Budget Analysis.... Friday, February 29, 2008 On the overall government accounting the Revenue Deficit for the year would be at 1.4% as compared to the target of 1.5% for the year 2007-08. Similarly, the fiscal deficit for the year is expected to settle at 3.1% as compared to the budgeted target of 3.3%. For the next year, FM has budgeted a Revenue Deficit of 1% and a Fiscal Deficit of 2.5%. FM expects the direct taxes proposals to be revenue neutral and indirect taxes proposals to cost the government Rs 5900 crore. It is clear that he is banking on the economy to continue to grow at a faster pace. Tax buoyancy on account of high economic growth is what will help the FM find money for all the grant give-away that he has announced in the budget today The fiscal deficit is Rs 133000 crs as against Rs 148000 crs in 08. The GDP is close to 53 lac crores and fiscal deficit is 2.5 % as against 3.1% for 08. The growth in GDP at factor cost at constant (1999-2000) prices for 2007-08 is estimated at 8.7 per cent as compared to the growth rate of 9.6 percent during 2006-07. The growth rate at current market prices during the 2006-07 (Quick Estimates) and 2007-08 (Advance estimates) have been put at 15.8 per cent and 13.2 percent respectively. The growth rate for 2008-09 has been assumed at 13.0 percent. For the years beyond 2008-09 a trend growth of 13.0 percent has been assumed. With the advance estimates of GDP at current market prices in 2007-08 being Rs. 46,93,602 crore, GDP at current market prices for 2008-09 is pegged at Rs.53, 03,770 crore. The debt waiver of 50K crs is one time write off in the Budget which needs to be adjusted in order to find out the adjusted fiscal deficit. Your attention is drawn to Budget 08 in which the provision of 40K was made for transfer of SBI stake from RBI to Govt of India which was routed through capital account on either side. While calculating the fiscal deficit in real terms we need to adjust this Rs 50 K crs if the same has entered the expenditure side of the Budget. If so then the fiscal deficit has to be 1.56% or around instead of 2.5% announced in the Budget on the fiscal deficit no of Rs 133000 crs. If the same is not routed through the Budget then the fiscal deficit stands at 2.5 % only and then in that case the market reaction to 60K write off itself is uncalled for. Therefore whatever way we look at the Budget sounds very well. It seems the same is not routed in the Budget and hence this is Budget neutral. The alternative analysis also suggest that the 60 K crs bad debts which must have been provided as bad in the books of PSU Banks will not get any budgetary support to that extent but the F M has gone on record to suggest that this money will be made available to the banking system for lending. This could be possibly suggesting the banking industry to pass a book entry to remove recoverable from the Balance Sheet as also remove the provisioning. This is big positive for banking instead of knee jerk analysis of negative one. Banking Industry will find their Balance Sheet cleaner which will help them to use the SLR for lending. The change in the slab gives Rs 55000 per employee which will be reintroduced in the system as spending which will stimulate growth in a major way. As regards non employees class traditionally in India the cult is to offer income for tax at an average rate of tax of 10% by offering the income till the highest slab of income. Now since the highest slab is raised to 5 lacs the average rate of tax comes to 11% which hardly matters for tax payers in the light of the fact that it is now very difficult to carry out transactions in cash due to the various checks introduced. Logically it means majority of the tax payers are going to use these slabs for generating higher taxable income. This means every tax payer who is generating additional income at the same rate of tax will add Rs 2.5 lacs to their disposable income. If Rs 55000 can really matter in case of salaried class then Rs 2.5 lac will definitely matters from the business class. This will stimulate growth substantially. Our analysis suggests that Rs 55000 spending from salaried class can add to close to 4 to 5 bn USD spending. Simultaneously Rs 2.5 lacs spending could add another 10 bn USD spending on a larger scale. The issue is that this additional 15 bn USD savings capitalisation could bring 10 to 12 bn USD revenue to exchequers in the form of different taxes such as service tax, cst, excise, professional tax, stt, it, customs, octroi, cess, entertainment tax, FBT, MAT, turnover tax. Municipal tax, water tax, road tax and so so on. The finest part is that in 08 FM had taken 16% higher estimate on revenue I e Rs 548122 crs as against Rs 473324 crs. The figures are now revised to Rs 585410 crs which was assigned to robust economic growth. Now in 09 the F M has estimated the revenue at Rs 687715 crs which is 18% higher than the revised robust nos of 08. This clearly shows that the F M is confident of no slow down even though the 18% estimate is on very higher base and larger than the estimate of last year (16%). It tantamount to 46% rise with reference to the budgeted estimates of 08. Yet if we say that the economy is slowing then it is really need to redefine the growth terminology. In fact, the 16% growth in revenues clearly suggests that Indian co will sustain at least 20% growth earnings and therefore the market has to respond very positively. This will pave the avenues for FII to invest in India straight away as their doubt on the nos will be dispensed with. FM has taken higher credit of Rs 43200 crs on account of dividend as against Rs 33900 crs (revised Rs 36100 crs) which goes well in favour of PSU stocks. It is fair indication that PSU cos will raise the dividend outgo by at least 20%. Wherever PSU stocks are available at dividend yield values, it makes a very strong case of investment. MTNL and Bongaigon stand out on these grounds. The analysis of Capital receipts suggests that the Govt borrowing is estimated at Rs 113000 crs as against Rs 136000 crs down by Rs 23000 crs. This shows Govt’s confidence in maintaining the fiscal deficit as per FRBM or even below that.. This is very encouraging and positive. The annexure 10 of the Receipt Budget shows that the amount of tax revenues raised but not realised are Rs 79076 crs out of which disputed demands are Rs 51333 crs which means Govt has scope to recover Rs 27743 crs which will go long way to reduce fiscal deficit further. This entire sum is from corporation tax and income tax. One grave area where Govt has to work hard is arrears of non tax revenues of Rs 37198 crs from PSU’s. The same yardsticks needs to be applied which are being applied for recovery tax arrears from corporates and individuals. By any stretch of imagination Rs 37198 crs is large sum which will have major impact of the fiscal deficit. Though Rs 32000 rise in non plan expenditure mainly is on account of interest and defence allocations, the increase in plan expenditure of Rs 31285 crs will have far reaching impact of the upliftment of economy especially in schooling, welfare and women benefit will go a long way of redefining the paradigm of Budget. Coupled with the fact the Govt is likely to take very strong measures to kerb leakages in the expenditure. In fact, if introduced in letter and spirit the smart card delivery system to make available the food subsidy to the end beneficiaries then the same can be used for PDS and fertiliser subsidies which will result in savings of at least 30% to the exchequer. The sector which immerges from the allocation is clearly energy which has been given higher allocation of Rs 93814 crs as against Rs 72230 crs. This includes power, petroleum, coal & lignite and non conventional energy. Hence the top priority for investors could also be energy sector. Few other sectors which have got higher allocations are Iron and Steel Rs 9551 crs as against Rs 4334 crs, Fertiliser from Rs 434 crs 1858 crs, petrochemicals Rs 4110 crs from Rs 2573 crs, roads and bridges Rs 31199 crs from Rs 24851 crs. RCF has been granted plan outlay Rs 812 crs as against Rs 253 crs which should benefit RCF in a big way. Neyveli Lignite has been granted plan outlay of Rs 2717 crs as against Rs 1930 crs, MTNL Rs 2430 crs as against Rs 2042 crs, BSNL Rs 21059 crs as against Rs 16139 crs, Bhel Rs 1016 crs as against Rs 836 crs. These allocations were also increased for ONGC, BPCL, MRPL, NTPC, Power Grid, HPCL, IOC, GAIL. However these are not budgetary support. Only Delhi Metro Rail has got Rs 1500 crs budgetary support. The proposals of providing 5-year tax holiday for setting up hospitals in non-urban cities/tier-2 and tier-3 towns and 2-star, 3-star and 4-star hotels in UNESCO declared world heritage sites. The proposed increase in expenditure on the development to National highways is another positive move. These will certainly give a further boost to the infrastructure sector of the country. Finance Minister has proposed to cut excise duty on paper and paperboards to 8 percent from 12 percent this will help boost investments, enabling the industry to compete with imported paper. Also has increased fund allocation for education by 20 percent to 344 billion rupees in 2008-09. This is in line with our expectations. Newsprint costs have risen by 15% which augurs well for domestic paper industry which is a clear winner. Government on Friday extended a five-year tax holiday, currently given only to hospitals in the rural areas, to those across the country, sending the shares of healthcare providers higher. Big positive for healthcare industry. The Finance Minister Palaniappan Chidambaram, in his budget for 2008/09, also proposed an excise duty of 8 per cent for all goods produced in the pharmaceutical sector, down from 16 per cent. Excise duty on small cars, two, three wheelers, buses and their chassis will come down to 12 per cent from the current level of 16 per cent, while in case of hybrid cars the duty will be lowered to 14 per cent from the current 24 per cent. Though there is no definition given on the hybrid car it implies where the source of fuel is more than one. It indirectly implies that the cars having with gas fuel will get lower duty because it is practically impossible to have petrol and diesel as duel fuels in the car. This is again in line with our expectations. This should go a long way in creating more demand for hybrid as well as hydrogen cars and MINDA Industries should be the largest beneficiary being in monopolist situation as far as gas kits are concerned. The duty exemption on naphtha for use in the manufacture of polymers has been withdrawn and the normal rate of five percent customs duty has been imposed to remove distortions that arise due to its export from refineries and import by manufacturers of polymers. However, naphtha imported for the production of fertilizers will continue to the exempt from import duty. Business of production of seeds and manufacture of agricultural implements added to the list of companies allowed weighted deduction of 150 per cent on any expenditure on in house scientific research. Tax income arising from saplings or seedlings grown in a nursery exempted. This should be a big re rating trigger for seed companies such as Basant Agro, Monsanto and J K Agri. Parent company allowed to set off the dividend received from its subsidiary company against dividend distributed by the parent company; provided that the dividend received has suffered DDT and the parent company is not a subsidiary of another company. This will resolve some anomaly of double taxation of DDT. Based on our budget analysis we do not consider that market may fall from these levels though knee jerk reaction is always expected. In the short run market will react to global clues but in long run the budget ramifications will be felt. The budget which is full of growth stimulates would attract more foreign funds than ever especially when the foreign markets are doing badly. The immerging winners are Monsanto, J K Agri, Basant Agro, Tata Motors, Bajaj Auto, Mahindra, Maruti, Minda Industries, Rainbow Paper, Sirpur Paper, Rama Paper, BEL, Bhel, BEML, J P Associates, DLF, Unitech, Parshwanath, Bombay Dyeing, IFCI, IDBI, all auto component companies, steel cos, all mining cos such as panyam, sandur, jeyswal neco, MSP Steel, transformer cos such as Accurate Transformer, LIC Housing and the star performers could be PSU stocks once again. We maintain our long term target of Nifty 7K and remain positive. Market will react to OI positions in the short run which is pegged at 58K as of yesterday.

