Indian Stock Market News, Information, Tips, Investment, IPO Details, Analysis Report

Today Sensex Down -357.54 and Nifty Down -108.20 Points

Today’s top gainers were Spice Tele, Genesys, HGSL, HOCL, Suprajit & losers were DLF, Reliance Infra, Unitech, Sail, Reliane Capital.

After the acting Finance Minister Pranab Mukherjee met with the heads of various public-sector banks, expectation is rife that bankers may cut rates in response to the rate cuts effected by the Reserve Bank of India (RBI).

The acting Finance Minister, along with the Deputy Governor of RBI, said the meeting was aimed at looking for solutions to counter the adverse impact of the uncertainty in the global economy.

Mukherjee said that there is a need to concentrate on domestic demand creation. “We must support the development of those sections, which will immediately boost growth and throw up employment opportunities. In view of contracting global demand, we have to focus on development of domestic demand by primarily stimulating demand in the rural areas and in highly labour-intensive sectors,” he said.

After the Reserve Bank of India cut rates, banks have, for long, been expected to follow suit and cut their benchmark rates. Finance Secretary Arun Ramanathan said he expected bank to cut deposit rates.

Emerging from the meeting, KC Chakrabarty, the CMD of Punjab National Bank, said the bank has already cut the primary lending rates and that should translate into reduced home lending rates. He further added that the bank will cut rate as inflation falls. According to him, there is a scope for 200 basis points reduction in lending and deposit rates. UCO Bank CMD SK Goel also said he saw a scope for a 100-200 bps reduction in lending and deposit rates.

There were also reports that Corporate Bank will reduce deposit rates from tomorrow by 50-75 bps. Reports added that bank will reduce lending rates in retail sector by 50-100 bps.

Bhaskar Bhat, MD, Titan, said sales growth in the watches segment picked up in the second half of January. “Thus we expect the watches segment to grow by 12-15% in the coming quarter.”

Bhat said large format stores have been lagging behind, but added that the company’s precision engineering division has been growing at a robust pace.

He, however, said there have been EBIT losses in the others segment on account investments in eyewear business.

As prospective bidders for crisis-ridden Satyam Computer Services start lining up, industrialist BK Modi’s Spice Communication joined the fray to buy out the troubled IT firm.

Modi, however, made it clear that the telecom group would be interested in buying out Satyam and that it was not looking at a piecemeal acquisition. He added that he saw Rs 2,000 crore as a benchmark for Satyam.

“It (Satyam’s price share value) has to between Rs2–Rs 60 depending on the auction price. We will bid in an auction because that will be competitive, [and based on that] the number of shares will be decided,” Modi said, adding that the company did not have any Satyam shares either now or in the past.

Modi also said the Spice had a full team in place for Satyam, in case of a takeover. He added that Spice had written a letter to the Satyam board but had not received a response yet.

“I understand that they (the Satyam board) are meeting on the February 5,” Modi said, adding that Satyam needs an immediate infusion of capital of around Rs 2,000 crore. Money should enter Satyam through preferential allotment of shares, he added.

Spice, Modi added, did not fear liabilities. “We are ready to take some risk on this. We are ready to go on as-and-where basis, provided there is an open auction system. There should be an electronic auction, which is now quite prevalent and is transparent.”

During the just-concluded results season, the real estate sector was expected to show dismal numbers. The star player in the realty pack, DLF, came out with its third quarter results on January 31. The company’s net profit was down by 68.72% from Rs 2144.98 crore to Rs 670.79 crore on YoY basis.

The Reserve Bank of India has left all key rates unchanged, the repo, the reverse repo and the CRR are held at current levels. The bank rate too is left static. The GDP target is revised downwards to 7% with a downward bias, this versus a previous target of between 7.5% to 8%. Inflation targets for the fiscal year are marked down to as low as 3%, versus an earlier target of below 7%.

RBI said that the financial markets globally continue to face crisis of confidence. RBI expects CPI to fall further with decline in input prices. It has also upped bank credit target to 24% from 20% while money supply target has been upped to 19% from 16.5-17%.

RBI has also extended refinance facility for MFs, NBFCs HFCs to September 30, 2009. It has also extended the refinance facility for commercial banks to September 30, 2009. It further added that there is slowdown in deposit growth and the lending rates have to come down with slowdown in deposit growth.

