India’s largest private telecom company Bharti Airtel on Saturday pulled itself out of negotiation for acquiring an estimated 45-50 billion dollar MTN, saying the South African telecom entity deviated from agreed terms.
“An in-principle agreement was reached on 16th May and a term sheet was initialled between two lead bankers… MTN has now presented a completely different structure, from what was agreed,” Bharti said in a statement.
The new structure envisaged Bharti Airtel becoming a subsidiary of MTN and exchange of majority shares of Indian company held by Sunil Mittal, promoter of Bharti, family and its foreign partner Singtel, in exchange for a controlling stake in MTN.
“Bharti believes that this convoluted way of getting an indirect control of the combined entity would have compromised the minority shareholders of Bharti Airtel and also would not capture the synergies of a combined entity,” the company said.
Both (Bharti and MTN) had initiated talks about three weeks ago and talks were cordial through out this period and conducted in good faith.
Bharti also claimed that over a dozen internationally reputed bankers from the US and Europe of having pledged funds of over 60 billion dollars for the acquisition.
The reference point at which MTN shares were to be transacted was agreed and frozen at the point of starting the discussion and Bharti would like to confirm that there was no further discussion on the share price of MTN, at any point.
Looks like guys at MTN wanted to have the cake and it too. That may have made Indian Telco major Bharti Airtel move out of talks.
Its general mistake we all make lots of mistakes while investing the stock markets. But you hardly see any one today who has not committed costly financial mistakes including the legendary investor Warren Buffet. However it is the ability to recognize and learn from your mistakes that will determine whether you are able to achieve your investment objectives. It is thus more important to commit as few mistakes as possible. Failure is often the best teacher provided you allow yourself to be taught.
The last three months have exposed investors to several such mistakes. Here we highlight eight of the common ones. Relying on tips and hearsay is the first and most common mistake committed by most investors.
Expecting Big Gains fast
Very few people have the mindset and patience required to invest in equity. A common expectation is to make big gains quickly. There is no focus on the risk the investment exposes your portfolio to. A classic example of recent times was the Power sector. Any stock that had the name ‘Power’ in it was considered sacrosanct. People did not even care about risk involved in taking exposure to such stocks. Instant gratification is injurious to your wealth. Leverage in equity markets can have disastrous consequences not just on your financial health but on your physical health. It’s not easy to always make money in equities and there could be periods of negative returns. Though over time, returns can even out, in the short run there could be sizeable downside. So don’t be surprised by it. Understand, expect corrections and be realistic.
Have reasonable expectations from equity
As an asset class equity should technically deliver returns in line with corporate earnings. However we do not invest in a utopian stock market but a market that drives on hope, greed and fear. Hence you are bound to see eras of excesses and exuberance and those of pessimism. It’s all easy to know ‘Buy low and sell high’, but majority of people would end up doing exactly the opposite. Most investment banks, brokerages, hedge funds, FIIs, domestic investors, gurus and analysts are super confident in a bullish market when highs are torn apart every other day. Things suddenly change for them when the market corrects and no one
is ready to put even their thumb in the market. Learn to embrace market sell offs. People who could not earlier invest had an excellent opportunity to invest at 14000 to 15000 levels but I do not know too many people who had the gut to really invest.
When the market corrects, diversify your portfolio immediately
Corrections that happen after very sharp rallies tend to extend themselves over a few months. One of the strategies that can be adopted is to invest in a staggered fashion. You should start investing if the market has corrected by more than 15-20% and go higher when it crosses 30-35%. There is no way to know what the bottom could be and I don’t know how people come up with their holy predictions on how lower can the index go. When the going gets tough, tough gets going as one and all is bad news and it’s very important to grow beyond these daily projections. Investing is certainly not a poker game and you would be harming your economic interests by following what a bunch of unknown people are doing. Don’t keep looking at your portfolio because things are not going to change even if you see it many times. A quarterly or semi annual review should be good enough for most people. Looking daily is harmful to your overall stockthought process and can urge you to take emotional decisions whether on the way up or way down. This is the time to take stock of what you actually have. The first step is to understand the various investments in your portfolio and how they fit within the overall scheme of things.