Budget the class …………. Budget 2008-2009 Update on 29 February 2008 2:45 p.m iDevelop rate this as by far the best Budget of Mr Chidambaram in his stint as F M. It was never easy to give a populist Budget with 60 K crs debt waiver with no increase in tax in a major way. You always need to assess the Budget in the given set of circumstances and not in general parlance. Only 3 issues were negative one that debt waiver and two that of 15% S T G T. If the corporates were paying 12.5% MAT even on L T G T when individuals were paying zero tax and hence this may not be considered major negative. Alternatively investors were reconciled to pay littler higher STT which is now matched with 5 % hike in S T G T and hence not considered non sense. Third issue is STT. In any case STT was not available for ST and LT trades. As far business income goes such as derivative trades STT will now be available as business expenditure. This is again a very good move which will remove the ambiguity once for all for traders. They will now show all jobbing trades in biz income and claim expenditure. It should also be noted that when you claim this biz expenditure they you can set off the same against your other income. An earlier trader has no choice than to waste STT when it was exceeding their tax liability. This Budget in my opinion is BIG positive for 2 reasons. One that it gave what FII wanted. A fiscal deficit of 2.5 % of GDP is very big positive for funds who wants to invest in India. Two; that by writing off debts it made a clear ground of succeeding elections through rural India. It was never easy to walk the rope and F M did it. To announce Rs 5 lac income tax bracket is very bold step which earlier also only this F M had dared. This will bring the saving of Indian households to tax be default which will do the trick of inflation control. Since pvt spending will rise it will offset the banking industry’s worry of reducing rates for containing inflation. Now coming back to tax breaks this breaks will result revenue loss of at least 4 bn SUD for the Govt yet Govt succeeded in giving 2.5 F D. This 4 bn is only from salaried class which will go into productive channels. This 4 bn USD assets will in turn create more revenues and employment opportunities. One more major reform orientation done in the Budget is that after plugging public systems of money laundering through compulsory PAN and lot of other checks, he has dared to clean his own house. He has attacked the bureaucratic system by introducing more checks Govt spending. One that the leakages will stop to great extent and two that the spending will start actually benefiting the end users. So far the spending never used to reach the actual beneficiary which means the spending was only on paper and hence it never contributed to the infrastructure and social development desired through these spending. This will definitely help revive GDP is larger interest. Truly now we are racing towards more transparency because they only hitch so far in the growth of India on global scale was controlling Govt spending. If F M has succeeded in bringing down the fiscal deficit to Rs 133000 crs as against Rs 148000 crs on wider GDP of 42 lac crs then he has achieved it what he wanted. In fact, we were anticipating F D at 3.1 and it came at 3.1 which mean I DEVELOP economist is bang on target. This year Govt succeeded in getting additional revenue of close to 40 K crs which though seems bit difficult to be repeated in 09 I am sure the same amount or even more will come from disciplined expenditure and stoppage of expenditure leakage which was graver than revenue leakage. Another important feature of the Budget is that F M has now admitted that the size must change which can give India yet larger exposure for investment from perspective of the global investors. In short Budget is A class and market will salute the Hon’ble F M sooner than later after they realise that it was good. We at I DEVELOP always remain first and we can’t lose this opportunity. Nifty will cross 7K in next 6 months and even GOD would not say now this will not happen as the most exciting event has passed on a very good note though market players will take time to understand as usual. Short term trends are beyond anybody’s control and assessment though you can always count on long term calls. The GURU of Warren Buffet Nr Graham Benjamin has said once that “I have noticed anything over these 60 years on Wall Street , it is that people do not succeed in forecasting what is going to happen to the stock market. “

