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India State-Run Banks Do Not Have Risky Exposures, Says Fin Min Official
Fin Min Official Says Despite Global Fin Mkt Turmoil India More Or Less Insulated
courtesy R M India --
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Companies scheduled to announce earnings for the quarter year ended March 31, 2008 today are -- Aftek, Amar Remedies, C & C Constructions , Centrum Capital , Dhunseri Tea & Industries , Indus Fila, Media Video, Morgan Ventures, Orient Press, Pfizer , RR Financial Consultants, Sterling International Enterprises , Symphony Comfort Systems, Uniflex Cables, Venus Sugar, Windsor Machines, Zuari Forex. -et
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Indian banks which have extended lines of credit (LoC) to subsidiaries of US financial majors like Merrill Lynch and Lehman Brothers are no longer willing to risk such exposure. Coming in the aftermath of the financial crisis in the US, the move may result in cancellation of deals worth about Rs 2,000 crore.
For instance, Union Bank of India, which had extended LoC of Rs 300 crore and term loan of Rs 100 crore to DSP Merrill Lynch, has put both the deals on freeze. Other commercial banks, which had earlier promised credits to these institutions but had not actually delivered them, might also take similar step. Banks have kept these deals at abeyance to save themselves from the affects of the global financial crisis. LoC refers to a commitment of credit to an institution which may need to use the service in times of needs or exigencies.
\"We had extended LoC to them (DSPML) but they never utilised it. Just as we got the information of the global financial turmoil, we put both the deals in abeyance which is like withdrawing the credits unless we get the full information on the future course of action of these institutions,\" Union Bank of India chairman and managing director M V Nair told ET.
In reply to an e-mailed query on whether the deal has been put on hold, a company official said: \"DSP Merrill Lynch Capital\'s liquidity position is extremely strong and has more than Rs 1,300 crore deployed in fixed deposits with various banks and liquid mutual funds and we currently are not actively borrowing from the market.\" DSPML is a non-banking financial company where Merrill Lynch has 89.7% stake.
According to a finance ministry estimate over half-a-dozen banks are expected to suffer mark-to-market losses in the financial crisis. The government and the Reserve Bank of India have asked banks to devise ways to minimise the losses.
Preliminary government estimates have put total exposure of the Indian banking system to the US financial institutions at about Rs 2,000 crore. \"The figure is, however, expected to increase substantially as the initial estimate has taken only the exposure to Lehman Brothers and Merrill Lynch - but with more banks including big investment bankers like Goldman Sachs and Morgan Stanley courting trouble, the exposure and loss figures is likely to go up substantially,\" a source in the finance ministry said.
-courtesy et
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Icici Bank Trading At 484 Rupees Per Share; Hits 52-Wk Low
50-Share Nifty Index Down 68 Points At 3781 Taking Cues From Global Markets
Bse Sensex Falls Below 2007 Low Of 12,316.10; At Lowest Since Oct 2006
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US stocks plunged on as the House of Representatives defeated a $700 billion emergency rescue package, while, earlier in the day, European governments had to step in with a flurry of major bank bailouts from Iceland to Germany as fear and turmoil from the US credit crisis spread through the financial system.
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After the meltdown, comes the flight of capital. Large institutions such as AIG, Morgan Stanley, Wachovia and others are planning to liquidate some of the Indian assets in which they had invested their proprietary capital.
Investment banking sources and PE funds have confirmed that a number of such deals have been available in the market for the last few weeks. While there are only a few income-yielding and advance stage assets, which would be easier to sell, a majority of the assets will be at an early stage which would find very few takers or see a loss. \"Around 15-20% of the deals in the market today are of this kind,\" says the investment banker.
Some of these institutions are highly leveraged and their mortgage related assets in the US are getting marked down. There is a need to liquidate some of the assets they bought with their proprietary capital to get cash and strengthen their balance sheet,\" says a source at an India-focused real estate fund. In the last one week, the fund has already received a few calls for large deals where some of the large institutions have invested from their proprietary books.
\"The pressure to sell is also because many PE deals might have been sold down by these institutions as structured products and now those buyers want an exit given these buyers\' potential exposure to sub-prime assets,\" says Jagdeep Pahwa, managing director, Infinite India Investment Management. \"We have reviewed a few structured deals with proprietary investments of large institutions in the past three weeks,\" says Sunil Agarwal, chief development and acquisition officer at South Asian Real Estate.
A Mumbai-based investment-banking firm confirmed that they are working on a few deals that involve investments from the proprietary books, but declined to reveal the names of the deals. The firm is working on such deals with a large Indian institutional investor which is fairly active in the market. \"With a rupee fund, an Indian institutional investor can structure the deal more effectively,\" says the investment banker.
\"At the moment, such deals will be looked at by the opportunistic and value funds. However, I expect that in six months, as valuations go down another 15-20%, these deals will also be attractive to vulture and buyout funds who are keeping a keen eye on this space,\" says real estate expert Anckur Srivasttava.
Most of these large institutions have been investing in real estate in India through both managed and proprietary capital. Wachovia does not have a fund and has been investing from its proprietary books for the last two years, though at the moment they are looking at investing selectively from their proprietary books in India, confirmed Sandeep Kundu, director for real estate capital markets at Wachovia. \"We are long-term investors in India and that is why we are investing from our proprietary books. We don\'t have an exit strategy as yet,\" adds Kundu.
Market sources though confirm that there are a few of Wachovia\'s real estate deals that are being looked at closely. Interestingly, Merrill Lynch had merged its proprietary book with its third-party fund early this year so they are safe on that front after the recent events. DSP Merrill Lynch has made proprietary investments of $500 million in the real estate segment.
