Indian equities, the best asset class for FY11: survey

Terming FY10 as an “okay year”, a panel of financial experts said that though this fiscal would a challenging one, the Indian equity market could turn out to be a “star performer”.Indian equities could be one of the great options for long-term investments and would give best returns in the next 12-months, Morgan Stanley’s managing director (India), Ridham Desai said at an Indian Association of Investments Professionals (IAIP) event held in Mumbai. The IAIP, in an online survey, has also found that about 80% of the respondents believed that the Indian equity markets could be the best asset class in this financial year followed by real estate and commodities, he said. The survey also said that the respondents felt that the Sensex would rally by 50% this fiscal from its current 17,000-level on the back of an improving Indian economy.The 30-scrip sensitive index of the Bombay Stock Exchange closed at 17,634 on Thursday.In the current quarter (April to June), the 30-scrip sensex is likely to be at an aggregate Rs36,000-crore, Desai said. The Sensex would go up by 50% this fiscal as banking firms, power, construction and manufacturing companies are likely to perform well. Cement companies with an $1-trillion capex plan would give a major boost to the Indian economy, noted economist and managing director of Oxus Research and Investments, Surjit Bhalla, said. Several global manufacturing companies have started seeing India as the most sought-after destination, he said, adding there would be a good inflow in the number of FII investments and an allocation-shift from China to India going forward. Generic Pharma, domestic FMCG and retail players and mid-size companies with high a Return on Equity (ROE) along with media and entertainment players could be strong and emerging players this financial year, he added. The IAIP survey said that the young Indian population with more consumption power would drive the economy. The GDP is likely to be at 9% this year, it said. Food inflation would come down given the fact the Government has taken certain steps and will be opening more cold storages this year, the survey stated. There could be some short-term challenges as the next 3-4 months will determine the trend of monsoon and the reported current account deficit, which could be a concern, it said.The survey also stated that people were quite optimistic in terms of salary and wages, which they feel would rise by 15%.

HCL hopes to get Cabinet nod for FPO in April

New Delhi: State-owned Hindustan Copper on Sunday said it is hopeful of getting the government’s approval in April for its share sale programme, which is expected to raise a total of about Rs10,000 crore.“We are hopeful that the proposal for the follow-on public offer (FPO) will be placed before the Union Cabinet for its approval in April,” Hindustan Copper (HCL) CMD Shakeel Ahmed told PTI. The share sale in HCL is now proposed in a single phase against the earlier plan of two-tranche FPO, Ahmed added. The government plans to sell 10% of its stake in HCL through FPO. HCL will also be raising fresh equity in the same proportion.The government holds 99.59% stake in the firm. The divestment proposal has already been vetted by the department of disinvestment and the ministry of finance. Now the ministry of mines, the administrative agency of the PSU, is in the process of finalising the draft note which would be placed before the Cabinet.“The ministry, I understand, has already circulated the note for views of different ministries. Their suggestions are expected in 10-15 days,” Ahmed added. Hindustan Copper shares closed at Rs535.20 on the Bombay Stock Exchange on Friday. Based on the share price, the FPO could mop up a gross sum of around Rs10,000 crore.Mines ministry, had earlier expressed hope for getting the Cabinet clearance before 31 March, 2010 for the 20% planned FPO of HCL. “The delay is there because we decided to wait for 2009- 10 financial results of the company before finalising the FPO proposal. We anticipate a good result as the company had a better last four months in terms of productivity and also London Metal Exchange (LME) prices surged,” Ahmed said.The LME prices act as a benchmark for base metals like copper, zinc, lead. Copper prices on the LME fluctuated between $7,000 a tonne in December last year and $5,700 per tonne in February and then recovered to $7,880 a tonne level in last month.The company did not have a “good” April-November period and is unlikely to meet its production target of 3.6 million tonne copper ore for FY’10, he said. HCL plans to fund its Rs3,500-crore expansion programme by raising equity. The government needs the divestment proceeds to part fund its social sector and infrastructure programmes.The Centre has targeted to generate Rs40,000 crore in this fiscal through disinvestment in PSUs like SAIL, CIL, HCL.