Asian Stocks Fall on U.S. Slowdown Asian stocks fell for a second day, with automakers and electronics manufacturers leading declines, after the U.S. economy slowed last quarter and the yen strengthened to almost a three-year high against the dollar. Toyota Motor Corp. dropped in Tokyo by the most in a week, while Samsung Electronics Co. slipped for the first time in three days in South Korea. Commonwealth Bank of Australia slumped in Sydney after Federal Reserve Chairman Ben S. Bernanke warned of possible failures among smaller banks. ``You've got a slowdown in economic growth and then there's the credit storm,'' Justin Urquhart Stewart, who manages about $4 billion including Asian assets as director of 7 Investment Management in London, said today in Singapore. ``We're going to see a lot more pain before we get any gains.'' The MSCI Asia Pacific Index declined 1.4 percent to 147.22 as of 11:01 a.m. in Tokyo. The benchmark has advanced 2.6 percent this month, after slumping 16 percent in the previous three months on concerns that a U.S. housing slump was dragging the world's largest economy into a recession. Japan's Nikkei 225 Stock Average lost 2.5 percent to 13,573.36, set for a fifth monthly drop. The S&P/ASX 200 Index retreated 2.2 percent, on course for its fourth monthly decline, the longest losing streak since 1992. Indexes also declined elsewhere in the region. U.S. stocks fell yesterday after the Commerce Department said gross domestic product rose at a 0.6 percent annualized rate, lower than the median estimate of a 0.8 percent increase in a Bloomberg News survey of economists. The Standard & Poor's 500 Index dropped 0.9 percent, the biggest loss in a week.