Most people would like to see their investments grow right from day one
For a long term investor, it should not matter if prices do not rise right away. Infact if investment values indeed go down, you should be happy to see your buying happening at lower levels. Eventually when the market recovers, you are bound to get much higher returns because of these inefficiencies in a turbulent market. The only time your stock prices should be up is when you need to sell. For example, I have an interests in Parekh Aluminium, around 10000 equity shares set for long term investment for self good. Though bought at higher level at 255 last january, currently it is languishing at 140 level. Rest text to follow here……
Currently one sees lower volumes in the market due to fear and several other factors
The increase in STT (securities transaction tax) and short term capital gains tax also has had some impact on volumes. There is no clear cut clarity on the direction of the market. However just because this is the case, there is no need to change your investment strategy. Continue to buy in a staggered fashion and just stay put if you already have.
Today at the end of the trading session, bulls turned so aggressive, which remained a bit range bound for around four hours, rallied in a remarkable manner and signed off in style today. Capital goods, realty, oil, bank and power stocks sparkled.
Metal and PSU stocks, after remaining a bit subdued till around mid afternoon, sprung higher on strong buying support. IT stocks gave up some gains due to lack of support at higher levels.But pharma stocks returned a mixed bag while auto and FMCG stocks remained subdued.
The Sensex, which opened with a positive gap of over 100 points at 17,084.89 this morning, vaulted to a high of 17,366.19 in late afternoon trade and eventually settled at 17,353.54 with a thumping gain of 375.19 points or 2.21%. The Nifty ended at 5115.25, netting a big gain of 2.07% or 103.50 points for the day.
Hindalco, which hogged the limelight in late afternoon trade, ended with a handsome gain of 6.15%. Reliance Communications closed with a sharp gain of 5.35%. Larsen & Toubro turned in an impressive display and notched up a gain of 4.7%. The announcement from the company that it has sold its Ready Mix Concrete Business to Lafarge at an enterprise value of around $350 million buoyed up the stock. Index heavyweight Reliance Industries gained 3.7% and contributed significantly to the rise of the benchmark indices today. Two other heavyweights ICICI Bank (3.65%) and Infosys Technologies (3.6%) also played a key role in lifting the market.
DLF moved up by 3.4%. Maruti Suzuki surged 3.2%. Power equipment maker BHEL gained a little over 3%. Ambuja Cements, HDFC, Jaiprakash Associates, ACC and Cipla advanced by 2% – 2.5%. Reliance Energy (1.85%), Tata Consultancy Services (1.6%), Grasim Industries (1.3%), ONGC (1.25%), State Bank of India (1.2%), Wipro (1.05%), Bharti Airtel (0.95%), NTPC (0.85%), HDFC Bank (0.8%) and Mahindra & Mahindra (0.7%) also finished with smart gains.
Satyam Computer Services opened on a weak note on reports that the company may have to pay a hefty penalty in the event of a legal battle with Upaid Systems in a US Federal Court going against the company. Though the stock settled above its intra-day low, it still recorded a sharp loss of 3.4% today.
Hindustan Unilever (down 1.85%), Tata Motors (down 1.45%) and Tata Steel (down 0.5%) also closed on a weak note. ITC and Ranbaxy Laboratories ended with very small losses.
Punjab National Bank spurted 5.65% on strong quarterly numbers. Unitech, Naclo, Zee Entertainment, Idea Cellular, Tata Power, Suzlon Energy, Sterlite Industries, SAIL, Reliance Petroleum, Tata Communications, Cairn India, ABB, GAIL India and Siemens also closed on a high note.