RBI is of the view that global crisis will dent India’s growth trajectory and there is a period of painful adjustment ahead. The growth will be lower due to declining exports and industry slowdown, it added.

RBI said that it is uncertain about when the bottom of asset, business cycle will be seen. There is an emerging consensus that there will be no recovery till late 2009. It further stated that crisis has been spread to emerging economies contrary to decoupling expectations.

RBI FY09 stance is to give comfortable liquidity to meet loan growth. It expects fiscal deficit at 5.9% of GDP vs 2.5% earlier. RBI feels that revenue surplus of states may not materialise. It sees full effect of CRR cut felt in 4-6 months time.

RBI said that there is a slowdown in deposit growth in private, foreign banks. Banks’ SLR rose from 25.8% in October 2008 to 28.9% in January 2009. It is of the view that lending rates have to come down.

RBI said that the fall in inflation will not commensurate with sharp fall in WPI and CPI will decline with a lag effect. It said it will take into account all price indices and their components.

The central bank also believes that there is distinct evidence of slowdown due to global downturn. The aggregate deposit growth target is also revised to 19% from 17%. It said that the capital flow reversals has stabilised since September, October 2008. International credit channels continue to be constrained and capital market valuations remain low, it added.

RBI said that the transmission of policy rate signal to credit market is subdued and transmission of policy rate signal to G-Sec market is effective. According to RBI, there is more room for bank to cut rates in response to policy cues.

It further said that the cash flow to commodity sector is down to Rs 4.85 lakh crore vs Rs 4.99 lakh crore (YoY). RBI will take caliberated monetary policy actions as necessary. “The export growth turned negative during October-November 2008. Overall business sentiment has deteriorated whereas domestic financial markets are functioning in an orderly manner.”

RBI stated that the response to actions over last quarter is still unfolding. Financial markets globally continue to face crisis of confidence and there are no signs of early resolution as collateral damage continues, it added.

RBI believes that major global concern will forestall the worst ever recession since 1930. Monetary ammunition has exhausted in many countries and slowdown of the world trade deeper than expected. It also expects exports to advanced countries to decline further.

RBI expects CPI to fall with decline in input prices. It also stated that government will lose 0.6% of GDP due to excise and customs duty cuts.

Larsen & Toubrp has increased its stake in Satyam Computer Services from 4% to 12%. Bulk of the buying was done by the infrastructure giant on Friday. The Satyam stock witnessed huge volumes during the day. The company has not yet commented on the move.

As per records on the NSE website, L&T bought 3.9 crore Satyam shares at Rs 34.52 per share. Sources said L&T increased the stake to protect the company’s interest in Satyam.

Earlier, L&T had picked up a 3.95% stake in Satyam, when the IT company was already facing rough weathers for its attempt to acquire Maytas Infra and Maytas Properties. The full-blown Rs 7,000-crore corporate scandal, however, had not broken then.

Today Sensex Down -229.02 and Nifty Down -49.60 Points.

Today’s top gainers were Power grid corporation, NTPC, Reliance Infra, BPCL, Tata Power and Losers were Zee Entertainment, Tata Steel, Siemens, Ambuja Cements & Bharti Airtel.

The UK government in a bid to save its stuttering economy has unveiled its second bank bailout plan. The country is staring at a record level of unemployment numbers and recession. Technically, recession is defined by two successive quarters of negative output. The country saw negative GDP growth in Q3. Its Q4 figures are to be announced on Friday.

Justifying the bailout, Gordon Brown, the British Prime Minister, said the move was required as the overall credit availability is inadequate to support the economy. The bailout, he said, will aim at expanding lending necessary for credit worthy institutions. The Bank of England will give more details of the new facilities on Tuesday.

In October, UK extended a 37 billion pounds lifeline to banks. This was at the height of the global financial crisis and was accompanied by similar such steps by various other countries. The justification for the move at that time too was shoring up of the country’s financial system. Even Gordon Brown had said this will help build financial stability.

The Reserve Bank of India, or RBI has cut the repo rate by 100 bps to 8% with immediate effect. This is the first repo cut since 2004.