.

DLF was followed by telecom major Bharti Airtel as the country's fifth most valued company with a market value of Rs 1,78,530 crore. Earlier in the day, shares of DLF touched a lifetime high of Rs 1,072. - PTI

SEBI puts curbs on Reliance Power offer

Market regulator Securities and Exchange Board of India (SEBI) has placed some restrictions on the impending initial public offering of Reliance Power and has asked the company and its merchant bankers to ensure all disclosures as per the relevant laws and the board's own comments on the prospectus that may follow.

SEBI was considering a complaint by Rajkot Saher Jilla Grahak Suraksha Mandal on the issue. Reliance Power is a 50:50 joint venture between Reliance Energy and AAA Projects, which is an Anil Ambani Group company. The proposed public issue could be the largest ever in India.

The regulator directed on Thursday that the entire 20 per cent of the promoter's share in the company should be locked-in for 5 years instead of 18.6 per cent as proposed in the Draft Red Herring Prospectus.

It has also noted that the company has withdrawn its application to split the shares of a face value of Rs 10 to those with a face value of Rs 2 and pointed out that guidelines mandate that in case the offer price is less than Rs 500 the shares may not be split.

The gist of the complaint was that by engineering a merger prior to the issue, the promoters have managed to misuse an exemption allowed by clause 4.6.4 of the guidelines for public issues. This would allow the promoters to not contribute any capital as a part of the issue.

The spokesperson for Reliance Power declined to comment on the issue.

SEBI also said: "The sequence of dates of the issue of shares to promoters, approval of the scheme of amalgamation, filing the same with the Registrar of Companies, allotment pursuant to the scheme and subsequently splitting the shares so allotted for the face value of Rs 2 each and filling DRHP with SEBI offering 130 crore of its equity shares with a face value of Rs 2 at a premium to the public could no doubt be interpreted and conceived as a device to bring the case under the exemption of clause 4.6.4."

SEBI noted "that the number of shares issued as a result of the amalgamation as a proportion of the total paid up capital of the issuer company is very high in the case of RPL (around 50 per cent)…" The regulator, however, said that some of the other issues raised in the complaint were not within its jurisdiction.

BSE to launch mini contracts in derivative market

MUMBAI: To attract retail investors into the ever-growing derivatives market, the BSE will launch 'Sensex mini derivatives contracts' from January 1, 2008. The small size of the contract would woo retail investors as there would be comparatively lower c apital outlay, trading costs, more precise hedging and flexible trading, a BSE release said.

The mini derivatives contracts would be in a market lot of five, it added. It is a step to encourage and enable small investors to mitigate risk and gain easy access to India's popular index, Sensex, through futures and options.

The security symbol for Sensex mini contracts would be MSX and would be available for one, two and three months along with weekly options. Market watchdog SEBI has approved introduction of seven new derivative products for the domestic market.

"The introduction of these products is a step intended to progressively encourage markets to move onshore,'' SEBI had said.

The Securities and Exchange Board of India had allowed trading in mini contracts on index (BSE 30-share Sensex and NSE 50-share Nifty) with a minimum contract size of Rs 1 lakh. - PTI

MFs may get to invest $7 bn abroad

KOLKATA: Mutual funds may get more liberty in 2008 in terms of their overseas investments. They are likely to be allowed to invest upto $7 billion collectively in overseas markets, which is a good 40% jump over the present ceiling of $5 billion. The present ceiling has been raised from $4 billion just about three months back.

Both financial regulators — Reserve Bank of India (RBI) and Securities & Exchange Board of India (SEBI) — have in principal agreed to the proposal to enhance the overseas investment ceiling further. According to top industry sources, the papers are lying with the government for final clearance.

Accordingly, the individual investment ceiling is also going to be raised from the current limit of $300 million. Not only will the proposed move allow fund houses to deepen their investment basket, a higher capital outflow would also ease the pressure on RBI in managing the dollar deluge.

Mutual funds can invest in American depository and global depository receipts, equity of overseas companies, foreign debt securities in the countries with fully convertible currencies and money market instruments rated not below investment grade.

When contacted by ET, SEBI officials declined to comment on the issue. Mutual fund circles close to the development, however, said SEBI had written sometime in November to the central bank seeking permission to raise total overseas investment by all mutual funds by $2 billion to $7 billion.

According to a senior RBI official, so far the mutual funds collectively have invested just about $1 billion in overseas markets, which is well under the current limit. “However, some aggressive fund houses have exhausted their individual investment limits of $300 million. These players have requested an enhancement of the ceiling,” he said.

Supporting this, Association of Mutual Funds in India (AMFI) chairman AP Kurian said: “So far, some five to seven fund houses have launched special schemes for investment in overseas securities. The total mop-up by these funds is yet to reach anywhere near the present $5 billion cap. This notwithstanding, we have been assured by both SEBI and RBI that they are open to consider increasing the overall overseas investment limit if needed.”

AIG Global Asset Management Company (India) CEO Saurabh Sonthalia said: “This industry has taken a step forward by investing in overseas securities. However, a lot of MF houses have launched hybrid funds which invest about 65% in India and the balance 35% in overseas securities primarily because of lower limits and tax considerations. But clearly there is an increasing demand for 100% offshore products. We have also sought SEBI approval for launching an overseas fund for investing in global gold mining companies.”

'Technical error' bug bites BSE

MUMBAI: It is now BSE’s turn to be hit by a “technical error”. Even as there is a move afoot to probe the delay in transfer of securities that took place on December 19 & 20, the market on Wednesday was once again abuzz with talk of payout problems. According to market participants a technical glitch saw payout being delayed at the BSE’s end. Several brokers said the exchange had communicated that payout would be delayed by a few hours. However till about 6.30-7.00 pm on Wednesday, the payout process was yet to commence. Several brokers also bemoaned the fact that this could mean that back-office operations at the brokers end would continue till about 9.30-10 pm. Even as questions about the efficacy of the system at the exchange level was raised, a moot point to note is that such delay in payouts is contradictory to what the capital markets regulator Sebi has intimated to the bourses. As per Sebi circular of September 2005, payout of securities by the exchange/clearing house/clearing corporation to the depositories is to be done by 1.30 pm on T+2, while payout of securities was to be completed by the depositories by 2.00 pm on T+2. Payin was to be done by 11 am. BSE spokesperson said it was a technical glitch and was largely on account of a delay at the clearing house end i.e. BOI Shareholding (Clearing House of BSE). They added that the regulator has been informed of the same. Delay in a few inter-depository transactions between NSDL and CDSL on December 19 & 20 had prompted the stock exchanges to auction a few shares thereby incurring losses to brokers and investors. Following this NSDL had written to SEBI suggesting that a committee be set up to probe this. Given the large volume of trades in the equity markets, there is concern that repeated disruptions on account of either software glitches or overloading of the systems could have adverse impact on the functioning of the capital market as a whole.

