Tata Motors posts highest consolidated quarterly profits

Tata Motors reported its highest ever quarterly profit at Rs 2,223 crore for the second quarter against Rs 22 crore for the corresponding period last fiscal.

The company's consolidated revenue went up by 36.5 per cent at Rs 28,782 crore. The company's share price reached new high at Rs 1,270.55 on the BSE on Tuesday in the hope of a record performance. The results were announced post market hours.

The company attributed the performance to increase in sales volume and continuing cost reduction efforts. “The company will continue cost reduction initiatives. Operationally, we will look at every opportunity to curb cost increase,” said Mr Carl-Peter Forster, Managing Director and CEO of Tata Motors.

The Jaguar Land Rover business, which reported Rs 1,715 crore net profit for the three-month period ending September 30 from a loss of Rs 461 crore for the year-ago period, drove the record performance. JLR posted a 22 per cent growth in volume at 54,140 units.


Standalone net dips

The standalone net profit of Tata Motors at Rs 433 crore, fell 41 per cent from Rs 729 crore for the corresponding quarter a year ago. This is because of the Rs 420 crore income from the sale of shares in subsidiary company's Tata Motors received during the second quarter of last year. If this exceptional income is removed, the profit after tax grew by 21 per cent for the just ended quarter.

The net income from the domestic business grew 45 per cent to Rs 12,420 crore as the truck and bus sales grew 23 per cent to 1.11 lakh vehicles and car sales grew 36 per cent to 82,564 units.

About Nano sales which decreased in the recent months and production ramp up, Mr Forster said, “We have to break new grounds with Nano sales. The production will be adjusted to the retail sales.”

For Jaguar Land Rover, the engine supply constraints which slowed its sales still continue. The company is preparing to launch Range Rover Evoque in the summer of 2011. UK continues to be the major market for the JLR with more than 14,000 unit sales for the quarter while China reported highest growth at 72 per cent to 5,801 units. North America too reported 27 per cent growth at more than 12,000 unit sales.

“The better product mix and better market mix drove the JLR volumes. New Jaguar XJ and increase of selling price led to good growth,” said Mr Ramakrishnan, Chief Financial Officer, Tata Motors.


Outlook

“There is a strong growth in demand. However, supply constraints and raw material cost pressures still continue,” said Mr Ramakrishnan.

Another subsidiary Tata Motors Finance's net profit more than doubled to Rs 44 crore while Tata Daewoo net profit declined to Rs 8 crore.

TCS and other results rocks....

* Novartis India Q2 net up 22% to Rs. 40.5 cr
Drug firm Novartis India on Thursday said its net profit rose by 21.98 per cent to Rs. 40.5 crore for the second quarter ended September 30, 2010, over the same period previous fiscal.

* Ambuja Cements net down at Rs. 152 cr
Cement major Ambuja Cements on Thursday said that it has clocked a net sales of Rs. 1,564 crore in the third quarter of the current fiscal, down 2.9 per cent from Rs. 1,611 crore in the year-ago period. Net sales declined on account of lower realisations, the company said.

* McDonald's Q3 net income jumps 10%
McDonald's frappes, smoothies and dollar menu drew in more customers in the third quarter, pushing the world's largest burger chain's net income up 10 per cent.

* TCS tops expectations, profit up at Rs. 2,169 cr
Indian IT major beat the Street’s expectations after it announced a 13.8 per cent quarter-on-quarter rise in its second quarter.


# Output outage pulls down ACC net by 79.2%
# GlaxoSmithKline Q3 net down 3.5%
# Sensex regains 20K in 388-point rebound
# Allahabad Bank Q2 net up 20% on NII growth
# TCS rises over 1% on hopes of strong Q2 numbers
# Ashok Leyland gains 2% on good Q2 numbers
# Kotak Bank consolidated Q2 net up 21%

FDI inflows down by about 60% in Aug

Reflecting fragile recovery in world's major economies, foreign direct investment into India dipped for the third consecutive month, by about 60 percent to USD 1.33 billion in August.
The FDI inflows in August 2009 were USD 3.26 billion.

Contrary to smart recovery in the domestic economy and a rebound in exports, overseas investment show a slackening trend in the current fiscal, an official said.

For the April-August period of 2010-11, FDI inflows declined by 35 percent to USD 8.92 billion compared to USD 13.8 billion in the same period last year, the official said.