Religare Securities raises stake in Fame to 5.82%

Mumbai: Religare Securities Ltd has increased its stake in multiplex operator Fame India to 5.82% from 0.70%, according to a filing made by Fame to the Bombay Stock Exchange on Monday. The stake increase was effected on 25 March. As Religare is a broker, shares are held in the ordinary course of business towards margin or collateral on behalf of clients, the filing said. Fame India is the subject of a takeover battle between Reliance Mediaworks Inox already holds 50.48% in Fame while Reliance Media has delayed an open offer to acquire 21.7 million shares in Fame

Favours check on downstream investments by firms with minority foreign shareholders. The finance ministry has proposed to tighten the foreign direct i

Favours check on downstream investments by firms with minority foreign shareholders. The finance ministry has proposed to tighten the foreign direct investment (FDI) regime in the country. It has sought to route a larger number of investments by companies where the foreign stakeholding is less than 50 per cent through the Foreign Investment Promotion Board (FIPB). Such investments are currently under the automatic approval route. The proposal implies a significant tightening in the controversial Press Notes 2, 3 and 4 of 2009, which had redefined the FDI policy in the country. According to these Press Notes, corporate entities which had less than 50 per cent foreign equity, but where the control was exercised through Indian promoters and companies, were to be treated as Indian companies. Thus, such companies could make any downstream investment even if the sector had an FDI cap without taking clearance from the FIPB. “Control” in a company had been defined as the power to appoint a majority of the directors to the board of the company. The finance ministry proposal now envisages that an investing or an operating company with less than 50 per cent foreign ownership would be permitted to make downstream investment through the automatic route only in sectors where 100 per cent foreign investment is allowed. These include sectors like floriculture, mining, power, hazardous chemicals and industrial explosives. For sectors with foreign investment caps or those which require clearance by FIPB in the normal course, investment proposals from companies with even less than 50 per cent foreign equity would require FIPB approval. These companies would also be barred from investing in prohibited sectors. These include atomic energy, retail trading (except single-brand product retailing), the lottery business and gambling and betting. These changes, being pushed by the finance ministry, will be discussed at a meeting in Delhi on Tuesday. Representatives from the Department of Industrial Policy and Promotion, Department of Financial Services, Ministry of Corporate Affairs, Department of Legal Affairs and the Reserve Bank of India have been called to sort out the issues. The concern that is driving the finance ministry is: What cannot be done directly must not be capable of being done indirectly. The Press Notes had come under fire, as many within industry and government had said that this would make redundant the government policy of having FDI caps in various sectors like retail, telecom, defence production, print media and cable network. Also, this would give foreign investors a backdoor route permitting them to breach FDI caps in various sectors. However, the Ministry of Commerce, which had pushed through the new press notes last year, has made it clear that companies owned by resident entities (where less than 50 per cent of the foreign equity is foreign) do not have to go to FIPB, as this would increase the administrative burden. The finance ministry has, however, opined that the disclosure of agreements impinging on “control” is voluntary. It has also said that agreements are liable to change with the passage of time, or simply that control which is with the Indians could pass on to foreigners without anyone knowing. The finance ministry has said that the FDI policy needs to be changed, as investment in prohibited sectors even by entities which are ostensibly Indian-owned and controlled but have foreign equity, should not be allowed.

Asia Stocks, Commodities Rise

Asian stocks and commodities rose as U.S. economic reports boosted investor optimism that demand in the world’s largest economy is recovering. The MSCI Asia Pacific Index climbed 0.2 percent to 126.74 as of 12:18 p.m. in Tokyo, driven by gains in Japan as markets in Australia, Hong Kong, China, Taiwan and New Zealand are closed for holidays. Asian bond risk fell while copper prices climbed to a 20-month high. Malaysia’s ringgit rose to the strongest since July 2008 after the government said exports increased for a third-straight month. Futures for the Standard & Poor’s 500 Stock Index increased 0.4 percent. U.S. payrolls rose last month by the most in three years, a “solid report” indicating “the economy is now creating jobs,” Treasury Secretary Timothy F. Geithner said in a Bloomberg Television interview. A private report today may show U.S. service industries expanded for a third month. “Overall, we are seeing positive signs about the global economy,” said Hiroaki Muto, a senior economist at Sumitomo Mitsui Asset Management Co., which manages $111 billion. “While developing nations are leading global growth, they are waiting for the U.S. to rebound. Recent reports are suggesting that the U.S. labor market and consumer spending are improving.” Japan’s Nikkei 225 Stock Average climbed 0.5 percent, led by exporters on optimism the weaker yen will boost the value of overseas sales. The currency weakened to as low as 94.79 per dollar, the lowest level since Aug. 24. Growth Optimism Canon Inc., which gets 28 percent of its revenue in the Americas, climbed 2.4 percent to 4,505 yen. Toyota Motor Corp., which derives 31 percent of its revenue in North America, increased 1.3 percent to 3,825 yen. Toshiba Corp., Japan’s biggest memory-chip maker, gained 0.6 percent to 507 yen after the Nikkan Kogyo newspaper reported the company will double annual production capacity of electric- vehicle motors. Former Federal Reserve chairman Alan Greenspan said yesterday on ABC’s “This Week” the chances the economy will retrench after recovering from the worst recession since the 1930s “have fallen very significantly in the last two months.” “There is increasing growth optimism now given that the job situation in the U.S. is getting a little more relaxed,” said Roger Groebli, Singapore-based head of financial-market analysis at LG Capital Management, part of the group that oversees $84 billion. “Exporters will benefit from that.”