Indowind Energy raises Rs 118 cr via FCCBs

MUMBAI: Wind power company Indowind Energy on Wednesday said that it raised Rs 118 crore though Foreign Currency Convertible Bonds (FCCBs) for overseas business expansion.

The FCCBs contain a coupon payment of 2.5 per cent paid semi-annually and have a maturity period of five years and one day. They would be converted into equity shares at a premium of 33 per cent, Indowind said in a statement.

The underlying equity shares on conversion would be listed on BSE and NSE and the FCCBs on the Singapore Stock Exchange. The company has been developing wind farms since 1995. - PTI

Has Sebi's P-Note move really worked?

It's been a phenomenal year for the Indian stock markets. Nearly 16 billion dollars have flown into India till December and the Sensex has scaled the 20,000 mark. But from a market regulation standpoint, the year 2007 would be remembered for Sebi’s restrictions on participatory notes or P-Notes. This move was to moderate capital flows and deal with the issue of anonymous investors. But has it really worked? CNBC-TV18’s Abhijit Neogy finds the answer...

The bulls have been on a rampage through the year and the dollar inflows become a deluge by October this year. While the unrelenting rally pleased the investor community and made for eye-catching headlines, the government was getting uncomfortable with each passing day.

Apart from the pressure it exerted on the rupee, there were fears that PNotes were being used a vehicle to bring in illegitimate funds from abroad. In a defensive move, the government finally intervened-their argument to moderate capital flows. Soon after the Finance Minister’s statement, market regulator SEBI stunned the markets with what are now being viewed as landmark proposals to regulate PN route and force foreign investors to use the front door.

As per the new regulations, PNotes with stocks as underlying could be issued by FIIs subject to a maximum of 40% of overall assets under custody. SEBI also proposed that where PNotes have equity derivates as underlying, these instruments cannot be issued anymore

Such existing positions would have to be wound up over the next 18 months.

Incase a FII wants to increase the share of PNotes in his assets under custody, the FII can raise the share of PNotes to the extent of 5% at a time this caused confusion and even temporary panic. The markets tanked, hitting the 10% lower circuit-trading had to be halted for about an hour. Finance Minister Chidambaram was then forced to step out to calm the markets and lift investor sentiment

P Chidambaram, Finance Minister, said, “We have not banned PNotes. In the recent months, fund flows had become copious; the idea is to moderate these flows.”

In the past the RBI had come out in favour of banning PNs altogether but this is a view that had not found favour with the Finance Ministry for fear of hurting investor sentiment.

Chidambaram said, “We are not against anybody investing in our markets. But we want everybody through the front door.”

The question that begged an answer- what was the real motive behind the p-note controls? Was it a means to control capital flows or was it apprehension over the identity of the ultimate beneficiary in the case of a PNote.

I don't think that we have said that it's only the anonymity that has been bothering SEBI or anyone else. What we have spoken about are a number of issues that have come up in the inter-regulatory consultative process over a period of time and during examinations within SEBI itself. There is clearly a question of flows coming in that the Finance Minister described as copious inflows into the Indian market. There were also issues that we have had with what we need to do to tweak the regulations regarding ODI.

M Damodaran, Chairman, SEBI, said, “I don't think that it’s just the anonymity issue which concerns us. This is the outcome of a lot of deliberations; there is clearly a question of flows coming into the market as the FM has described; there have also been issues regarding the tweaking of ODI guidelines which we wanted to look at.”

Analysts say hedge funds may not be too keen to register with the market regulator though at least 20 sub-accounts had applied for FII status. But despite all the controversy surrounding the new PN regulations, the dollar inflows haven't really stopped. Till December, FIIs had pumped in a whopping 16 billion dollars into India and the markets have since breached the psychological 20000 mark. This may make the government become cagey again but investors are not complaining.

Wipro Gains Most Since May 2004 After Report on Cap Gemini Bid

Dec. 24 (Bloomberg) -- Wipro Ltd., the second-worst technology stock on India's benchmark Sensitive Index this year, gained the most since May 2004 on a report it may bid for Europe's largest computer services company Cap Gemini SA.

Wipro gained 8.9 percent to 535.3 rupees at the close of trading on the Bombay Stock Exchange today. Wipro and rival Infosys Technologies Ltd. were also helped by news that U.S. consumer spending increased last month, easing worries about a slowdown in the computer services providers' biggest market.

Indian software companies are seeking acquisitions overseas to enter new markets and diversify away from the U.S. market.

Wipro, which has spent more money on acquisitions abroad than any other Indian computer services company, completed buying Infocrossing Inc. for $600 million in September, which added $6.4 million in second-quarter revenue.

``Strategically it is a sound buy, it is a question of how well we execute,'' Sudip Nandy, Wipro's next head of the telecommunications business unit, said in an interview Dec. 21, referring to Infocrossing. ``It has opened up a whole market.''

Nandy, who will become president of the unit Jan. 18, is a senior vice president and chief strategy officer for Wipro.

The stock-market gains may be short-lived as ``bad things are still to come,'' said Religare Securities Ltd. analyst Harshad Deshpande.

`Hold'

Deshpande rates Wipro a ``hold'' because ``we haven't yet taken a call on how big the impact of a U.S. recession will be.'' Comments from Wipro and Infosys in April at the start of the next fiscal year will reveal their outlook, he said.

Indian software companies had been ``touching their bottom valuation, what it had been in 2003, so this could be a kind of short-term bounce back,'' Deshpande said.

Infosys, India's second-biggest software exporter, rose 6.6 percent to 1,810.90, while larger rival Tata Consultancy Services Ltd., added 6.1 percent, to 1,108.70. The two stocks had their biggest gain in more than 17 months. Indian software companies get more than half their sales from the U.S.

Wipro for its part may not embark on a transaction that would see the company be forced to take on debt, Deshpande said.

Cap Gemini is ``almost four times the size of the Indian player,'' Deshpande said.

Sebi must allow short selling in all scrips: Ex-Sebi Member

Former Sebi Member, J R Varma in an exclusive interview to CNBC-TV18 said they can look at a timeline of a few weeks for Securities Lending and Borrowing (SLB) mechanism. He further added that position limits need to be enhanced in line with F&O market and Sebi should allow short selling in all scrips.

Excerpts from CNBC-TV18’s exclusive interview with J R Varma:

Q: What have you made of the broad framework set, both for short selling, stock lending and borrowing?

A: It is a very good idea that we are at last making progress on short selling. There are some parts of proposals, which are still very restrictive, primarily on position limits are too low. For example- the position limits at the client level is really says 1% of the marketwide limit, which means 0.1% of the free float that I think is extremely low.