According to experts, weak global economic recovery is one of the reasons for declining FDI in India.

"The main reason for the decline in FDI is slump in the major western economies like the US and Europe...," international trade expert with India's prestigious Indian Institute of Foreign Trade (IIFT) Rakesh Mohan Joshi said.

Crisil chief economist DK Joshi said: "This is not a good news for Indian economy. This reflects that global economic recovery is still fragile and some impact of that would be reflected in our FDI."

Foreign investment in July 2010 was at USD 1.78 billion, a dip of 49 percent and in June international inflows were at USD 1.38, a dip of 46 per cent over the year ago period.

The sectors which attracted foreign investment, included services, telecommunication, construction activities and computer software and hardware, the official said.

The country received maximum investment from countries like Mauritius, the US, the UK, Singapore, the Netherlands and Japan.

The government has recently floated discussion papers for public comments to liberalise FDI in multi-brand retail and defence sector.

The foreign investment remained low-key despite a recent UNCTAD survey showing that India would remain the second most important FDI destination for transnational corporations during 2010-2012, next only to China.

In its latest 'World Investment Prospects Survey 2010-2012', the United Nations Conference on Trade and Development (UNCTAD) said transnational corporations remain buoyant about investment prospects in China, India and Brazil.

FDI for 2009-10 at USD 25.88 billion was lower by 5 percent from USD 27.33 billion in the previous fiscal.

India's external debt rises to $273.1 billion

India's external debt rose 4.1 percent or USD 10.8 billion to USD 273.1 billion in the first quarter of current fiscal due to a sharp increase in short-term trade credits, commercial borrowings and multilateral government borrowings.

The short-term debt increased by USD 5.4 billion to USD 57.8 billion, accounting for 21.2 percent of the total debt, while the long-term debt rose to USD 215.2 billion at the quarter ended June 30, the Reserve Bank of India (RBI) said in its monthly bulletin.

Almost all the components of external debt registered increase during the first three months of fiscal 2010-11. Commercial borrowings and loans under external assistance (multilateral and bilateral debt) increased by USD 2.5 billion and USD 2.3 billion respectively.

The share of commercial borrowings continue to be the highest at 27.3 percent in the total external debt followed by short-term debt (21.2 percent), NRI deposits (17.6 percent) and multilateral debt (16.4 percent).

The valuation effect reflecting the appreciation of the US dollar against other major international currencies and the Indian rupee resulted in a decline of USD 1.3 billion in India's external debt during the reporting quarter.

"Excluding the valuation effects due to appreciation of US dollar against other major international currencies and the Indian rupee, the increase in external debt worked out to USD 12.1 billion over the quarter," the RBI said.

IIP growth dips to 5.6% in Aug

Industrial output in August grew at the slowest pace in 15 months at 5.6 percent, nearly half of last year, disappointing the government that was betting on domestic consumption to drive the economy.

Manufacturing sector, which accounts for 80 percent of the factory ouput numbers and a key indicator of consumer demand, saw growth slip to 5.9 percent from 10.6 per cent in August, 2009.

"(The trend is) a little disappointing. Let us see how it fares in annualised terms," Finance Minister Pranab Mukherjee said in his comments on the sharp fall in industrial output growth.

Growth in capital goods -- used by the manufacturing segment -- was a negative 2.6 percent in August compared to a 9.2 expansion in the year-ago period.

The poor showing drew immediate calls from the industry against any further increase in key policy rates by the Reserve Bank, which is slated to review its monetary policy on November two.

The RBI has increased policy rates five times this year to cool inflation, following which the rate for its key short-term lending (repo) stands at 6 per cent and borrowing (reverse repo) at 5 percent.

India Inc believes the deceleration was owing to the tight monetary policy stance that has pushed up interest rates for corporates, as well as for retail customers, most of whom rely on loans or credit to buy auto or other consumer durables.

The disappointing industrial output numbers triggered a huge sale on the bourses, as investors booked profits, pulling down the benchmark Sensex by nearly 225 points in intra-day trade. The losses were curtailed to 137 points at close.

Mukherjee, though disappointed, asserted that the "Indian economy is on the path of robust growth led by increased investment and capital inflows, stronger industrial output and rising aggregate demand."