-et
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Panic gripped markets after U.S. lawmakers unexpectedly rejected a $700 billion bailout plan for the financial industry, with Asian stocks opening sharply lower after Wall Street\'s biggest fall since the crash of 1987.
R M India-
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2
3001
Wishing all the investors Best of Luck on a day which is going to be very eventful.
Never be in a hurry to buy or sell Do not try to bottom fish.Come what may,do not lose hopes.The world is toooo big for 'one street' be it wall or dalal.
God Bless all
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What areBuybacks & Open Offers??
The stockmarket gives shareholders opportunities to increase their wealth even during periods when volumes go down, as is the case now. These come from the promoters or prospective promoters, either by way of buyback offers or open offers.
Such activities tend to increase when share prices are down. Presently, there are 83 companies that have either announced opening dates or plans for a buyback. More than 50 companies have announced their opening dates for takeover open offers.
WHAT ARE BUYBACKS?
A company’s offer to purchase its own shares issued earlier is termed as buyback. It usually does not affect the company’s operations or its stability. Its objective is to reduce the company’s share capital as, typically, these shares are extinguished.
Types of buyback. A company buys back its shares by sending a letter of offer to shareholders. It fixes a price, generally higher than the prevailing market price. Companies can also fix a range of prices in which it is willing to buy the shares.
Companies also buy shares in the open market through brokers.
How to evaluate a buyback. In theory, a company goes for a buyback when it has surplus cash and few investment opportunities. In such a situation, companies reward their shareholders by offering them cash for the shares.
However, a developing economy like India, which has many investment opportunities, there are very few companies that can give this reason for a buyback.
Investors should be aware of any manipulation or inaccurate information that a company may give to explain why it opted for a buyback.
A buyback reduces the number of shares in the market and, thus, the earning per share increases. As a result, the price earning multiple (PE) falls and the valuations become attractive, which leads to more demand for the stock pushing prices up.
At times, the management uses this to put a gloss to their financial statements. Investors should note that prices cannot be sustained until the profitability of the company improves.
WHAT ARE OPEN OFFERS?
An open offer is a way in which the acquirer tries to take control of the target company. The acquirer makes a public announcement in the newspapers disclosing his intentions to acquire the shares of the target company.
How to evaluate an open offer? Investors have the discretion to accept or reject the open offer. The offer price can be a major criterion for deciding. If the investors feel the offer is underpriced, they may hold on to their shares. Also, if indications point towards competitive bids by other acquirers, investors can also wait for these bids, which might be more attractive than the present one.
If investors feel that the stock has the potential to perform better than the present open offer, even then they might not put up their shares for sale. Otherwise, at the right price, an open offer is a good exit opportunity, especially in a turbulent market like the present one.
Buybacks and open offers give investors a chance to exit the market and also get a handsome reward for being a shareholder. However, investors should evaluate buybacks and open offers on a case-to-case basis before taking a decision.
OutLooK......................
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The rout in the global equity markets following the crises at US-based investment banking firms Lehman Brothers and Merrill Lynch shook the Indian stock markets on Monday, sending the benchmark indices plunging by 6 per cent intra-day.
However, late buying helped the indices pare losses to end the day 3 per cent lower.
FIIs were net sellers again, while volumes were thin. “Many FIIs have been selling and taking money out of the emerging markets such as India to strengthen their position back home in US,” said Mr. P K Agarwal, President, Research, Bonanza Portfolio.
The Sensex opened with a negative gap of 434 points but the sentiment was so negative that its free fall continued in the morning session, beating the index to a low of 13150.
Stocks across all the sectors were pulled down, but realty and IT sectors were the worst affected.
Many scrips hit their 52-week and even all-time lows. Reliance Industries hit its 52-week low at Rs 1824 in intra-day trade.
The losses were most for the listed Indian firms in which Lehman have their investments; for instance realty firm Orbit Corporation fell over 18.5 per cent intra day but closed 11.69 per cent lower due to some buying later in the day.
Other blue chips too got hammered as the mood was one of panic. Reliance Infrastrcuture was the top loser among the Sensex scrips, closing 9.72 per cent lower.
At the end of the day BSE Mid –cap index was down 4.5 per cent and the BSE Small cap down 4.93 per cent.
Domestic buying
Among the market participants, FIIs were net sellers of stocks for Rs 763 crore. Domestic institutional investors (DIIs) bought scrips that looked much cheaper and were net buyers of stocks for Rs 1328 crore, according to the combined data for BSE and NSE trades
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Goldman Sachs Group Inc is looking to buy up to $50 billion in assets from troubled US banks, the Financial Times reported on Sunday, citing executives at the bank. ...
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* Egm Of----
+ Tata Coffee.
* Board Meeting Of ----
+ Abhishek Corp To Consider Raising Funds By Way Of Deposits.
+ Ds Kulkarni Developers To Mull Fixed Deposit Scheme For 2008-09.
+ Suzlon Energy To Consider Rights Issue To An Extent Of 18 Bln Rupees.
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Nifty Fut have goood support at 3934...one can book profits there.
Courtesy stoxandmore...
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sir ur opinion is reverse of ur . Pl buy GOLD at every decilne which may not cross 105oo level at bottom . Top ur target is 25000\\\\\\\\- @ april 2010. Nifty as soon as it crosses 3800 may touch 3250 level . start investing IT REALITY INFRA cement Steel co to have huge prfit over 2 yrs y...
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Sell crude and gold now: Geojit Commodities
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MMB Messenger
Alex Mathew of Geojit Commodities Ltd believes it is time to sell crude and gold. 
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Alex Mathew of Geojit Commodities Ltd believes it is time to sell crude and gold....
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