Dr. Reddy’s Laboratories (down 2.95%), Hero Honda (down 1.5%) and HCL Technologies (down 1.2%) eased on selling pressure.
There were sharp gains for several stocks from midcap and smallcap segments too. Mirroring the surge in prices of stocks from this space, the Midcap and Smallcap indices ended stronger by 1.29% and 1.33% respectively. The market breadth remained pretty strong today. Out of a total of 2755 stocks traded on BSE, 1772 stocks closed on a winning note. 909 stocks declined and 74 stocks ended at their previous closing levels.
The stock markets had a very good and decent rallies too over the past few weeks. The Nifty 50 has been on the verge consolidating for the last couple of days around the 5,100 levels, but was not very well convincing to push ahead. The global indices have been edgy and the economic indicators in the form of inflation and prices of crude oil were not been supportive too. In this backdrop, over all investors sentiments has deep doubts over the market’s ability to continue its upward journey.
Oil prices from here, how far it can surge?
The latest surge in oil prices has sparked worries over inflation and the impact of higher energy costs on corporate results. Oil prices hit a record high of $124 a barrel on worries of supply disruptions. There were concerns about supply disruptions in Nigeria where oil production was stopped. The surge in crude prices to an extent could be attributed to the decline of the greenbacks. The dollar’s continued decline against the euro and other foreign currencies since last year had investors looking around for a hedge against inflation. Oil seemed a good one and thus saw a step rise in the last few months.
Usually, when the dollar strengthens, the effect usually reverses, sending oil prices lower. However, this trend did not continue after the dollar strengthened in the last few days and oil prices continued to move upwards. The upward momentum just seemed to continue regardless of all negative news.
The decline in demand for oil, which normally accompanies a sharp increase in price, was not evident giving further fuel to this enormous rally. Curiously, the stock markets have absorbed the oil price increase quiet smoothly and consolidated instead of falling.
Surging crude price and markets
The surging oil price is indeed a dangerous situation for the markets. As far as the economy is concerned, it has severe repurcussions. About Rs 1,75,000 crores which is about one lakh crore more than their total under recovery for this fiscal of 2008. As the crude prices head higher the under recoveries are bound to increase.
There is a lack of clarity from the Indian government as to how this money is going to be recovered. The government may give more oil bonds and recover some portion from the upstream companies. But oil bonds will just push the government’s cost of borrowings. As elections are near, the government’s willingness to increase the price of crude at retail level will be low. Hence, we have a situation of oil prices remaining stable at retail levels with the government and oil companies absorbing all the losses, putting their balance sheets under enormous pressure.
Volatility in the short term
Currently, most analysts do not expect a major rally in the stock markets, mainly due to increase in global commodity prices and its impact on inflation. However, there is a change in the FII perception of India. Many of them had been underweight on India for a long time but the markets proved them wrong.
Hence, they now feel India is a good long-term buy, though in the short-term they see some weakness. Most fund managers have general thoughts that in the short term we could have a rangebound market with volatility because the volumes are very low and any spike in volumes is contributing to volatility. All institutional investors are waiting for a decisive outlook in the strength of the dollar. For a strong dollar will depress commodity prices and inflation. They believe the long-term growth story is intact and want to invest aggressively in India as the valuations become more realistic. In this scenario, investors may find it is best to wait and watch before investing in the markets for the short-term. However, for a long-term investor it is best to stay invested, market is taking support in every movement and then in year’s threshold markets are expected to recapture old highs with ease.
The Renault-Nissan CEO is fighting to keep pace in the U.S. and chasing Chinese and Indian customers.
Carlos Ghosn, CEO of both Renault and Nissan Motor, early this week he faced some petulant shareholders at the French automaker’s annual meeting on Apr. 29 in Paris. One complained that the stock was down more than 30% this year. What, he wanted to know, had happened to the Ghosn Effect?