The Finance Minister expects annual industrial growth to be around 12-13 percent, which could push economic growth to 8.5 percent or more. After over 9 percent growth for three years till 2007-08, GDP expansion slipped to 6.7 percent in 2008-09 post the global financial crisis.

The last time factory output growth was slower was in May 2009 (2.7 percent).

Mining sector output decelerated to 7 percent from 11 percent, electricity generation to 1 per cent from 10.6 percent.

"...the RBI should not raise policy rates any further as it could have a negative impact on consumer demand as well as corporate investment and thereby slowdown economic growth," CII said in a statement.

Industry chamber Ficci too said any further hike in interest rates could impact consumer durables and automotive sector.

"Negative growth in key sectors like capital goods, apparels...is indeed a cause of concern and with appreciation in Rupee and hardening of interest rates, the growth of manufacturing sector may be significantly affected," Ficci secretary general Amit Mitra said.

The central bank will have to draw a balance between the need to check prices, as inflation is still high at 8.5 percent, and push up economic growth.

Commenting on the IIP numbers, RBI Governor D Subbarao said, "We will study (IIP numbers). I cannot make a comment (just yet)."

The only sector that showed a positive trend in August was consumer durables which improved to 26.5 percent from 24.7 percent in August last fiscal.

Further, July IIP was revised upwards to 15.2 percent from 13.8 percent in the provisional estimates.

Finance Secretary Ashok Chawla said, "It (the trend) is purely a cyclical movement. Sometimes it goes up, sometimes (it) goes down...We need to watch."

On decline in capital goods production, India's chief statistician TCA Anant said, "It is very difficult to predict a trend based on month-on-month number. Capital goods production always comes with a lag and is difficult to say that there is any slowdown.

Manufacturing growth is good on the broader trend. This kind of variation takes place."

Consumer non-durables, mainly fast moving consumer goods (FMCG), recorded a negative growth of 1.2 percent, as against expansion of 6.1 percent in the same month last year.

Of the 17 industry groups, as many as 14 have shown positive growth during the month of August.

Meanwhile, the industrial expansion figure for July was revised upwards to 15.2 percent from the earlier estimates of 13.8 percent.

Industrial growth for the first five months of this fiscal stood at 10.6 percent in comparison to 5.9 percent growth in the same period a year ago.

According to Standard Chartered Bank economist, Anubhuti Sahay, "GDP growth and industrial output for the fiscal would be in line with projection...going forward industrial output is expected to moderate due to high base effect."

SAIL achieves best ever Q 2 sales

The July-September quarter of 2010 has been the best-ever Q2 for Steel Authority Of India with sales of 3.17 million tonnes (MT) achieved during the period, sources in Rourkela Steel Plant said Saturday.

In comparison to sales in Q1 SAIL achieved a growth of 30 percent. The previous best Q2 in respect of sales was 3.08 MT achieved in 2009-10, they said.

During this year's Q2 SAIL sold 8.5 lakh tonnes of special and value-added steel products, showing a growth of 10.1 percent over the corresponding period last year. Special steel constituted 30 percent of the total domestic sales achieved in Q2.

Sales growth in Q2 was mainly due to higher intake by construction and manufacturing sectors. This was reflected in higher sales of products such as wife rods, rounds and bars, structurals, CR sheets/coils and galvanised items, the sources added.

IMF projects India's economic growth at 9.7% in 2010

The International Monetary Fund has projected the Indian economy will grow by 9.7 percent in 2010 and 8.4 percent in the next fiscal, driven by robust industrial production and macro-economic performance.

However, neighbouring China is expected to grow at an even faster rate of 10.5 percent in 2010 and 9.6 percent in 2011, driven by domestic demand, the IMF said in its latest World Economic Outlook report.

Advanced economies, on the other hand, are projected to grow by just 2.7 percent in 2010 and 2.2 percent in 2011, the IMF report said, adding that global trade is forecast to expand by 4.8 percent in 2010 and 4.2 percent in 2011, with a temporary slowdown during the second half of 2010 and the first half of 2011.

"India's macroeconomic performance has been vigorous, with industrial production at a two-year high. Leading indicators -- the production manufacturing index and measures of business and consumer confidence -- continue to point up," the IMF said.