Similarly, at the member level, it says 10% or 50 crore, whichever is lower. Now, on a company, which has Rs 1 lakh crore of marketcap, 50 crore is 0.05% or something.

So, some of those position limits have to be reviewed, especially those are extremely low. Of course, the document says to begin with, for example, it is limited currently to stocks, which are on the derivative segment. Hopefully, that would also get widened as we get along. But it is good to see that there is some progress in the end.

Q: Could you tell us about stock lending and borrowing mechanism as it stands currently, because the market really seems to be wanting to know more about the time it would take to settle contracts and the margins on which these contracts would be laid?

A: On that there is no clarity. It only says that there should be adequate risk management system. But I guess the exchanges have a lot of experience in margining derivative contracts. There are a lot of software, which can be readily reused for them. So, if the exchanges and the regulators want to make this happen, we should be looking at the timeline of maybe a couple of weeks or maybe three weeks. Within that timeframe, everything should be ready.

I think short sellers, the world over, are accustomed to pay stiff margin and the interest on the collateral deposited. So, that is not an issue, but it is now up to the exchanges to get out securities lending products.

Q: What is taking this process so long because we have been talking about it for a year and a half now?

A: I have always believed that in India much of the market manipulation takes place by the company promoters and by company managements themselves. For them, short selling is the most undesirable thing in the world.

So, I am sure that there is an enormous lobbying by corporate managements and corporate promoters to stop short selling and to make it as weak and restrictive as possible. Perhaps, the regulator is feeling that pressure as well. So, we need to keep the pressure up on the regulator, to ensure that they do not succumb to pressure from unscrupulous company managements, to make short selling unduly restrictive.

Q: What kind of a re-look do you think the position limits would require?

A: The position limit needs to be significantly enhanced, maybe something closer on the lines with what we have in the derivatives market and so on. We need significantly wider position limits.

Q: If this decision has to be implemented, do you think the timing at this point is most apt?

A: I am always of the view that the regulatory measures should not be tied to market timing. One cannot say that I will do the short selling, but the markets are going up or coming down and so on. These regulatory processes have a logic of their own. You are doing that not because one wants to change the direction in which the markets are going, but because one wants to improve price discovery in the market. Short selling is a mechanism through which one improves price discovery and anytime is a good time to do that.

Q: Currently, short selling is talking about addressing stocks in the F&O space. How would you read into an extension of this into the segments, which essentially comprise of non F&O stocks as well?

A: We should go there so long as you have proper risk containment that the short seller has to deposit appropriate margins. You should allow short selling in all scrips.

If somebody is bold enough to short and if the person is willing to deposit appropriate margins, I do not think the regulator should come in and say that you cannot short.

Short-selling provides much needed discipline to the market and much needed price discount discovery. In some ways, it is the less liquid stocks, where promoters rig up prices. It is there where the short seller’s power is even more useful. So, we should extend short selling across the board. But if the regulator wants to start with the derivative segment and then extend it, that is fine. But I would want to see short-selling on maybe a couple of 1,000 stocks within 3-6 months.

Q: What has your own analysis thrown up on post the P-note episode and whether or not registration has actually happened in the way expected?

A: My position at that time was that the restrictions, as they were finally put in place, would not make too much of a difference. That is what has happened. It has not made too much of a difference.

Brokerages expect 15-20% returns in `08: Poll

After the third consecutive year of spectacular gains by the Indian stock markets, which saw the bellwether Sensex climbing nearly 39 per cent, investors can still expect returns of 15 to 20 per cent in 2008, according to a poll among top local and foreign brokerage houses.

Most of the 15 brokerages that participated in Business Standard’s poll also see no major impact in India due to a possible US slowdown, encouraging more and more foreign funds to invest in the Indian stock markets in the new year.

Two-thirds of the brokerages chose to play safe by predicting a 19,000 to 22,000 range for the Sensex in 2008. Two brokerage houses — SBI Capital Markets and Religare Securities — have forecast 25,000 for the index next year, which is a 30 per cent gain from the current levels.

ICICI Securities went a step further, predicting that the Sensex would be at 25,500 levels (a 33 per cent rise) at the end of next year.

Others such as Motilal Oswal Securities, Enam Securities and fund house Morgan Stanley decline to predict a Sensex target.

“The market will continue its secular upward trajectory, reflecting robust economic growth led by consumption-buoyed demand, favourable demographics and increasing infrastructure spends,” said Anil Advani, head of research at SBI Cap Securities.

“We expect the Indian economy to grow at 8 to 9 per cent in the next two years,” he added.

Religare Securities Ltd has set a conservative target of 18,000 for the year. But Amitabh Chakraborty, president (equity) said the brokerage believed “2008 will start off on a very positive note with the Sensex touching 22,500 early in the year with India attracting higher fund allocations from foreign investors”.

Kotak Securities has a conservative forecast of 19,000 to 22,000 in 2008.

“The liquidity pull-out, sustained high crude prices, negative international events (if any) may impact markets,” said Dipen Shah, vice-president (private client group) of Kotak Securities.

This year is the third successive stellar performance for the Sensex. In 2005, the index grew 42.33 per cent (from 6,602.69 to 9,397.93), followed by 46.07 per cent in 2006 (from 9,397.97 to 13,786.91) and 38 per cent (13,786.91 to 19,162.57) this year so far.

Major triggers that investors need to watch out for in 2008, according to broking firms, are elections, the Union Budget, corporate earnings figures, the value of the rupee vis-à-vis the dollar, US economic health and interest rate cuts by the US Federal Reserve.

“On the international front, the markets might expect a further cut in the Fed rate, which will see money flowing into the emerging markets,” said Seshadri Bharathan, director, stock broking of Dawnay Day AV Securities Private Ltd, which expects the Sensex to cross 22,000 in 2008.

Manish Sonthalia, vice-president (equity strategy) at Motilal Oswal Securities, which has chosen not to predict a 2008 Sensex target, said he believes the market will continue to be driven by strong earnings growth and high liquidity.

A spokesman for foreign brokerage HSBC, which has put a Sensex target of 23,000 for 2008-end, said “The Indian markets also will retain their appeal to global investors; it is an outstanding domestic story, led by consumption and capex, in an uncertain world.”

The correlation of Indian and US markets is low, which means that global investors can improve the risk-reward profile by adding Indian stocks, HSBC added.

RBI proposes lower fee on use of ATMs of other banks

Coming to the aid of bank customers who are charged an unreasonable fee, sometimes as high as Rs 57, for using ATMs of other banks, the Reserve Bank on Monday proposed a ceiling of Rs 20 on such transactions.

The RBI, in its draft notification, has also prohibited banks from charging any fee from customers for using ATMs of other banks for services like balance inquiry.

