Market outlook for Monday

Market may open higher today, following the global cues. U.S. stocks surged on Friday as Internet leader Google and heavy equipment maker Caterpillar showed resilience in the face of a slowing economy with profits that defied Wall Street’s modest expectations and the Asian stocks rose, sending the benchmark index to a seven-week high, on speculation earnings will withstand slower global economic growth. Reliance, TCS, Satyam, Axis Bank, United Spirits, GlaxoSmithKline, UB Holdings, Jain Irrigation, KS Oils are some of the major company scheduled to announce their March quarter results today. As per provisional data, foreign funds bought shares worth a net Rs 597.53 crore on Thursday, 17 April 2008. Domestic funds sold shares worth a net Rs 59.87 crore on that day.

News Capsules For Monday Morning

• The department of Telecom (DoT) plans to auction third generation (3G) spectrum in two phases—the first by 2008-end and the next after March, 2009. This is because the alternative network for the defence forces,which will result in vacation of radio frequencies for 3G, will be ready only by March, 2009.

• Reliance Anil Dhirubhai Ambani Group (R-ADAG) promoted 1,200 mw Rosa power project in Shahjahanpur district, Uttar Pradesh, is slated to be completed by the beginning of 2010, nine months ahead of schedule. Construction is going on extensively and the first phase of the project is all set to commence operation in the second quarter of 2009, while work on the second phase is expected to be completed in early 2010.

• Mahindra & Mahindra (M&M) is understood to be in an advanced stage of negotiation to acquire Belgium gearmaker VCST. The deal size could be in the range of around euro 300 million ($475 million or Rs 1,900 cr).

• Diversified conglomerate ITC has earmarked in excess of Rs 15,000 crore investment over the next few years, the company has said in its sustainability report 2007. The proposed capex two-and-a-half times higher than the entire amount it had invested in the previous decade. It had spent Rs 6,000 crore to “enhance the competitiveness of its businesses”.

• The Aditya Birla group is close to signing a land deal with the port authority of Altamira, in eastern Mexico, to set up a carbon black plant with an investment of $150 million (Rs 600 crore). Carbon black is a key input for the rubber processing and chemicals industry. It is mainly used in the manufacturing of tyres and conveyor belts and for also making paints, dyes and inks.

• Abhishek Industries, the flagship company of Trident Group, has forayed into retail business of homeaccessories under the brand name of Homespaces. The maiden outlet of Homespaces was rolled out inChandigarh on Sunday and the group has plans to open 300 outlets across India this year.

• Commodities, the world’s largest producer of calcined petroleum coke (CPC), is looking at listing its wholly owned subsidiary, Rain CII Carbon LLC on any of the US bourses. Post listing, Rain CII Carbon is expected to be valued at about $1.5 billion. Rain Commodities had acquired the company in July last year for $595 million in an all-cash deal.

• The markets at the start of session have rallied on strong global gues and did not react to 50-bps hike in CRR by RBI. Technology, metal, capital goods, power, realty, oil, FMCG and pharma stocks jumped up. Market breadth is positive. Midcap and small cap stocks have moved up. On the global front, Asian markets were trading strong.

At 9:56 am, the Sensex was up 198 points at 16,679 and the Nifty up 60 points at 5,018.

Jaguar-Land Rover CEO Who Steered Tata-JLR Deal Dies at 60

Jaguar and Land Rover’s Chief Executive Geoff Polites, who is credited with putting the storied British luxury brands through the ongoing sale process to India’s Tata Motors, has expired. He was 60.

Polites died Sunday in his home country of Australia after battling serious illness for the past two years. Additional details, including where in Australia he died, weren’t immediately available.

Dearborn-based Ford credits Geoff Polites with leading the team that returned the overall Jaguar and Land Rover business back to profitability. Ford said Sunday it still anticipates completing the deal with Tata in the second quarter.

“Geoff ensured that Jaguar Land Rover was not distracted and continued to focus on the fundamentals of the business during the recent sale process, despite at the time also fighting his own personal health battle,” Ford President and CEO Alan Mulally said in a statement.

Polites, who had a nearly 40-year career in the automotive industry, took over as CEO of Jaguar Land Rover in 2005.