Indian Bank unlikely to tap market before '09 Chennai-based Indian Bank may not tap the equity market to raise resources before 2009, Indian Bank chairman and managing director MS Sundara Rajan said on Thursday. According to the chairman, the bank will be adequately capitalised even after factoring in the capital requirement under the imminent Basel II regime. Indian Bank would need to adhere to Basel II norms as of March 2008, as it has two overseas branches in Singapore and Colombo. Banks without overseas branches would need to adhere to the Basel II norms after a year on March 31, 2009. “We may not look to raise funds from the equity market further before 2009, as we are comfortable in the capital adequacy front. We have a capital adequacy ratio (CAR) of around 13%. Of that tier-I capital is very healthy at around 12%. So, we have enough elbow room to raise resources by way of selling tier II bonds,” Mr Sundara Rajan said. Indian Bank had first hit the equity market in February last year. Consequent upon this exercise, the government holding in the bank came to 80%. He also indicated that a more than required statutory liquidity ratio (SLR) holding can be leveraged for funding the bank’s increasing credit business. Banks need to hold a minimum 25% SLR, while the SLR portfolio of Indian Bank, which stands at 34% is well above the prescribed norm. In absolute terms, it has surplus government securities — which qualified for SLR requirement — of around Rs 4,300 crore. “We can sell the surplus SLR portfolio when required and fund our credit expansion,” Mr Sundara Rajan said. The bank is growing at a healthy pace. Its credit business is expected to grow 25% in 2007-08 over Rs 29,000 crore of portfolio as on March 31, 2007. Its deposit collection is expected to grow 20% in this fiscal over Rs 44,000 crore on March 31, 2007.