Presently, banks charge up to Rs 57 per transaction from customers who use ATMs of other banks for cash withdrawal and balance inquiry, the RBI said in its draft approach paper on Fair Pricing and Enhanced Access of Bank ATMs.

While prohibiting the banks from further increasing the ATM charges, the draft paper said that they would have to reduce the transaction fee to Rs 20 per transaction by the end of the current fiscal (March 31, 2008).

Also, the banks would be required to do away with charges for services like balance inquiry with effect from April 1, 2009, the draft added.

The central bank has invited comments from interested stakeholders by January 31 next year on its draft paper, which seeks to establish a fair and transparent framework for levy of service charges for bank ATMs.

'Lots' of troubles for retail futures players

MUMBAI: Absence of revision in the lot size structure of futures and options (F&O) on NSE in the past many months despite the sharp run up in stock prices, is proving to be unviable for retail investors. Analysts believe that this is unhealthy for the development of the F&O segment, particularly at a time when foreign inflows into this segment has shrunk after the curb on investments through P-notes.

Lot size refers to the number of underlying securities in an equity derivatives contract. Stock exchanges, in consultation with the market regulator Sebi, sets the minimum lot sizes and makes changes as and when required. The lot size is multiplied with the share price to determine the contract size whose value has to be at least Rs 2 lakh at the time of its introduction.

For instance, if ABC is trading at Rs 500/share and since the minimum contract has to be at least Rs 2 lakh, its lot size will be 400 shares. So, if ABC doubles to Rs 1,000/share and lot size remains at 400 shares, then the contract size rises to Rs 4 lakh.

Since the last major revision in the lot size structure earlier this year, many stocks with presence in the F&O segment have more than doubled. For instance, the current contract size of Jindal Steel is at around Rs 19 lakh from roughly Rs 5 lakh in August, Essar Oil is at Rs 17 lakh from Rs 2.9 lakh in August, Neyveli Lignite at Rs 15.6 lakh from Rs 4.4 lakh in August.

“Short-term traders, who function on thin stop losses, are incurring losses because of the sharp movements in many of these stocks,” Geojit Financial Services’ head of technical and derivatives research Alex Mathews said.

Several analysts believe the situation calls for a change in the lot size structure to bring in wider participation among investors as it is felt that the introduction of mini futures is still some time away. Dolat Capital’s vice-president (derivatives) Vijay Kanchan said, “They (authorities) can reduce the actual minimum value of the contract (from Rs 2 lakh currently), which will invite more participation.”

The finance ministry is believed to be in favour of reducing the value of the minimum contract size to Rs 1 lakh from the existing Rs 2 lakh. But, authorities in Mumbai are not keen on reducing it at the moment as they feel it should happen only after the market matures further.

A Mumbai-based broker said, “It will be an open invitation to unwanted speculation. Authorities are just about getting a grip on things after the recent surge. So I don’t think, they should spark another rally, which will lead to a bubble.”

Hindujas eye Tide Water Oil

KOLKATA: After keeping a low profile in the mergers and acquisitions space, Hindujas have now decided to bid for lubricant maker Tide Water Oil, an associate company of diversified PSU Andrew Yule.

Andrew Yule & Company (AYCL), LIC and United India Insurance are planning to divest their combined holding of 40.3% in Tide Water Oil. Tide Water was originally floated as a joint venture with Caltex (now Chevron) 60 years back. Chevron still holds 22% in Tide Water through a subsidiary called Four Star Oil.

"We will look at the terms of reference for the Tide Water bid. If it suits us, then we may bid. There is a synergy between Gulf Oil and Tide Water," Hinduja group VC Subir Raha said.

Incidentally, ONGC had once evinced interest in Tide Water when the former was headed by Raha. "The valuation too was done, but due to some technical reason, an ONGC-Tide Water Oil deal did not materialise," sources said.

Tide Water is a key player in the diesel engine lubricant market and markets these under Veedol brand. Besides, it has recently introduced ‘Eneos’ brand for two-wheelers. Tide Water has a technical collaboration with Nippon Oil Corporation (formerly Mitsubishi Oil). The company posted a turnover of Rs 423 crore in 2006-07.

Currently, AYCL holds 26% in Tide Water. LIC and United India Insurance jointly hold 14.3% stake in the company. On Wednesday, AYCL CMD Kallol Datta had said the insurance companies too will divest their holding in Tide Water. Tide Water Oil’s stock is now hovering at around Rs 4,200-4,300 on BSE and NSE. In November, its share price touched a 52-week high of Rs 5,220 on the NSE when the stake sale decision was announced.

Sources said seven merchant bankers, which include Deloitte, SBI Capital Markets, PwC, ICICI Securities and Srei, are in the race for managing the Tide Water stake sale. "AYCL will appoint one or more merchant bankers on Saturday," sources added.

Sources said Chevron has so far not evinced interest to buy out AYCL’s holding in Tide Water.

Weekly Wrap-up: Sensex tanks 868 points in the week

The market plunged into the negative for the first time in 3 weeks after some highly volatile sessions of trading. As the US subprime lending problems continued to swell, Asian markets reacted accordingly and big bouts of profit booking were seen in the pivotal stocks at the BSE and NSE. Also, December, historically not being a very good month for the markets, traders chose to book profits and cut down their long positions before entering into the fresh week.

The 30-share BSE Sensex declined 868.26 points to 19,162.57 in the week ended Dec. 21 2007 while the 50-share NSE Nifty slipped 281.70 points to 5,766.50 in the week.

On Monday (December 17), the Sensex opened weak at 20,032.67 on back of negative global cues. It continued to trade weak throughout the day due to heavy selling pressure in pivotal stocks. Intense profit booking was witnessed across board. The Sensex fell to an intraday low of 19,177.19, its second biggest single day fall.

The Sensex ended down 769.48 points, or 3.84%, at 19,261.35, while the broad-based NSE Nifty closed at 5,777.00, down 270.7 points, or 4.48%. It was the biggest single day fall for the Nifty.

On Tuesday (December 18), the market opened on a quiet note. It continued to trade in the positive for sometime and after touching an intraday high of 19,375.07, slipped into the negative terrain on weak cues from global counterparts. The benchmark, Sensex continued to trade in a volatile manner initially; however in the last lap of trade the market witnessed huge fall on back of strong selling pressure across the board. The market lost around 252 points to touch the day`s low of 19,009.35 but made some recovery in the last minutes of trade.

BSE Sensex declined 181.71 points, or 0.94%, to close at 19,079.64, while the broad-based NSE Nifty closed at 5,742.30.00, down 34.7 points, or 0.60%.