"Growth is projected at 9.7 percent in 2010 and 8.4 percent in 2011, led increasingly by domestic demand. Robust corporate profits and favorable external financing will encourage investment," it said.

"Recent activity (10 percent year-over year growth in real GDP at market prices in the second quarter) was driven largely by investment and the contribution from net exports is projected to turn negative in 2011 as the strength in investment further boosts imports," the IMF said.

According to the World Economic Outlook report, growth in emerging Asia economies stands at about 9.5 percent, with robust demand from China, India, and Indonesia benefiting other Asian economies.

In China, a major fiscal stimulus, a large expansion of credit and a number of specific measures to boost household income and consumption increased domestic demand growth to almost 13 percent in 2009, contributing to a large decline in the current account surplus.

The recovery is now well established, and a transition from public stimulus to private-sector-led growth is underway, it said.

Latin America has also recovered strongly, with real GDP growth at about 7 percent.

The recovery in Latin America is being led by Brazil, where real GDP growth has been close to 10 percent since the third quarter of 2009 and the economy is now showing signs of overheating, the report said.

A number of other economies have also returned to solid growth. However, Mexico is lagging behind, partly because of its strong trade linkages with the United States.

Growth in Mexico recently picked up on the back of strengthening exports to the United States, but the output gap remains large.

The World Economic Outlook projects that the output of emerging and developing economies will expand at a rate of 7.1 percent and 6.4 percent, respectively, in 2010 and 2011.

"The global recovery remains fragile, because strong policies to foster internal rebalancing of demand from public to private sources and external rebalancing from deficit to surplus economies are not yet in place," it said.

Maruti sees Sept vehicle sales rising 32-33%

Top Indian car maker Maruti Suzuki expects September vehicle sales to rise an annual 32 to 33%, bolstered by robust domestic demand, its chairman said on Thursday.

RC Bhargava said the company, 54.2% owned by Japan's Suzuki Motor, expects to sell 1.2 million vehicles in the current fiscal year that ends next March from 1.02 million in the previous year.

India is one of the world's fastest growing market for cars as a rapidly expanding economy boosts incomes and consumer spending.

"Clearly, the market continues to hold firm. There is no softening," Bhargava said. "We are now looking fairly optimistically at the rest of the year."

Beginning October, Maruti will increase its annual car-making capacity to 1.3 million units from its current capacity of 1.2 million units, he said.

Maruti plans to invest USD 1.3 billion over the next three years on manufacturing plants to boost capacity, it had said earlier this month.

The company would build its fourth auto plant in India, boosting its output to 1.5 million units a year. The new factory would start operations in 2013, with annual output capacity of 250,000 cars.

Bhargava said September sales would be higher than in August, when they rose 24% from a year earlier to a record for any month.

Maruti's share of the Indian car market at the end of August was 51.8%, he said. This is down from 53.2% in the previous fiscal year and 55.1% in 2008/09.

"We are not focused fundamentally on retaining market share. It's not a worry because we know we have capacity constraints, we have a waiting list," Bhargava said. He also said Japan's Nissan Motor Corp would source less than 30,000 cars this fiscal year from Maruti, compared with 51,072 cars last fiscal year, primarily due to a decline in European demand.

Maruti currently has a contract with Nissan to make and export the Pixo hatchback to European markets.

Shares in Maruti, which has a market value of USD 9.2 billion, were trading up 1% by RS 1,445 at 2.29 pm (0859 GMT) in a subdued Mumbai market. The stock is, however, down 7.4% this year versus a 14% rise in the index.

Advance tax numbers indicate good show by finance, auto cos

Advance tax collections for the second quarter, July-September, 2010-11 indicated Wednesday that while sectors like banking, finance and auto have done well, cement and pharma were down as compared to last year's numbers.

As for individual corporate, Mukesh Ambani-led Reliance Industries and Larsen & Toubro paid Rs 1,306 crore and Rs 280 crore respectively, higher than Q2 FY10.

RIL had paid Rs 1,157 crore in the year-ago period, indicating that it is steaming ahead. L&T's had paid Rs 210 crore in Q2 FY 10.

Similarly, Kumar Mangalam Birla-owned Hindalco's tax outgo doubled to Rs 140 crore.

However, it was a mixed bag from the Tata Group as Tata Power Rs 60 crore and Tata Motors Rs 95-crore paid less to the exchequer vis-a-vis last year.