LIC Housing to combine reverse mortgage with insurance plan LIC Housing Finance is looking to combine its reverse mortgage plan with a whole-life annuity provided by a life insurer. This will allow home owners to use their property to generate income for life as against for only 15 years as provided under the present reverse mortgage schemes. The housing finance arm of the Life Insurance Corporation on Thursday announced the launch of its reverse mortgage scheme. This product is available across the country for senior citizens above 60 years. The loan can be availed of either singly or jointly with a spouse, if the spouse is also above 60. The shortcoming of most reverse mortgage schemes is that it is available only for 15 years. With the increased life expectancy, most borrowers are expected to outlive the term of their reverse mortgage. Under present schemes while income from the reverse mortgage dries up after 15 years, the borrowers end up with the lender having a lien on their property. LIC Housing Finance chief executive SK Mitter told ET that the company was in talks with insurance companies to work out a scheme where home equity could be used to buy an annuity that provides income for the entire life span of the borrower. “We are working out how to merge an annuity plan with this product” said Mr Mitter. The reverse mortgage loan by LICHF will be offered at a fixed interest rate, subject to reset every five years. Under the scheme, senior citizens can avail of the loan either on a monthly payment or on a lump sum payment or a combination of both. The property evaluated for the loan should have at least 20 years of residual life. The maximum loan balance shall be 90% of the value of the property and the loan balance will include interest till maturity. The amount of the loan will take into consideration the property value, age of the borrower, and the rate of interest. The loan will become due and payable only when the last surviving borrower dies or opts to sell the home, or permanently moves out of the home.