On Wednesday (December 19), the 30-share index, opened on a strong note. The opening was backed by positive global cues with most of the Asian markets opening in the positive. Within moments of the opening bell, the Sensex proceeded to a 300 points gain. Until mid day the index seemed to be in a consolidation mood. However, in the later half of the day the index slipped into the negative backed by heavy selling interest in the pivotal stocks. The index came off 453 points from its day`s high. The last hour saw some relief rally, the index managed to regain some ground and ended the day on a flat note.

The BSE Sensex ended at 19,091.96, up 12.23 points while the NSE Nifty closed at 5,751.15, up 7.85 points.

On Thursday (December 20), the Sensex opened on a strong note with a positive gap of 109 points from the previous close of 19,091.96. BSE Benchmark Index continued to trade in positive terrain and soon after opening it touched intraday high of 19,291.14 (up nearly 200 points) due to the strong buying in all the sectors especially in IT, Auto and Metal space. However Sensex was not able to maintain the same level and in the following sessions it traded in a range bound manner and finally ended with a gain of 70.61 points.

BSE Sensex gained 70.61 points, or 0.37%, to close at 19,162.57, while the broad-based NSE Nifty closed at 5,766.00, up 15.35 points, or 0.27%.

On Friday (December 21), the market remained closed on account of Bakrra Eid.

Companies In News

Reliance Communications (RCom) completed the Rs 12 billion-worth acquisition of US-based Yipes Holdings. The acquisition will give the company access to Rs 4,000 billion global enterprise data market. RCom received all necessary approvals from the US Federal Communications Commission (FCC) for the transfer of control of Yipes.

The board of directors of Deccan Aviation, which met on Dec. 19, 2007, decided to merge the scheduled airline business undertaking of Kingfisher Airlines with itself. The merged entity will be known as Kingfisher Airlines. Vijay Mallya will be the chairman and CEO, while Captain Gopinath will be the vice-chairman of the merged entity. The charter business of the company will be spun off into a separate entity to be jointly owned by Captain Gopinath and the UB Group.

Welspun India, a part of the USD 1.5 billion Welspun Group and amongst the top 4 terry towel manufacturing companies in the world, has acquired 76% interest in bath rug major in Portugal, Sorema - Tapates e Cortinas de Banho, SA (Sorema) for Rs 456 million.

The Tata Group will be soon declared as the winner of Ford`s, Jaguar and Land Rover brands. However, a final decision may come in the first week of the New Year, as per international media reports. It is said that the deal is valued at USD 2.05 billion. Mahindra & Mahindra and private equity firms One Equity Partners were the other bidders for the two luxury brands.

Bharat Heavy Electricals (BHEL) inked a joint venture agreement with NTPC on Dec. 17, 2007 for establishment and operation of joint venture company for taking up engineering, procurement & construction (EPC) business.

Sector Round-up

Four GSM mobile operators, Bharti Airtel, Vodafone, Idea and Spice will approach the Delhi High Court against the Telecom tribunal TDSAT`s interim order not to stay the spectrum allocation process. GSM lobby Cellular Operators Association of India (COAI) said in a statement, that the department of telecom`s (DoT) decision is an attempt to pass off second and new GSM licences to CDMA operators in the garb of dual technology allocation.

The centre, on Thursday (December 20) said that it would look into cartelisation of the cement industry after the anti-monopoly watchdog MRTPC pronouncing 44 manufacturers guilty of unfair trade practices. MRTPC held cement manufacturers including L&T Cement, Birla Cement, Grasim and ACC guilty of cartelisation under the aegis of Cement Manufacturers` Association. The Commission said that they had found direct as well as indirect evidence of concert.

Economic Developments

The National Development Council (NDC) approved the 11th Five-Year Plan that aims at sustaining a 9% economic growth. The five-year plan (2007-12) was approved by the NDC, the highest policy making body comprising the centre and the states, amid demands by the chief ministers for greater flow of funds to states for tackling the regional imbalances. Prime minister Manmohan Singh cautioned against the price pressures on food items and the adverse impact of global financial crisis on the economy. Attaching highest priority to agriculture, education and health, the Plan earmarks more than half of the budgetary support toward these areas. The total outlay for the plan is Rs 36,447.18 billion, of which budgetary support would be Rs 14,217.11 billion.

India`s wholesale price index (WPI) based Inflation moved to 3.65% for the week ended December 08, as against 3.75% in the previous week. Lower prices of food articles like fruits and vegetables, pulses and some manufactured items led the inflation to slowdown. The annual rate of inflation stood at 5.63% as on Dec. 09, 2006.

New Listing

Shares of leading FMCG player, Jyothy Laboratories after listing on bourses, settled with 13.04% premium on the NSE. The shares opened at a premium of Rs 205, or 29.71%, at Rs 895 as compared with the issue price of Rs 690 a share. It touched a high of Rs 895 and a low of Rs 741.15. It finally closed with a premium of Rs 90, or 13.04% at Rs 780. Total volume of shares traded was 5,136,540, while the total turnover was Rs 4,061.62 million.

The week ahead

Giving his outlook for the coming week, technical analyst Vishwas Agarwal said, ``If Sensex maintains 18,888, then the market looks good and in trading zone; above 19,350 more profitable trading is possible with a possible target of 19,888.``

He added, ``The course of the market will be decided by RIL and SBI, so its very important to watch these two stocks...January is a result session which will help in deciding the market move. Also the Gujarat election result is due which will also give some direction to the market. We can see some upside of 10-15% in the Gujarat based stocks if BJP wins this election.``

A Bullish Call on Infosys

from US markets, By JMP Securities ($42.10, Dec. 20, 2007)

WE ARE INITIATING COVERAGE OF Infosys with a Market Outperform rating and a $51 price target, representing 19% upside from current levels.

Infosys is an India-based provider of information technology and business processing outsourcing (BPO) services to Global 2000 companies. Infosys obtains approximately 50% of its revenue from offshore delivery in India and 50% from on-site services to clients predominantly in the U.S. and Europe.

Infosys generates 91% of its revenues from IT services, which include: 1) application maintenance (28%); 2) custom development (20%); 3) package implementation (19%); and 4) testing (8%). Additionally, Infosys generates approximately 5% of its revenue from BPO, which is currently growing at 50%-plus annually.

We believe Infosys' American depositary shares have overreacted to concerns around rupee appreciation, and a potential slowdown in IT budgets, particularly in financial services. Although Infosys does have significant exposure to financial services, we believe Infosys is well positioned to weather a modest decline (2%-5%) in IT budgets.