Country's financial capital Mumbai, which contributes a major chunk of direct tax collection, clocked over 13 percent growth, which a top Income Tax official said was below expectations.

"Our expectations were more...some companies in sectors like cement are not showing good numbers," chief commissioner of Income Tax Mumbai, PP Srivastava, told PTI here, after the advance tax collections for September quarter ended Wednesday.

The Mumbai region of Income Tax Department has been assigned a direct tax collection target of Rs 1,50,480-crore for the current financial year, which is 35 per cent of the all India collection target of Rs 4,30,000-crore.

Asked if the target (Mumbai circle) would be met, Srivastava said that "we are hopeful. However, we will have to take extra measures to achieve it."

IT-major Tata Consultancy Services paid Rs 260 crore in advance tax as compared to the previous year's Rs 220 crore, while the payment by Tata Chemicals remained unchanged at Rs 60 crore.

Driven by high growth, advance tax payments in the auto sector were good.

Bajaj Auto paid Rs 243 crore in Q2 FY11, as against last year period's Rs 170 crore, while Mahindra & Mahindra paid Rs 158 crore, up from Rs 112 crore, the source said.

Barring some names, the banking and financial sector witnessed high tax payouts, led by State Bank of India (Rs 1,924 crore), ICICI Bank (Rs 600 crore), HDFC Bank (Rs 600 crore), Central Bank of India (Rs 206 crore), Union Bank of India (Rs 308 crore) and Yes Bank (Rs 105 crore).

Home-loans lender HDFC shelled out Rs 400-crore this quarter, as against Rs 320 crore in the year ago period.

Life Insurance Corporation's payout increased by Rs 128 crore to Rs 1,067-crore, while in the case of General Insurance Corporation, it almost doubled to Rs 92-crore.

The sector which appears to have suffered the most in Q2 FY11 since last year is cement, as payouts by a majority of companies in this segment have fallen sharply.

From last fiscal's Q2 of Rs 150 crore, Ambuja Cement's advance tax payment fell to Rs 90 crore, while UltraTech's payout more than halved to Rs 60 crore.

Cement major Lafarge's advance tax payment declined from Rs 67 crore to Rs 40 crore. In the case of ACC, its advance tax payment plummeted to Rs 60 crore from last fiscal's Q2 of Rs 150 crore.

Consumer electronics major, Videocon, saw its advance tax outgo increase to Rs 35 crore, from last year's Rs 30 crore while state-owned fertiliser company RCF showed a decline to Rs 19 crore from Rs 33 crore in Q2 last fiscal.

Biscuit maker Parle saw its advance tax outgo increase by Rs 3 crore to Rs 12 crore this quarter and Johnson and Johnson paid Rs 22 crore, up from last year's Rs 18 crore.

Two pharma majors -- Lupin and Cipla -- have registered lower payouts at Rs 45 crore and Rs 65 crore respectively as compared to Rs 50 crore and Rs 75 crore, respectively, in the year-ago period.

In the media and entertainment space, Zee Entertainment's payout almost doubled to Rs 60 crore from Rs 32 crore in the year-ago period.

M&M to launch portfolio of bikes by October

Mahindra & Mahindra plans to launch a portfolio of bikes between 100-125 cc, 150c and 250-300 cc by September end or early October. M&M says that these bikes are designed Engines Engineering Company it acquired in 2008.

The company plans to use its existing dealer network to market bikes and hopes to compete with Hero Honda’s dominance in the 125 cc segment inorder to take advantage of the absence of new launches fm Hero Honda in the 125cc segment. M&M Two wheelers have more than 370 dealerships across India.

RBI panel to review repo, reverse repo process

The Reserve Bank of India (RBI) on Monday said its committee on monetary policy will review the operating procedure with respect to repo, reverse repo auctions; width of the interest rate corridor; and frequency and timing of reverse repo and repo auctions.
In its quarterly policy review in July, the RBI had announced its plan to set up a panel to monitor the operating procedure of the monetary policy, including liquidity adjustment facility.
Rate corridor is the spread between repo rate -- the rate at which the RBI infuses liquidity -- and reverse repo rate -- the rate at which liquidity is drained out.
The panel will look at monetary policy in the light of global practices and domestic experience.