Yen Rises to Highest in Almost Three Years on U.S. Bank Concern The yen rose to the highest in almost three years against the dollar after Federal Reserve Chairman Ben S. Bernanke said some small U.S. banks may collapse. The currency headed for a second monthly gain after Bernanke told the Senate yesterday ``there probably will be some bank failures,'' prompting investors to cut holdings of higher- yielding assets bought with loans from Japan. The dollar also headed for its biggest monthly loss against the euro since September before a U.S. government report that will probably show consumer spending stayed at the weakest in six months. ``There are renewed concerns over U.S. financial institutions, causing some investors to be risk averse,'' said Hideaki Inoue, chief manager of derivatives and fixed-income investment in Tokyo at Mitsubishi UFJ Trust and Banking Corp., a unit of Japan's largest publicly traded bank by assets. ``The yen is being bought.'' The yen climbed to 104.58 against the dollar, the strongest since May 2005, before trading at 104.71 as of 11:31 a.m. in Tokyo, from 105.37 late in New York yesterday and 107.17 a week ago. It rose 0.7 percent to 158.98 per euro, the largest gain in three weeks, from 160.10 yesterday and 158.99 last week. The dollar traded at $1.5176 per euro, near the record low of $1.5229 reached yesterday. The currency dropped to 3.1890 versus Malaysia's ringgit and 31.90 against the Thai baht, both the weakest in more than a decade, on speculation rate cuts in the U.S. will prompt fund managers to shift investment into Asia. The Japanese yen gained against all of the 16 most-active currencies today as the MSCI Asia-Pacific Index of regional shares fell 1.2 percent. The yen climbed 0.9 percent to 99.14 versus Australia's dollar, 0.6 percent to 85.43 to New Zealand's dollar and 0.9 percent to 13.8121 against South Africa's rand.

Network to make pref... Network Ltd has informed that a meeting of the Board of Directors of the Company will be held on March 06, 2008 to: 1. Consider the allotment of 440000 Equity Shares of Rs 10/- each at a premium of Rs 40/- each to Paliwal Infrastructures Pvt. Ltd. in lieu of 440000 Warrants allotted on September 07, 2007 at a price of Rs 50/- each. The Company has received respective amount of Rs 2.20 crores from Paliwal Infrastructures Pvt. Ltd. in lieu of equity shares to be allotted. Paliwal Infrastructures Pvt. Ltd. has already exercised the option for 660000 Equity Shares in lieu of 660000 Warrants. 2. Consider the allotment of 330000 Equity Shares of Rs 10/ - each at a premium of Rs 40/- each to Paliwal Overseas Pvt. Ltd. in lieu of 330000 Warrants allotted on September 07, 2007 at a price of Rs 50/- each. The Company has received respective amount of Rs 1.65 crores from Paliwal Overseas Pvt. Ltd. in lieu of equity shares to be allotted Paliwal Overseas Pvt. Ltd. has already exercised the option for 500000 Equity Shares in lieu of 500000 Warrants. 3. Consider the allotment of 440000 Equity Shares of Rs 10/- each at a premium of Rs 40/- each to Ashok Sawhney & Sons (HUF) in lieu of 440000 Warrants allotted on September 07, 2007 at a price of Rs 50/- each. The Company has received respective amount of Rs 2.20 crores from Ashok Sawhney & Sons (HUF) in lieu of equity shares to be allotted

Dollar Falls to Record Low of $1.50 per Euro on Rate Outlook The dollar fell to a record low of $1.50 per euro on speculation Federal Reserve Chairman Ben S. Bernanke today will indicate the U.S. central bank is prepared to keep lowering interest rates. The currency is headed for its second straight monthly decline on expectations a U.S. government report today will show a drop in new home sales, bolstering the Fed's case for cutting its 3 percent target for the overnight lending rate between banks. The euro climbed to a six-week high against the yen as traders bet the European Central Bank will keep its 4 percent benchmark rate unchanged in coming months. ``We're going into a new leg of dollar weakness,'' Tony Morriss, a currency strategist in Sydney at Australia & New Zealand Banking Group Ltd., Australia's third-biggest bank, said in an interview with Bloomberg Television. ``The Federal Reserve is sending a pretty clear signal they need to support growth.'' The U.S. currency touched $1.5047 per euro, the lowest since the European single currency was introduced in 1999, before trading at $1.4991 as of 10:46 a.m. in Tokyo from $1.4974 in late New York yesterday. It was little changed at 107.22 yen. The euro rose to 160.73 yen from 160.67. The dollar may fall to $1.53 per euro in the next three months, Morriss said. The U.S. dollar slid against 11 of the 16 most-active currencies before Bernanke delivers his semi-annual testimony to the House Financial Services Committee at 10 a.m. in Washington today. Fed Vice Chairman Donald Kohn said yesterday turmoil in credit markets and the possibility of slower economic growth pose a ``greater threat'' than inflation.