In regards to rupee appreciation, Infosys has a number of levers to offset margin pressure caused by currency appreciation, as it demonstrated earlier in the first quarter of 2007, when the rupee appreciated 7% in one quarter. Infosys' ADS are currently trading at an out-year (fiscal 2009) multiple of 17.3 times, an all-time low. On a calendar-year basis, Infosys trades at a calendar 2008 price/earnings multiple of 18.5 times, below the peer group median of 20.9 times. Our $51 price target implies a calendar 2008 P/E of 22.4 times, a slight premium that we believe is justified by Infosys' high operating margins, strong revenue growth, and Tier-1 position.

Our estimates call for FY'09 GAAP EPS of $2.43, above the consensus estimate of $2.39. Our revenue estimate for FY'09 is $5.34 billion, compared with consensus of $5.31 billion.

Key positives for Infosys include: First, Infosys is well positioned to weather a slight decline in IT budgets, in our view. Second, Infosys has a number of levers to offset margin pressure due to the appreciating rupee and wage pressure. Third, offshore IT services and BPO services are large, fast-growing, and unsaturated markets. Last, Infosys has introduced a number of new service offerings, which should allow it to sustain strong growth rates in range of high 20% to low 30% for the next three to five years.

Key risks that could prevent Infosys from achieving our price target include margin pressure due to appreciating rupee and wage inflation, increased competition from domestic players (Accenture, IBM), and reduced profitability due to expiration of tax holidays.

SEBI permits short selling in stocks

Securities traded in F&O segment will be eligible

Settlement cycle for SLB transactions will be on T+1 basis

---

MUMBAI: The Securities and Exchange Board of India (SEBI) has decided to permit short selling by institutional investors. Until now, only retail investors were allowed to short sell.

Further SEBI has also been decided to put in place a full-fledged Securities Lending and Borrowing (SLB) scheme for all market participants in the Indian securities market “in order to provide a mechanism for borrowing of securities to enable settlement of securities sold short.”

The introduction of a full-ledged SLB scheme would be simultaneous with the introduction of short selling by institutional investors.

Short selling is defined as an act of selling a stock which the seller does not own at the time of trade. The SEBI asked all Stock Exchanges and the depositories — National Securities Depository Ltd. (NSDL) and Central Depository Services (India) Limited (CDSL) — to put necessary systems in place to operationalise the mechanisms for short selling and SLB.

The securities traded in the Futures & Options (F&O) segment would also be eligible for short selling. Further, SEBI may review the list of stocks that are eligible for short selling transactions from time to time.

Institutional investors are asked to disclose upfront at the time of placement of order, whether the transaction is a short sale. However, retail investors would be permitted to make a similar disclosure by the end of the trading hours on the transaction day.

SEBI also stated that the brokers are mandated to collect the details on scrip-wise short sell positions, collate the data and upload it to the stock exchanges before the commencement of trading on the following trading day. “The stock exchanges then consolidate such information and disseminate the same on their websites for the information of the public on a weekly basis.”

Stock lending

SEBI stated that the tenure of lending and borrowing would be fixed as standadised contracts and “to begin with contracts with tenure of 7 trading days may be introduced.” While the settlement cycle for SLB transactions would be on T+1 basis, the settlement of lending and borrowing transactions would be independent of normal market settlement.

Position limits

On position limits, the SEBI stated that: the market-wide position limits for SLB transactions shall be 10 per cent of the free-float capital of the company in terms of number of shares; No clearing member shall have open of more than 10 per cent of the market-wide position limits or Rs 50 crore (base value), whichever is lower; For a Foreign Institutional Investor (FII) or Mutual Fund (MF), the position limits shall be the same as of a clearing member; and the client level position limits shall not be more than one per cent of the market-wide position limits.

SEBI further stated that the SLB would be operated through clearing corporation or clearing house of stock exchanges having nation-wide terminals, which will be registered as approved intermediaries. The date of implementation of this scheme will be announced in due course.

Edelweiss Capital to replace Ceat in BSE-500 index

Mumbai: Newly-listed domestic brokerage firm Edelweiss Capital will replace tyre maker Ceat Ltd in the BSE-500 index from 26 December.

Edelweiss Capital would replace Ceat Ltd from the BSE-500 index, a circular issued by the Bombay Stock Exchange said.

The circular further stated that Ceat Ltd would be also excluded from trading in the BSE Small Cap index.

Edelweiss Capital which listed on the bourses early this month had recorded a gain a 83% on its debut trade. The initial public offer (IPO) of Edelweiss Capital was subscribed over 110 times and the issue price per share had been fixed at Rs825.

The BSE-500 index represents nearly 93% of the total market capitalization on the Bombay Stock Exchange. This means BSE-500 index ideally represents total market. This index represents all 20 major industries of the economy.

Suzlon sells shares to raise $552 million to part-pay debt

India’s biggest maker of wind turbine generators Suzlon Energy Ltd raised $552 million (Rs2,186 crore) by selling shares to select investors to repay part of the debt raised to fund the acquisition of Germany’s Repower Systems AG.

Comfortable: Suzlon Energy Ltd chairman Tulsi Tanti says the share sale will cut the company’s debt to Rs5,275 crore from Rs6,400 crore.

Suzlon’s board approved the sale of 11.4 million shares for Rs1,917 apiece, the Ahmedabad-based firm said in a statement to the Bombay Stock Exchange (BSE) on Wednesday.

The company’s euro 1.2 billion (Rs6,840 crore) acquisition of Repower this year and a euro 465 million purchase of Belgian gearbox maker Hansen Transmissions International NV. last year increased debt to 0.75% of equity, straining Suzlon’s balance sheet.

“We funded two large acquisitions by raising debt and that was a concern for our investors,” chairman Tulsi Tanti said. “Our balance sheet is more comfortable now.”

The share sale will cut Suzlon’s debt to Rs5,275 crore from Rs6,400 crore, Tanti said. As  many as 25 investors bought Suzlon shares, of which roughly 60% are Indian financial institutions and rest are foreign investment firms, he said. He declined to name the investors.

Suzlon rose Rs37.70 a share, or 2.02%, to Rs18,99.50 on BSE on Wednesday.

Roughly half the funds will be used to repay the debt Suzlon incurred to fund acquisitions of Repower and Hansen Transmissions, Tanti said.

Suzlon beat Areva SA., the world’s largest builder of nuclear plants, for Repower with a euro 1.2 billion offer in February this year.

Part of the funds raised on Wednesday will fund the expansion, he said. Suzlon plans to spend Rs2,600 crore on boosting generation capacity in India to 5,000MW next year from 2,700MW.

The shares sold amount to 3.8% of Suzlon’s total equity, the company said in an emailed statement. “We expected Suzlon to dilute equity to remedy its debt burden but had expected a better price,” said Mukul Jain, analyst at Mumbai-based brokerage Prabhudas Lilladher Pvt. Ltd. “The sale gives Suzlon better leverage for raising funds for its expansion plans.” Jain has an “outperform” rating on Suzlon.