The terms of reference include:
* whether there is a need for a rate corridor at all
* whether its width should be fixed or variable
* what are the tools necessary to enable the corridor to function efficiently.

The committee will be headed by Deepak Mohanty, executive director, RBI.
The panel will also compare its monetary policy with operating methods of other central banks, the RBI said.
The RBI had introduced repo and reverse repo rates in June 2000 when it had started the liquidity adjustment facility.
Besides interest rates, other tools such as cash reserve ratio (CRR), open market operations (OMO) and market stabilisation scheme (MSS), have served the monetary policy management well, the RBI said.

"However, India's increasing integration with the global economy, large volatility in capital flows and sharp fluctuations in government cash balances have posed several challenges to liquidity management by the Reserve Bank, particularly in effectively signalling the monetary policy stance," the RBI said, explaining the rationale behind forming the panel.
The committee will also the assess the role of Bank Rate, which has been unchanged since April 2003 and is considered defunct now as no real interest rates are linked to this rate.
Bank Rate was used to signal change in interest rates over medium to long term, while repo and reverse repo rates are short-term rate tools.

July industrial output up 13.8% YoY

India's industrial output in July rose at a faster-than-expected 13.8% from a year earlier, sharply higher than the previous month's 7.1%, government data showed on Friday.

A poll had suggested industrial output to come in at 7.89%.

Industrial output rose 10.4% in the 2009-10 financial year (April-March) , faster than the 2.8% clocked in the previous fiscal year. India's headline inflation for July eased from double digits to 9.97%.

Commenting on India's July factory output figures, deputy chairman of Planning Commission Montek Sigh Ahluwalia said they were better-than-expected and there is a good case for the government to increase its economic growth target for the current fiscal year.

French co Accelya buys 35.6% in Kale Consultants

French back office provider Accelya has acquired a controlling interest in outsourcing services firm, Kale Consultants. Accelya has acquired 35.61% stake at Rs 172 per share in Kale Consultants

Post- acquisition, promoters of Kale Consultants will completely exit the company. However the company says that its MD and CEO Vipul Jain will still remain in the post. The deal will help Kale to reach wider markets, adds the company.

As reported earlier in July, the acquisition will trigger an offer of 20%.

ArcelorMittal, Indiabulls in JV talks for steel project, mining

New Delhi: ArcelorMittal, the world's largest steel-maker, is in discussions with Indiabulls Group to form a joint venture company for scouting and mining iron ore in Rajasthan and setting up a steel plant.


"The discussions are on (between ArcelorMittal and Indiabulls to form a JV company). ArcelorMittal is pitching for a majority stake in the JV company," a person in-the-know of the development told PTI.

"There are indications of iron ore in Rajasthan. It is a mineral-rich state. The JV company would seek to locate and develop it. Then, a steel plant would be developed in the state," the source said.

According to the source, the JV would be between an ArcelorMittal subsidiary or an investment arm of the Mittal family and an Indiabulls Group firm.

ArcelorMittal chief financial officer Aditya Mittal is said to be the brains behind the proposed venture, which aims at tapping the market for steel in North India, where there is no integrated steel plant.

"Promoters of ArcelorMittal and Indiabulls share a good relationship and the new venture would further their partnership," the source added.

Through LNM India Internet Ventures, it is said that L N Mittal already holds an 8.79 per cent stake in Indiabulls Power, which is developing various power projects across the country.

State-owned SAIL has already discovered iron ore deposits in the desert state.

The proposed investment in the JV could not be immediately ascertained. An ArcelorMittal spokesperson did not revert to a PTI query on the cost of the proposed venture.

ArcelorMittal had in July said it expects to start work on one of its proposed Rs 1.3 lakh crore India projects in early 2011.

The world's largest steel-maker, accounting for 8 percent of global production, announced plans to set up projects in Jharkhand in 2005 and in Orissa a year later. In June this year, it signed an MoU with the Karnataka government for a Rs 30,000 crore steel project.

"We believe that in 2011, in one of the projects, we will break the ground, we don't know which one... It is our hope that it should be in the first quarter or the second quarter,"

ArcelorMittal chairman and CEO L N Mittal had said.

Bull of the week: Stock that rallied 62% in 5 days

EIH Associated Hotels gained 9.98% or Rs 20.95 to close at Rs 230.85. It touched a 52-week high of Rs 230.85. There were pending buy orders of 43,187 shares, with no sellers available.

