Has the India Stock Market bottomed Out?

The global turmoil has pushed Indian stock indices to levels unthinkable. Is there more pain ahead or is it time to buy? Three experts weigh in.

International credit markets are in a crisis and the stock markets have been shaky. Nobody is in a position to react to the big macro issues such as where the dollar is going, what is the likely GDP growth of US or China, and so on. For every smart person on one side of the question, there is another smart person on the other side.

The Indian Financial Markets have also been witnessing sustained volatility and clearly global cues are the deciding factor, in the absence of any strong domestic positive news. The US economy and its future course will be a critical factor in assessing the FII mood and market sentiments, going ahead.

As far as the valuations are concerned although the Indian markets are now trading at 14-15x FY09E, and a large part of the froth generated is now out of the system, the sustainability of any upward move in the market clearly depends on global factors. I feel that the markets are trading closer to fair fundamental value but a minor down-move is not ruled out in the short term. One key deciding factor for the Indian markets will be FII liquidity, which seems to have completely dried up and unless this revives substantially way, we may continue to see volatile and choppy markets for another 3-4 months, followed by a noticeable recovery that could start from September ’08 onwards. However, even this will be subject to the forthcoming general elections, which now look scheduled early.

Clearly, retail investors should look at the SIPs (systematic investment plans) of mutual funds as the right investment option if they do not have the ability and the capacity to take risk directly. Equity as an asset class will definitely bounce back and offer significantly better returns over the next two-to-three year horizon. With elections looming near the corner, the markets will continue to remain choppy and volatile and this may keep investors away from the markets.

Nevertheless, this is an excellent time for an investor to build a quality portfolio of stocks because prices of almost all blue chip stocks have come off by almost 50% and hence returns from these levels over the next two to three years will be a significant for any retail investors. However, they will have to be patient and have the conviction in their investment decisions and take a long-term call on the markets without looking at the short-term aspects. It should be very clearly understood that the India story continues to remain strong but sentiment has taken a beating due to unfavorable global developments.

However, unfortunately, while investing in equity, retail investors tend to take a short-term view and look for almost instant gains. This short-term approach needs to be curbed and equity, as an asset class, needs to be considered by the investors for long-term deployment. If this approach to investment is followed, the current market scenario is ripe for retail investors to enter for making substantial long-term gains.

Keywords: NSE/BSE, Indian Stock Market, Indian Economy, SIP, FIIs, Mutual Funds, Equity, Futures

83 Indian Companies Made Acquisitions In US In 2007; 70% of them IT/ITES

India’s US conquest continues with over 73 per cent increase in outbound Indo-US cross border transactions. According to a report released by Vitrus Global Partners, a cross-border investment and advisory firm focused on US and India-based transactions, Indian companies accounted for a total of 83 US-bound acquisitions in 2007.

This accounted for a cumulative transaction value of over $10 billion in 2007. In 2006, there were only 48 transactions. Among the conclusions it draws, about 70 per cent of these transactions were in the Information Technology/ IT-Enabled Service (IT/ITES) sector compared to only 40 per cent last year. The report says that it reflects “the growing pressure amongst IT/ITES companies in India to scale up their size and service offerings”.

What has led to the increase in number of M&As is that there is easy access to the US, the need for acquiring more customers, marketing and distribution channels of the acquired company, low interest rates and tariffs. Besides, there is easy access to external commercial borrowings which provide Indian companies sufficient liquidity for global acquisitions.

The mega deals of 2007 were Hindalco’s acquisition of Novelis for $6 billion, Rain Calcining’s acquisition of CII Carbon for $595 million, Wipro’s acquisition of Infocrossing for $568 million and Firstsource’s acquisition of MedAssist for $330 million.

IT/ITES remains the most acquisitive industry capturing over 51 per cent share of the total US-bound transactions by volume, followed by health-care (11%); chemicals, textiles, and automotive (5% each); metals & mining, jewelry, travel, and media (4% each). Other industries accounted for less than 2 per cent each in terms of volume.

Keywords: India Inc, Acquisitions, IT/ITES, Hindalco, Novelis, Rain Calcinings, CII Corbon, Wipro, Firstsource, Infocrossing

Retired 'Winning Smoking Fight' survey says!

Reaching retirement presents a golden opportunity to finally kick the smoking habit, research suggests. The Peninsula Medical School, in Devon, followed 1,712 smokers over Six years to measure their success in giving up.

The success rate among those who had recently retired was 42.5%, but among those still in work it was 29.3%. Researchers said retirement may make it easier to make other major lifestyle changes, but workers thinking of quitting should still attempt to do so.

Other research released by the Peninsula Medical School, in Exeter, to coincide with No Smoking Day suggested smokers are generally unhappier than non-smokers.

Both studies were carried out by Dr Iain Lang, he said:

"Retirement is one of the great transitions in life, which is why a greater proportion of people may find it easier to make significant changes elsewhere in their lives at this time. We are excited at the possibility that what we have seen with smoking may also apply to other aspects of lifestyle, like eating more healthily and doing more exercise."

Dr Lang said highlighted some of the important notes for smokers:

> Smoking is also an extremely expensive habit - and the Budget could mean
it gets even more expensive.