The company calculated the share sale price by allowing a 2% discount to the average of Suzlon’s share price in the last seven days, Tanti said. The price was at a 3% premium to Tuesday’s closing price of Rs1,861 a share.

The company has overseas bonds worth $500 million due for conversion into equity over the next 24 months, Tanti said.

This may add additional equity of as much as 4%. Suzlon may raise more debt next year for its capacity addition plans, he said.

Suzlon will need to make an offer to buy a 30% stake that Areva continues to hold in Repower next year, according to its takeover agreement.

A similar offer will need to be made the following year to buy out partner Martifer SGPS SA., the Portugal-based metal structures maker, according to Jain.

Martifer and Suzlon Energy hold 57% of Repower Systems AG after a takeover offer for Repower.

Indian shares higher in early trade; IFCI declines, Deccan Aviation up

MUMBAI, Dec. 20, 2007 (Thomson Financial delivered by Newstex) -- Indian shares opened higher Thursday on back of good buying by domestic funds and bargain hunting by foreign investors.

'There is hardly any fresh activity and most of the action seems centred on profit taking in blue chip shares,' said a leading dealer.

At 0455 GMT, the Bombay (OOTC:BBAO) Stock Exchange's (BSE) 30-share Sensex rose 0.24 pct to 19,138.64 while the National Stock Exchange's (NSE) 50-share S&P CNX Nifty was up 0.06 pct at 5,754.45 points.

Industrial Finance Corp of India fell 21.77 pct to 78.35 rupees while Deccan Aviation (OOTC:DVIAF) rose 3.12 pct to 304.50 rupees a share.

Rashtriya Chemicals & Fertilizers rose 5 pct to 97.70 rupees, while Dr Reddy's Laboratories (NYSE:RDY) Ltd gained 2.87 pct on the NSE at 718.95 rupees.

Jammu & Kashmir Bank fell 5.67 pct to 765 rupees on the BSE, while Bharat Petroleum Corp Ltd declined 1.51 pct to 416.05 rupees on the NSE.

HOT STOCKS for 19-12-07

STATISTICS :

In last 4 days Nifty had come off 400 points from level of 6140 to 5745 levels. This kind of selloff can lead to gap up openings, today is this kind of a day were one can witness a strong opening, which could remain till the closing session. Nifty can trade between levels 5850 to 5730. But can see some sort of volatility if FII's continue to sell. Nifty has a strong resistance @ 5850 level. Nifty has a support @ 5700, below this level can go to 5600 level.

I would suggest one to book profits at higher levels can be @ 5850 levels. Stocks which have corrected 10% in last 4 days or more can have a run up today. So below mentioned are the stocks one can watch out for todays trading.

INTRADAY :

RELIANCE : buy for a tgt of 2770+, sl@ 2715

AIRDECCAN : buy for a tgt of 328+ , sl @ 310

INDIAINFOLINE : buy for a tgt of 1500+, sl @ 1434

DELIVERY :

RCF : buy for a tgt of 120+, time frame is 2 weeks

L & T : buy for a tgt of 4800+ , time frame is 2 months

FUTURES :

SAIL : buy for a tgt of 267.5+, sl @259

GMRINFRA : buy for a tgt of 245+, sl @232

RELIANCE : buy for a tgt of 2800+, sl @ 2732

NIITTECH : buy for a tgt of 233+, sl @ 223

INFOSYS : buy for a tgt of 1900+ :: for jan expiry

OPTIONS :

NIFTY : buy call 6000 for a tgt of 90+, sl @ 30

NIFTY : buy call 5800 for a tgt of 180+, sl @ 90

RELIANCE : buy call 2900 for a tgt of 32+ , sl @ 20

INFOSYS : buy call 1620 for a tgt of 60+, sl @ 32

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.

Essar to Raise $4 Billion to Triple Refining Output

Dec. 18 (Bloomberg) -- Essar Oil Ltd., operator of India's newest refinery, plans to raise $4 billion, half of it overseas, to more than triple capacity at the facility.

The funding plan will be completed next month, Naresh Nayyar, managing director, said in an interview in Mumbai. Shareholders today approved a plan to sell $2 billion of shares to the group, controlled by billionaire brothers Shashi and Ravi Ruia, to pay for the remainder of the Gujarat, western India-based plant.

Essar, whose shares have risen five-fold this year, needs money to narrow the gap with Reliance Industries Ltd., which is using record profits to build the world's biggest refinery complex. The Indian refiners are reliant on exports because state-set retail prices make it impossible to profit from selling gasoline, diesel and heating oil at home.

``It will be hugely ambitious to grow as big as that by 2010,'' said Tony Regan, energy consultant at Nexant Inc. in Singapore. ``From 2009 we'll see significant volumes coming up, mostly from Reliance. So we're expecting refining margins to come off quite sharply.''

Essar Oil's Jamnagar refinery started last year almost a decade after it was first planned, as the group's steel unit faced losses because of falling prices of the commodity. In the interim, Reliance has built a plant in the same city that's three times larger than Essar's and will next year almost double capacity again with a new facility.

``By mid-2009, we should have in hand all the equipment needed to run the refinery at full scale,'' Nayyar said yesterday, without saying whether Essar will sell bonds or obtain loans. ``We've already placed orders for all critical items.''

Shares Rise

Shares rose 31.3 rupees, or 12.2 percent, to 287.3 rupees at 2:34 p.m. local time on the Bombay Stock Exchange today. They earlier rose as much as 16.8 percent.

Essar Oil has gained 50 percent since the group last month scrapped a plan to delist from the Bombay Stock Exchange and National Stock Exchange and said it would spend $6 billion in expanding the refinery.

Construction by Essar, Reliance and Indian Oil Corp. will increase India's ability to process crude by 92 million metric tons a year by 2012 from 149 million tons now, boosting exports, Dinsha Patel, junior minister for oil and gas, said Aug. 16.

India had a surplus of 20.1 million tons of fuels in the year ended March 31, of which diesel accounted for more than half.

``We were aware of the tightness in the equipment market thanks to all the expansion plans by Asian refiners,'' Nayyar said. The company has ordered all equipment that it needs up to 24 months for delivery, he said.

Increase Capacity

Essar will increase capacity at the western India-based refinery to 34 million tons a year, or 680,000 barrels a day, from 10.5 million tons now.

Reliance Petroleum Ltd., a unit of Reliance Industries, is building a 580,000 barrel-a-day refinery adjacent to a 660,000 barrel-a-day plant owned by its parent.

Indian Oil, the nation's biggest state-run refiner, and third-ranked Bharat Petroleum Corp. are also planning expansions.