Why the run up?

On August 30, 2010, Energy major Reliance Industries controlled by billionaire Mukesh Ambani, announced its foray into the hospitality sector by acquiring a 14.12% in EIH for a total cost of Rs 1021 crore. The stake buy worked out to Rs 184 per share. The acquisition at Rs 184 per share represented almost a 20% premium to its price of Rs 151 on the day. EIH holds 75% controlling stake in EIH Associated Hotels.

On September 01, 2010 , Reliance, bought an additional 0.68% in EIH Ltd, raising its holding to 14.8% in the hotel chain.

Reliance's 14.8% stake in EIH, just shy of the 15% level that triggers a mandatory open offer to buy an additional 20%, could mean the company is not keen to take management control of the hotel chain.

ITC, which holds 14.98% stake in EIH, reiterated that it would not make a hostile bid for EIH.

Analajit Singh, Chairman of Max India, who also holds under 5% stake in EIH, was also interested in hiking his stake in the company. However, talks failed over differences in valuations.

Inflationary pressures is easing, says RBI

Bangalore: Reserve Bank of India Governor D Subbarao Saturday said the country's economic growth is getting broad-based and inflationary pressures are easing.

"There is evidence that growth is getting more broad-based. Inflationary pressures too are easing because of improved supply position as also the impact of monetary tightening effected by the Reserve Bank," he said while delivering a lecture here.

"Going forward, the Reserve Bank will calibrate policy action to the evolving growth inflation dynamics," Subbarao said.

"Given the uncertainty in the world and the lags in monetary transmission, it is not possible to offer more precise guidance. All I can say is that our guide post is festina lente-as the Romans used to say-make haste slowly".

Subbarao, who was speaking on "Economic Crisis and Crisis in Economics : Some Reflections", said the Reserve Bank has to balance between the objectives of growth, price stability and financial stability.

"Determining this prioritisation is the judgement call of the Reserve Bank. People who apprehend that monetary tightening will hurt growth must remember that even if there is some sacrifice of output in the near-term, we are better off curbing inflation since inflation can be inimical to sustainable and equitable growth in the medium term", he added.

Experts see weak market ahead

The benchmark Sensex closed below the important psychological level of 18,000 for the first time since July 30, 2010. The index shed more than 200 points in the second half of trade, dragged by shares of financial, technology, realty, auto, capital goods and power companies.

The 30-share BSE Sensex closed at 17,998.41, down 227.94 points or 1.25% and the 50-share NSE Nifty fell 69.20 points or 1.26% to settle at 5,408.70, after witnessing an intraday low of 5,391.95. For the week, indices lost 2.2% each.

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Mitesh Thacker of miteshthacker.com, who had been watching 5,450-5,455 very closely, says, “Since the markets bottomed out in the last week of May and started a rally from 4,900, every correction on the Nifty has failed to close below 21-day exponential average."

"We have had three-four corrective movements where the Nifty has fallen about 100 points from the top, but every time it’s managed to close above that and then has made a new high. The Nifty has closed below that level. This is the first sign of proper weakness and a corrective kind of movement coming into the Nifty. Probably, the one important level, which we saw couple of weeks back was on the downside, 5,360- 5,350. So maybe we are heading towards that and if you break that may be even lower.”

Dipan Mehta, Member of the BSE and NSE also feels that the market is in a correction mode. “But this is more like a normal technical kind of correction. I don’t expect that is going to add up to anything significant. I think that maybe this month we could see the losses deepening as compared to what we have seen over the past two-three trading sessions.”

US growth revised lower: What will Fed do now?

The second quarter growth in the United States has been revised lower to 1.6% from an initial estimate of 2.4%. Meanwhile, in the United Kingdom, growth has been revised upwards to 1.7%—the fastest since 2001. A stronger Europe than the US was unthinkable just a few months ago when we began the year with the specter of sovereign debt crisis in Europe hanging over our heads.

Are the Bad days coming back ???

The bad days will be back again in the Global markets. Euro has temporarily bounced back but the changes of Euro zone going bankrupt has not been phased out. No change in the US jobless claims indicates that there has been no change in the US markets.