Reliance Industries Rises on East Coast Natural Gas Discovery Reliance Industries Ltd., owner of the world's third-biggest oil refinery, gained after saying it discovered natural gas in a field off India's east coast. The Mumbai-based company said yesterday the discovery was made in the shallow-water area of NEC-Mahanadi field, off the eastern Indian state of Orissa. Reliance Industries owns 90 percent in the area and Canada's Niko Resources Ltd. holds 10 percent, according to a statement. This is the eighth gas discovery in the field, the company said

Asian Stocks Fall for First Time Asian stocks fell for the first time this week, led by automakers and electronics manufacturers, after the yen strengthened against the dollar and on speculation new U.S. interest rate cuts won't prevent global growth from slowing. Toyota Motor Corp. led losses in Tokyo as the yen climbed to a three-week high against the dollar, eroding the value of overseas sales. Japan's Fanuc Ltd. dropped after the nation's factory production fell at twice the pace economists predicted. Westfield Group, the world's largest shopping mall owner by market value, retreated in Sydney after U.S. reports showed weaker new home sales and durable-goods orders. ``The bigger-than-expected decline in industrial production makes the outlook even more uncertain for Japanese companies,'' said Naoki Fujiwara, chief fund manager at Tokyo-based Shinkin Asset Management Co., which manages about $5.1 billion. ``Automakers can't avoid an economic slowdown in North America, and the stronger yen may further reduce their earnings.'' The MSCI Asia Pacific Index declined 0.9 percent to 148.23 as of 10:43 a.m. in Tokyo, halting a three-day, 4.1 percent rally. The benchmark advanced 13 percent through yesterday since reaching a 14-month low on Jan. 22. Japan's Nikkei 225 Stock Average lost 1.3 percent to 13,846.58, retreating from a six-week high. Australia's benchmark S&P/ASX 200 fell 1.9 percent, the biggest decline in the region. Suncorp-Metway Ltd., the nation's No. 2 car and home insurer, slumped after profit decreased. Most U.S. stocks fell yesterday after a slump in utility and drugmaker shares overshadowed speculation Federal Reserve Chairman Ben S. Bernanke will cut interest rates. The Standard & Poor's 500 Index, which swung between gains and losses at least 25 times, ended 0.1 percent lower.

NTPC - Updates National Thermal Power Corporation Ltd (NTPC) has informed that the Company has signed a loan Agreement of Euro 68.56 million with the Nordic Investment Bank (NIB) on February 15, 2008, a multilateral financial institution owned by the Nordic and Baltic countries, to part finance the capital expenditure of its projects. The loan has a maturity of 12 years including availability period of 3 years. The loan carries a floating rate of interest linked to EURIBOR and is without sovereign guarantee. This is the first loan that NTPC has tied up with NIB.

RIL, ADAG among 37 in race for developing eight airports in AP Reliance Industries Ltd, and an Anil Dhirubhai Ambani Group company are among the 37 who have submitted expressions of interest (EoI) to develop eight regional airports in Andhra Pradesh, a senior official with Infrastructure Corp of Andhra Pradesh said Infrastructure Corp of Andhra Pradesh is the nodal agency for airports development in the state. Technical and financial bidding for the projects are expected to be completed in 3-4 months and the project would be awarded by September, he said. The state government recently invited EoIs from private companies to develop these airports on a public-private partnership basis. Other major companies that have evinced interest in the projects are Maytas Infra, Unitech, IVRCL, Lanco Infratech, GMR Infra, and London-based Caparo group promoted by Swaraj Paul. ADAG has submitted its documents through Reliance Airport Developers Pvt Ltd, the official said. The new airports are expected to come up in Bobbili, Nellore, Tadepalligudem, Ongole, Kurnool, Kothagudem, Nizamabad, and Ramagundam. “Major infrastructure developers in the country have submitted their EoIs and submitted pre-qualification request papers,” the official said. The state government will allocate land as its share of the project cost and the rest will have to be borne by the developers, the official said. “A total of 87 companies responded to our invitation for pre-qualification process. Out of them, 37 companies have been qualified for the bidding,” the official added.