R Infra commissions 600 MW unit of Hisar thermal plant

The company’s engineering, procurement and construction (EPC) division has commissioned the 600 MW unit at the Anil Ambani group firm Reliance Infrastructure on Sunday said it has commissioned a 600 MW power unit at the Rajiv Gandhi Khedar Thermal Power Plant (RGKTPP) in Haryana that will also create 15,000 jobs when it is completed. power plant in Hisar, Haryana, the company said . “This project will not only benefit the state by adding 288 lakh units of energy per day but will also create 15,000 job opportunities in the field of construction, operations and maintenance,” Reliance Infrastructure Director (Operations), SC Gupta said. The thermal power plant, which has a total capacity of 1,200 MW with two units of 600 MW each, will cost Rs 3,800 crore to build. It is being set up by Haryana Power Generation Corporation Limited (HPGCL) and executed by R Infra. The project was awarded to RInfra in January 2007. The main plant equipment for the Hisar project has been imported from Shanghai Electric Corporation, China.

Global recovery drives IT cos' plans to expand overseas

The revival in global economy has given a booster shot to the overseas expansion plans of the IT industry. Over the last two months, large IT companies seem to be pulling out all the stops to scale up presence in locations such as Romania, Australia, Brazil and Dubai. While Wipro announced a new global delivery centre in Curitiba, Brazil in March and followed it up with a new Melbourne development centre, HCL Technologies has opened the regional headquarters for its West Asia operations, in Dubai. Genpact has announced its expansion in Romania by acquiring a new facility in the Transylvanian city of Cluj-Napoca. The galvanised cross-border investment activity is visible not only for Indian companies but also MNC giants such as Steria and Microsoft that have spruced up their existing bases in India through additional IT services and R&D facilities, respectively, just last week. “Over the past few months, there has been a significant uptick in the business pipeline, and companies are beginning to invest in anticipation of recovery,” says Mr Sid A. Pai, Partner and Managing Director at outsourcing advisory firm TPI India. Global delivery models This trend, he said, is true for all IT segments. “Indian companies looking to be truly global have been going after global delivery models,” Mr Pai said. Wipro's new centre, located in South Melbourne, will provide consulting, software development, testing and business process services to domestic and global companies in Australia. The unit, along with those in Paramatta and Adelaide, will broaden Wipro's service capabilities. The Curitiba centre in Brazil will serve as regional headquarters for Wipro offices located in the region - São Paulo (Brazil) and Buenos Aires (Argentina); and cater to global and domestic clients. Last week, European IT-enabled business service provider Steria announced that it will deliver Remote Infrastructure Management services from its newly expanded centre in Noida. Just a day later, Microsoft India R&D announced the expansion of its product development activities to Bangalore. It already has a development centre in Hyderabad. Genpact, which has centres in Bucharest and Cluj-Napoca in Romania, has now started adding capacity in Cluj-Napoca. HCL Technologies recently inaugurated a new facility housed in Dubai Internet City, which will become the hub for regional operations. HCL services over 25 large organisations in West Asia. “Companies are exploring new growth engines and new geographies, and there is a clear need to be close to end-customers. So, you will see expansion across all categories – IT services, BPO and R&D,” Mr Praveen Bhadada, Engagement Manager, Zinnov Management Consulting, pointed out.