Chicago Federal Reserve Bank President Charles Evan said the risks of a double-dip US recession have risen in the last six months. While he added he did not think that was the most likely scenario, he said high unemployment and a fractured housing sector would make the recovery a fragile one. Asian stocks fell on Wednesday, with Japan's Nikkei at a 16-month low, as investors sold riskier assets after a spate of worrying US economic data, while the yen slipped from a 15-year high on a report Tokyo was considering weakening its currency. But even if Japan's government acted alone to try and halt yen strength, dealers were skeptical it could reverse the growing unwillingness among investors to take risks that has underlined the yen's 10 per cent rise against the dollar so far this year.


The US housing market is taking a turn for the worse.

Tuesday's report from the National Association of Realtors about sales of previously occupied homes is expected to show sales plunged in July. Economists are predicting as much as a 26 percent drop from a month earlier to a seasonally adjusted annual rate of 3.95 million. That would be the worst month for sales in more than a decade.
Many say the market is hurting because buyers and sellers are in a standoff over home prices. Sellers have unrealistic expectations about their home values and are listing properties on the high end.

The Japanese Nikkei was down 1.66%, on reports of its export growth slowing for a fifth month in July and the appreciating yen against the dollar. It had touched a new 15 year
high and that caused some panic amongst the investment community as a siring yen is detrimental to the export oriented Japanese economy.

Buyers are afraid home prices will start falling after being flat nationally for about a year and even rising in some parts of the country. The housing market is also being hampered by a weakening economic recovery. Unemployment remains stuck at 9.5 percent and many prospective buyers worry they might not have a job to pay the mortgage. Prices are low, but that's largely because foreclosures are running about 10 times higher than before the housing bust. And while mortgage rates are at the lowest levels in decades, many people can't qualify because banks are being selective in the tough economy.

Major Indices closed down nearly1.7% each. Midcap and Smallcap Indices also tanked this week, loosing nearly 2% each. Name whatever group, it crashed this week. Except the Oil refining companies surged ahead and out perform the Major Indices. Bpcl & Ongc were up by 12% & 5% each. Banks and the Infra stocks had their bad week on the street. Hdfc Bank tanked nearly 3.4% and Icici bank & Kotak bank corrected 3.2% & 2.5% each.

Some of the midcap stocks outperformed the markets. Indswift Lab surged 35% while Surya Pharma was up 30%. Natco Pharm stock was up 16%. India witness above average rainfall in this season, this might be the reason for which major small cap and Midcap fertilizers could see some good rally.

Markets remained very volatile for the week. Nifty made its new 52 week high but ended up with sharp correction and triggered its lower trendline also. Nifty at the close of the week made an intraweek high and low of 5549 & 5391. There is not such bad news in the Indian markets except the growing inflation and the corruption. Indians are used to corruption and for govt has promised to get control over the inflation within 3 months, irrespective of actual prices coming down, the inflation index will surely come down

In the last week RSI had take support at the trendline but triggered the downtrend and continued to fall. MACD also showed negative divergence. Nifty will find support at 5375 -5350 levels.

Adani to invest in $1.6 bn Indonesian railway project

Jakarta: Adani group plans to invest in a USD 1.6 billion coal railway project in Indonesia's South Sumatra province, a government official said on Wednesday, providing funding for much-needed infrastructure.

While Indonesia has abundant natural resources, including coal, oil and gas, lack of investment in exploration and infrastructure has limited extraction and development.

The island of Sumatra, which includes South Sumatra province, has 11.5 billion tonnes of mineable coal reserves -- or 57 percent of the country's total mineable reserves of 20 billion tonnes, according to data from the energy and mines ministry.

But the province only produced 11.5 million tonnes of coal in 2009, because of poor transportation.

The new 270-kilometres (168 miles) railway will be an addition to another railway project which is being developed by state-owned miner PT Perusahaan Batubara Bukit Asam.

Alex Noordin, governor of South Sumatra, said the railway project will require total investment of USD 1.6 billion including a coal terminal.

"The coal terminal will have the capacity to handle 50 million tonnes of coal. Bukit Asam will supply around 34 million tonnes," Noordin said.

Diversified Adani Enterprises controls Indian power utility Adani Power.

Indonesia's Kalimantan, on Borneo Island, accounts for most of the remaining coal produced by Indonesia, the world's top thermal coal exporter, and is also seeking investments in coal railway projects.