Good question. The Ghosn Effect once referred to the galvanizing impact the CEO had on Nissan, when he was dispatched by Renault, Nissan’s controlling shareholder, to turn around the foundering Japanese company almost a decade ago.
Today, Ghosn’s critics use the phrase to describe a boss who they worry may be stretched so thin he cannot manage either Nissan or Renault as well as he could manage one company. He certainly has hit a bad patch these days. Sales at Renault has become flat. Profits from last year slid 7.6% and won’t do any better in 2008. Same story about Nissan stock is down 32% from its 12-month high on flat profits in 2007 and bit poor prospects for 2008.
“Cross-cultural Management and the Importance of Diversity.” Lecture by Carlos Ghosn, Nissan and Renault CEO
Yet Ghosn, a.k.a. Le Cost Killer, Super Carlos, the Icebreaker, and probably a dozen other epithets, isn’t ruffled by the critics. True, his schedule seems impossible for ordinary mortals to survive, let alone thrive on. On Saturday, Apr. 26, he was in Tokyo preparing for Nissan’s May 13 annual meeting and announcement of a new five-year plan. Monday night it was New York to pick up an award (after lunch with BusinessWeek). Tuesday afternoon he was in Paris to meet those agitated shareholders.
And, says Ghosn, it’s all worth it. If you look at car-company tie-ups, such as Daimler-Benz buying Chrysler or Ford Motor (F) buying Jaguar and Land Rover, “there is only one global alliance that has added value, and that is Nissan and Renault,” he says, pointing out that the two are still earning billions even in a year of recession and slowdown. Renault’s operating income hit $1.8 billion in 2007, while Nissan posted $3.1 billion in operating income for the first half of its current fiscal year.
Ghosn figures his dual-CEO role fits the times, when automakers must move fast to adapt to changing tastes and ever-tougher regulations. In 2007 he launched four major joint ventures involving Nissan and Renault: two electric car projects in Denmark and Israel, a combined factory in Morocco, and a project to design and build a $3,000 car in India. That’s on top of winning a joint venture in Russia with AvtoVAZ, securing a deal to supply small cars to Chrysler, outsourcing Nissan’s pickup-truck manufacturing in the U.S., and agreeing to build small pickups for Suzuki Motor. “You need one decision-maker for these things,” says Ghosn, “so you get the bickering [that would result from having two CEOs] off the table.”
The game for Ghosn is getting even more challenging than when he saved Nissan from bankruptcy. In his worldview, Nissan has to stay strong in the U.S. even though, he says, “the U.S. market is not going to be great again.” A saturated America now has some 800 vehicles per 1,000 people, vs. fewer than 30 in China and India. Hence the dilemma: You have to stand your ground in the huge U.S. marketplace while racing to win the hearts and pocketbooks of first-time car buyers in China, Brazil, Russia, and elsewhere.
his gut feeling is the kind of problem Ghosn the engineer relishes. Current and former colleagues say he would not tolerate a lot of dissent and often relies on his own instinct rather than building consensus. That trait makes for a faster pace, but mixed results. Ghosn in 2003 unilaterally overruled his U.S. managers who opposed the sale of Nissan Versa subcompacts in North America, figuring Americans would not cotton to a fuel-sipping, tiny car designed for China and Latin America. Score one for Ghosn: Nissan will sell more than 120,000 Versas this year in the U.S.
On the other hand, just four years after launching the Nissan Titan fullsize pickup and opening a plant in Mississippi to build it, he is throwing in the towel. Nissan is on track to sell just 60,000 Titans this year, compared with Toyota’s (TM) 165,000 Tundras. At least Ghosn admitted his mistake fast, says George Magliano, director of North American auto industry analysis at Global Insight: “Getting out now is the smart thing to do.” Ghosn is moving to make the factory profitable by cranking out light commercial trucks there.