> People may feel like they're getting pleasure when they smoke a cigarette
but in fact smokers are likely to be less happy overall.

> Smoking doesn't make you happy - in fact, it's associated with poorer
overall quality of life.

> If lung age is normal, there is an incentive to stop before it is too
late.

> If lung age is abnormal then this is a clear message that the lungs are
undergoing accelerated deterioration that would be slowed if the smoker
stopped.

Organizers say they expect more than two million people to attempt to give
up smoking.

Keywords: smoking is unhealthy, life after retirement

India urges UK not to restrict movement of HSMP visa holders

India on Wednesday raised with Britain the plight of 49,000-strong Highly Skilled Migrant Programme (HSMP) Visa holders, mostly Indians, and suggested that any changes in the policy should not be applied retrospectively.

At the two-day meeting of the India-UK Joint Economic and Trade Committee (JETCO) held here, the Indian delegation led by Commerce and Industry Minister Kamal Nath emphasised that Britain adopt a more liberal visa regime for students and liberal visas for Indian professionals working for Indian companies, given that UK is used to service the whole of EU.

An estimated 49,000 highly skilled professionals, mostly from India came over here since 2002 when Britain introduced the HSMP scheme promising the professionals, including doctors, scientists and IT specialists, that they could settle down here at the end of four years.

But in November last year, Britain suddenly effected changes in their Visa regime and adopted a new point based system under which many of the professionals who entered the UK under HSMP since 2002 were not able to qualify for permanent residency.

Earlier NASSCOM had made a representation to Liam Byrne, Britain's Minister in the Home office regarding revisions to UK Work Permit Regulations. Specifically NASSCOM had argued that the requirement that a company should employ a worker for six months before becoming eligible for a UK ICT Work Permit is difficult to meet in the IT sector where staff is often recruited after winning major contracts.

According to sources, the delegation also stressed that the UK should revise the list of eligible criteria to include Indian Business Schools and National Institutions such as IIMs, IITs and National Institute of Fashion Technology.

Keywords: HSMP, UK Migration, Work Permit to UK

No Discrimination against INDIA in new Point-based Visa System

Britain on Monday assured India that there will be no discrimination against Indian professionals in the new point-based system for work Visa. In a meeting with Minister of State for Industry Ashwani Kumar here, Duke of York and special Representative of UK's Department of Trade and Investment Andrew Albert Christian Edward said there would be "no discrimination against Indian professionals for work visas in the UK".

Kumar hoped that the new visa system would give greater fairness to Indian professionals for entry in the UK. The new point-based system for managing migration would ensure only workers with skills to benefit Britain's economy come to the UK and put in place a licensing system for businesses who want to recruit from overseas. Both sides also stressed on the need to increase business contacts between SMEs, service sectors, education as well as skill up gradation.

Referring to the overall outward investment profile of the UK, Edward said there is tremendous scope for an exponential growth in trade as well as investments.

UK is the third largest investor in India with cumulative FDI of 4.13 billion dollars. Indian investment in the UK during 2006-07 in 76 projects generated 1450 jobs making it one of the major investors. Total investment in these 76 projects was to the tune of over two billion dollars in sectors like telecom and IT.

Keywords: HSMP Visa and Point Systems, India Visas, UK Visas

Hackers attack on Pentagon hacks and Google Maps

I have this nosy but absent-minded Uncle. He likes to paw through my emails, peruse my web history, and tap my phones. But when it comes to protecting his own, more important secrets, he's mostly clueless.

Case in point: When alleged Chinese Hackers broke into the Pentagon's email system last June, 07 Secretary of Defense Robert Gates sloughed it off as no big deal – nothing to see here, happens every day, please move along. Now it turns out that the hack was a wee bit more serious than Gates let on. GovernmentExecutive.com quotes Dennis Clem, CIO for the office of the defense secretary, talking about the hack at a federal tech conference last week:

"This was a very bad day," said Clem during a panel discussion at the Information Processing Interagency Conference Tuesday. The breach continues to pose a threat, he added. "We don't know when they'll use the information they stole, processes and procedures that will be valuable to adversaries."

And here's how they did it, per Federal Computer Week:

The hackers took advantage of a known Microsoft software vulnerability and sent spoof e-mail messages with the names of staff in Clem’s division. When the messages were opened, the code sent back the user names and passwords, which allowed access to the network. In follow-up forensics, Clem discovered that the hackers accessed sensitive information, which they encrypted as they transmitted it back to their sites.

So the Pentagon gets 0wned via what sounds like an ordinary spear phishing attack, and we're supposed to trust our government to sift all our email, decide which ones are from the terrorists, and leave the rest of us alone. In related news: The Pentagon has asked Google to pull images of US military installations from the "Street View" feature in Google Maps, and Google has complied. Apparently the images showed enough info on how to get in and out of each base to worry the commanders. Got it.

Keywords: Hacking, Virus Threads, Phishing, Google Maps, Pentagon

India, China Worst Performers in Stock Markets

India and China may be the flavor of the world markets, but when it comes to performance of their stock exchange indices in 2008, they are doing the worst in Asia. While the Bombay Stock Exchange’s National Index (popularly known as BSE 100 Index) dipped by 16.08% during the first two months of 2008, the Shanghai Stock Exchange’s Shanghai A Index slipped as much as 17.36% during the same period.