“His passion for the car business was legend, but the resolve he showed since taking over as CEO of Jaguar Land Rover … was something very special,” Lewis Booth, executive vice president of Ford’s European units, said in a statement.

Ford in March announced it was selling its Jaguar and Land Rover businesses to Tata in a deal that was expected to net the U.S. automaker $1.7 billion — roughly a third of the price it paid for the brands.

In March, Tata said it would pay $2.3 billion for the brands, but Ford will pay about $600 million into the Jaguar-Land Rover pension fund when the deal expanding Tata’s global reach closes.

Ford bought Jaguar for $2.5 billion in 1989 and Land Rover for $2.7 billion in 2000. But Ford pursued the sale to raise money to fund its turnaround plan and focus more attention on its main brands.

David Smith, Jaguar and Land Rover’s chief financial officer, will take over as the acting CEO at Jaguar and Land Rover until a successor is appointed.

We Should Put Up Credit Policy That Can Absorb Global Shocks Say’s India Inc.

In view of global turbulence and shaking of investor’s confidence in the Indian market, the ASSOCHAM has advocated for a forward looking monetary policy that can absorb and withstand implications of global slowdown.

In a note submitted to the RBI Governor, the Chamber President, Mr. Venugopal N. Dhoot has proposed that the RBI should increase surveillance of entire financial system so that a crisis situation does not arise.

The Chamber Chief has further suggested that Indian companies should be permitted to hike their overseas investment limit by 250% from current level of 200% of their total net-worth.

Mr. Dhoot said that the capital inflows should be diverted towards the infrastructure investment as this would help in solving the problems of access liquidity on account of capital flows and help in removing the infrastructure constraints.

The current investment boom in Indian economy can be hampered because of high borrowing costs particularly for small and medium enterprises and therefore, interest cut has become absolutely essential to ensure that SMEs contribution is enhanced towards domestic production and equally to exports. This would be possible with extension of liquidity to these enterprises particularly at lower borrowing costs.

The Chamber has also recommended that RBI should consider increasing the overall ceiling from US$ 22 billion and raising the company wise ceiling of US$ 20 million towards the domestic use of funds raised through the external commercial borrowing routes. The tightening of end-use norms for using the funds raised through this route should also be eased.

Since, the domestic companies are doing reasonably well, Mr. Dhoot said that India Inc. should be permitted to hike their overseas investment by 250% of their total networth so that their capital realization is used for capacities expansion with stronger currencies, added Mr. Dhoot.

The Chamber has pointed out that adequate liquidity infusion at appropriate time during crisis in the financial markets is a key element to avoid the situation of major turbulences as witnessed in the stock market in the last few months.

The RBI should relax the norms relating to the market intermediaries to avoid the liquidity crunch. In addition, the bank should be prepared for the withdrawal of liquidity from Indian economy as the conditions of recession in world economy have become ripped.

The ASSOCHAM also holds that India as compared to other countries has advantageous position as a large part of its food consumption is met by domestic production. The only exception is edible oil in which the country is dependent on imports. Rise in the prices of pulses is a disturbing trend as they are unique to the food basket and the time source of proteins and are not grown in larger quantities anywhere else. Hence, greater investments and technological inputs need to be diverted in production of pulses.

Research and development, especially catering to the needs of Indian food basket should be promoted. Appropriate policy measures need to be taken to reduce the inefficiencies in the supply chain system which contributes in the rising prices.

Government should promote organized retail, at least at the domestic level and adequate credit support should be given to sectors like food processing, logistics, transport, cold storage and warehousing. The ECB shall be further raised in case of food processing companies to reduce their effective borrowing cost.

While it is essential to maintain inflation under the tolerance level, government should also ensure that the benefit of higher prices for the agriculture commodities should reach farmers, which in turn would lead to more consumption in rural areas.

The Chamber has also highlighted the need for increasing surveillance in the entire financial system, stressing that RBI needs to become more pro-active on this front as crisis situation is taken on adequately due to global turbulence. As a result of this, the risk factor in the Indian market has already shaken the investors confidence.

- frontierindia