Ghosn wants to bring such quick decision-making to emerging markets. Rather than developing global products for both brands to share, he figures Renault and Nissan should design for local tastes and have the flexibility to export a design fast to ride consumer trends elsewhere. That’s what happened with the no-frills Logan. Developed by Renault for Eastern Europe and Latin America, it also caught on in France and other more developed markets.
More than anything, Ghosn wants to be prepared rather than try to predict: “We can’t know what consumers will want 10 years out.” But generally he is betting on smaller engines, smaller vehicles, and higher fuel economy due to the probable rise in gas prices. In green technology, he is stressing all-electric vehicles (EVs) more than gas-electric hybrids: “People used to think electric cars were ugly, hard to drive, and unsafe, but it’s completely different now.” The goal is to build a lineup of EVs starting in 2012.
Lowering the costs of technology and production is crucial to making both companies more profitable. That’s where global cross-pollination comes in. When it built the Logan, Renault tapped India’s Mahindra & Mahindra for ideas on inexpensive manufacturing. Now Nissan and Renault have teamed with Bajaj Auto on a $3,000 car for sale in the Indian market. Ghosn wants to infuse his companies with India’s low-cost- design thinking: “They understand frugal engineering, which is something we aren’t as good at in Europe or Japan.” Linking India to the rest of the empire: a new reason for the hyperdriven Ghosn to keep moving.
A contract for difference (or CFD) is a contract between two parties, buyer and seller, stipulating that the seller will pay to the buyer the difference between the current value of an asset and its value at contract time. (If the difference is negative, then the buyer pays instead to the seller) For example, when applied to equities, such a contract is an equity derivative that allows investors to speculate on share price movements, without the need for ownership of the underlying shares.
CFDs are currently available in listed [i.e. mini-warrants and ASX CFDs listed on the Australian Securities Exchange] and/or over-the-counter markets in the United Kingdom, Germany, Switzerland, Italy, Singapore, South Africa, Australia, Canada, New Zealand, Sweden, France and Spain. Some other securities markets, such as Hong Kong, have plans to issue CFDs in the near future. CFDs are not permitted in the United States, due to restrictions by the U.S. Securities and Exchange Commission on OTC financial instruments.
CFDs are not suitable for ‘buy and forget’ trading or long-term positions. Each day you maintain the position it costs money (if you are long), so there is a time when CFDs become expensive. For short-term trading they have advantages, provided you get the markets right. But be prepared at some economic stage to cut the position.
Contracts for difference (CFDs) are instruments that offer exposure to the markets at a small percentage of the cost of owning the actual share. This allows the investor to buy or sell an instrument, which usually costs only 10 per cent of the price of the underlying share. It offers great leverage opportunities.
How is different from F&O?
Contracts for differences allow investors to take long or short positions, and unlike futures contracts have no fixed expiry date or contract size. Trades are conducted on a leveraged basis with margins typically ranging from 1% to 30% of the notional value for CFDs on leading equities.
CFDs are convenient for the stock market (if used under around 10 weeks, an estimated point where CFD financing charge exceeds financing charge for stocks) while futures are preferred by professionals for indexes and interest rates trading (but CFDs for indices are used too and futures for stocks also). In addition to avoiding stamp duty, increased flexibility and leverage are other advantages of CFDs over more conventional forms of margin trading (like stocks), although with futures there is usually enough leverage available (typically 20:1, but can be as high as 70:1). All forms of margin trading involve financing charges (with the exception of the Spot Foreign Exchange market), although in the case of futures contracts these are already embedded in the price of the instrument. On the one hand, futures are more transparent (for instance: a group of hedge funds linked to BAE Systems managed to get more than 15% of Alvis plc through CFDs without having to warn the British regulator, see more in the “virtual positions” section of this IFLR article on virtual positions through CFDS). On the other hand, CFD-related hedging is estimated to account for more than 25% of the volume on the London Stock Exchange.
Posted by krishna Raj 
Posted by krishna Raj 
Posted by krishna Raj 