A comparison of major market indices in Asia by Thomson Financial reveals that none of the indices posted positive returns during the said period. The best performing index during the period was Jakarta Se Composite, which declined by less than 1% during the said period.

According to analysts, the bad performance of these indices is largely due to the late correction in India and China. “Even though global markets witnessed a slowdown in December, emerging markets like India and China carried on till January. In case of India, the correction happened only after the first fortnight of January,” explains Dipen Shah, head research of Kotak Securities.

Analysts expect the market to witness significant global currency corrections in near future. “These have a bearing on the investments in emerging markets and returns thereon. Global fund allocations for emerging markets would be clearer once currency implications become clearer during the next few months”.

Keywords: Indian Economy, China Economy, Bombay Stock Exchange(BSE), National Stock Exchange(NSE)

Gold crosses Rs 13000 level..!

Gold, an all weather investment option, sparkled like never before in the Indian Bullion Markets across the country on Monday with its rates crossing Rs 13,000 per 10 grams level in Kolkata, breaking all previous levels, and surging to historic level in Delhi.

In Kolkata, Gold scaled a new peak at Rs 13,005 per 10 grams by gaining Rs 220. In Delhi, the metal settled at an all-time high of Rs 12,800 per 10 gram, a gain of Rs 200 over its previous close. In Mumbai, it rose by Rs 180 at Rs 12,745 per 10 gram while in Chennai it shot up by Rs 175 at Rs 12,695 per 10 gram.

Traders said a slew of factors such as rising oil prices, softening of US dollar and a plunge in global stock markets contributed to gold's record prices in global markets. The domestic prices follow the international rates, they added. In Asia, gold shot up to an all-time high level of 984 dollar an ounce after the dollar touching record low and crude oil to a record high.

Gold is seen as a hedge against inflation and its prices go up in sync with oil prices. The precious metals such as gold and silver remained best performing financial assets this year so far. High inflation rates and slowing growth erode the value of the world's major currencies, bonds and stocks, but gold has not only retained its investment appeal but in fact bettered it, they said.

Keywords: Gold, Commodity, Silver,

Rupee Falls to 5-month low, Trade Data Hurts

Rupee dropped to its lowest level in five months on Monday as a sell-off in the stock markets heightened fears of capital outflows, while January trade data showed the deficit more than tripling from a year ago.
The partially convertible Rupee ended at 40.39/40, its lowest finish since September 18 2007, and down 1 per cent from Friday's close of 40.01/02. It was the biggest single-day percentage fall in four months.

"The outlook is bullish for the dollar in the near-term as importers are covering their positions and the party seems to be over for the stock markets," said R A Sankara Narayanan, head of currency trading at state-run Bank of India.

The local stock index fell more than 5 per cent, its biggest percentage fall in six weeks, triggering a wave of short-covering on dollar positions by foreign and private banks. The Rupee has fallen more than 2 per cent so far in 2008. The Rupee is unlikely to appreciate as sharply this year as last year, when its gains were "extraordinary", finance minister told media.

"Dollar/Rupee may go up all the way to 41 in the short term," said Narayanan. Trade data on Monday showed Country's trade deficit widened in January to $9.36 billion more than three times bigger than in the same month in 2007.

"The trade data has only added to the Rupee's woes," said a local dealer at a private bank. While it’s a bad news to the Indian Economy, but it’s a good news to corporate companies and NRIs.

Keywords: Rupees, Dollar, Foreign Exchange of Indian, Rupee Conversion to Dollar.

India clinch Second U-19 crown defeating SA in Final

INDIA regained the Under-19 Cricket World Cup crown after eight years with a close 12-run victory over South Africa in the rain-affected final here on Sunday. This was India's second triumph in the tournament's history after they captured the crown in 2000 in Sri Lanka. The win also exorcised the memories of the last edition when India went down to Pakistan in a low-scoring final in the same country.

Having been bowled out for 159 after being put in to bat, the Indian bowlers came to the party restricting the Proteas to 103 for eight in 25 overs with the adjusted target being 116.
The win was followed by scenes of great jubiliation as the players and the coaching staff, including coach Dav Whatmore, erupted in joy and were seen embracing and congratulating each other.

Man of the match Ajitesh Argal was the bowler who brought India back in the game taking two early wickets. But after his quota was reduced to five overs due to the rain, Ravinder Jadeja (2-25) and Siddarth Kaul (2-26) played their roles to perfection to keep the South African batsmen in check.

Reeza Hendricks (35) and Wayne Parnell (29) were the main scorers for the Proteas but they never managed to break free from the tight leash in which the Indians kept them.
Earlier, Tanmay Srivastava topscored with 46 as India struggled to a total which did not seem enough to give the South African colts a run for their money.
India reduced the opposition to 17 for three in 8.4 overs when the heavens opened and the game was stopped for about two hours.

Chak De INDIA…!

Keywords: under-19 cricket, Icricket, cricket, SA cricket