Essar Oil has about $2 billion of debt outstanding, Nayyar said. Parent company Essar Group last month secured a $3.59 billion loan against its stake in a mobile-phone venture with Vodafone Group Plc. BNP Paribas SA, Citigroup Inc., Commerzbank AG and Standard Chartered Plc arranged the loan.

Heavier Crude

Essar has placed orders to buy heavier varieties of crude oil from the Middle East, Nayyar said without elaborating. The company also plans to buy sour crude varieties from Mexico, Brazil and Venezuela.

``Our goal is to process 1 million barrels crude a day, of which 700,000 barrels a day will be processed in Jamnagar,'' Nayyar said. The company plans to build or buy overseas refining capacity of up to 250,000 barrels a day.

Essar plans to sell 80 percent of the fuels processed at its refinery in overseas markets. The company plans to market gasoline and diesel from its Jamnagar refinery in Southeast Asia including China and Middle East, he said without elaborating.

``Though the demand isn't huge now, marketing in east African countries will make economic sense for us,'' Nayyar said. Essar is looking to buy a stake in fuel retailing companies in African countries such as Kenya, Tanzania and Nairobi, he said.

Nayyar declined to comment on reports the company is planning to buy a 50 percent stake in a Kenyan refinery. Essar plans to buy a 50 percent stake currently owned by Chevron Corp., Royal Dutch Shell Plc and BP Plc, Press Trust of India reported on Dec. 10.

Exploring Oil

Essar Oil will bid for rights to explore oil and gas areas offered by the Indian government on Dec. 13, Nayyar said. The country offered a record 57 areas last week.

The Indian government expects companies to invest $3.5 billion in areas they secure in the auction, M.S. Srinivasan, secretary to India's oil ministry said on Dec. 13. The previous six rounds had drawn cumulative investments worth $8 billion.

The company may look for partners to jointly bid for areas auctioned, Nayyar said.

HOT STOCKS for 18-12-07

STATISTICS :

Markets globally are very volatile, so can expect the same from our markets also, Nifty will again have a range bound session can see up in opening with fluctuations on either sides, Nifty will trade @ 5720 levels to 5840 levels, Nifty has a support @ 5720 so below this levels can expect nifty @ 5665, and Nifty is strong above 5870 levels.

Can expect this trend of Fluctuations continue till this year end so trade cautiouslt with stock specific strategies with strict stop loss

INTRADAY :

IFCI : sell for a tgt of 100, sl @ 111

EDELWEISS : buy for a tgt 1500+, sl @1416

DELIVERY :

CENTRALBANK : buy for a tgt of 175, time frame is 3-6 months.

BHARTI : buy for a tgt of 1200+ , time frame is 6 months

FUTURES :

L&T : buy for a tgt of 4120+, sl @ 4020

RELIANCE buy for a tgt of 2830+, sl @ 2779

INFOSYS : buy for a tgt of 1645+, sl @ 1620

SATYAM : buy for a tgt of 415+, sl @ 402

BHARTI : buy for a tgt of 924+, sl @ 900

OPTIONS :

NIFTY : buy call 6000 for a tgt of 60+, sl @ 34

INFOSYS : buy call 1740 for a tgt of 25+, sl @ 5rs

RELIANCE : buy call 2900 for a tgt of 45+, sl @ 28

SEBI plans new products in F&O

MUMBAI: The Securities and Exchange Board of India (SEBI) on Monday proposed the introduction of new products in the derivatives segment, including mini contracts in equity indices, which would help individual investors to hedge an underlying portfolio, index futures and options contracts closely following the price movement of their respective underlying indices.

In continuation with the SEBI board decision to introduce new products in the derivatives segment, based on the interim recommendations of the Derivatives Market Review Committee headed by Prof. M. Rammohan Rao, it has come out with a note on new products in the futures and options (F&O) segment for public comments and suggestions on or before December 21.

The SEBI proposed to introduce initially, mini contracts in both index futures and index options with BSE Sensex or NSE Nifty as underlying. Mini contract will be fraction of normal derivative contact.

Smaller contract size, apart from helping the individual investor to hedge risks of a smaller portfolio, offers lower levels of risk in terms of smaller level of possible downside compared to a big size contract, SEBI stated.

Other instruments

Other instruments SEBI proposed are: Options contracts with longer life or tenure; volatility index and F&O contracts; options on futures; bond index and F&O contracts; exchange-traded currency (foreign exchange) F&O contracts; and exchange-traded products involving different strategies.

On proposing contracts with longer life or tenure, SEBI stated that many investors who have a long-term view on the market do not find a direct options product with which this could be achieved.

Heavy trading volume, marginal rise in turnover

Mumbai, Dec 17 The sharp and swift fall in the stock prices of Monday indicates the fact that investors were caught laid back and had not anticipated such a large fall in a single session. The trading volume on the Bombay Stock Exchange (BSE) surpassed its rival's National Stock Exchange (NSE) for the first time in recent times. The BSE recorded total number of shares traded in the cash market at 99.02 crore shares as against 98.98 crore shares traded on the NSE.

BSE witnessed an average trading volume in the range of 67 crore share to 79 crore shares till last Friday. The trading volumes spurt up suddenly on Monday and out paced NSE's volume which has averaged daily trading volume in the range of 83 crore shares to 88 crore shares in the last one week.

According to market analysts, the sharp rise in the BSE's traded volume indicates the fact that more trading took place in the small- and mid-cap stocks compared to average daily trading volume. The higher volume on BSE is also on account of more number of stocks listed on the exchange compared to NSE. BSE has a population of over 7,700 listed Companies of which almost 2,900 stocks are traded on a daily basis, while NSE, on other hand, has a population of listed and permitted Companies in the range of 1,100 and most of them are liquid and traded on the exchange on daily basis.

A leading market analyst said, the sudden rise in trading volume on both the exchanges on Monday was on account of triggering of stop losses, which investrors and brokerages adhere to when Markets are volatile. The fall at the fag end of the session was so swift that prices fell to the level of the stop loss level and investors did not get a chance of squaring up their position. This must have resulted in moderate to heavy losses to the investors, who could not reverse their position in time, he added.

This fact can be proved from the point that though the trading volume has jumped sharply, the turnover has not kept pace, indicating sharp fall in stock prices, thereby resulting in the loss. BSE on Monday recorded a turnover of Rs 9,641 crore while NSE clocked a turnover of Rs 20,428 crore, which is in line with the average turnover witnessed in the previous week.

Securities in ban period for trade date December 18, 2007- F&O segment

Securities in ban period for trade date December 18, 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.

Sr. No. Symbol 1 ADLABSFILM 2 ALOKTEXT 3 ESSAROIL 4 GITANJALI 5 IFCI 6 NAGARFERT 7 NEYVELILIG 8 POWERGRID 9 RAJESHEXPO