Bernanke Signals Fed Prepared to Lower Rates Again Federal Reserve Chairman Ben S. Bernanke signaled the U.S. central bank is prepared to lower interest rates again even as inflation accelerates. The Fed ``will be carefully evaluating incoming information bearing on the economic outlook and will act in a timely manner as needed to support growth and to provide adequate insurance against downside risks,'' Bernanke said in testimony to the House Financial Services Committee in Washington. Bernanke's remarks may reinforce investors' expectations that policy makers will lower rates further to shore up the faltering economy. While officials have expressed concern that inflation is accelerating, Bernanke indicated he shares Vice Chairman Donald Kohn's view that financial-market turmoil and slowing growth pose the ``greater threat.'' Bernanke's testimony came as government reports today showed the U.S. expansion, now in its seventh year, is in peril. Durable-goods orders fell 5.3 percent, more than forecast, in January as companies cut spending. New-home sales fell last month to the lowest level since February 1995 and house prices slid by a record 15 percent from a year ago. ``The Fed is in full risk-management mode, which means it has to prioritize financial market stability and growth over inflation,'' said Diane Swonk, chief economist of Mesirow Financial Inc. in Chicago. ``The discussion of inflation and inflation expectations, however, effectively sets the stage for a fairly quick normalization of rates once growth stabilizes.''

BUY BUY Aban Offshore Aban Offshore Ltd has informed that a subsidiary of the Company has received a Letter of Award from PTTEP International Ltd for a 3 well contract offshore Myanmar, for the jack-up drilling rig Deep Driller 5, with an estimated duration of 4 months. This contract will be in direct continuation of the current contract with Cairn Energy Sangu Field Ltd. The estimated contract value is approximately USD 25 million.

RIL gas find in Mahanadi basin block Reliance Industries Ltd announced on Tuesday that it had struck gas in the NEC-OSN 97/2 (NEC-25) block located in the NEC-Mahanadi offshore basin, off the Orissa coast in Bay of Bengal. This shallow water block covers an area of 10,755 sq km and water depths ranging between 20 metres and 600 metres. This is the eighth discovery in the block. RIL had earlier struck six consecutive commercial discoveries in this block, for which the development plan has been submitted to the Directorate General of Hydrocarbons for approval. The block was awarded under the bidding round of NELP-I. RIL holds 90 per cent participating interest and the rest is held by NIKO Ltd. This discovery, named ‘Dhirubhai–40’ has been notified to the Centre and DGH

BUY BUY BUY Petronet LNG Ltd. ====Breaking News==== ADB may sell its Petronet stake to L N Mittal Asian Development Bank (ADB) is likely to exit Petronet LNG Ltd by selling its 5.2 per cent holding in the country’s biggest liquefied natural gas importer possibly to promoters or billionaire Lakshmi Mittal. ADB and German Development Bank KfW had recently approved a loan of $169 million to Petronet for its expansion projects at Dahej and a new terminal at Kochi. However, ADB’s internal norms prohibit it from having both debt and equity exposure in a company. “In 2004, ADB had sanctioned a loan of $75 million to Petronet. But once it took a 5.2 per cent stake for less than $8 million, ADB could not disburse the balance of the loan due to its internal regulations,” Petronet CEO and Managing Director Prosad Dasgupta told the Press Trust of India. Though Dasgupta refused to say if Mittal was interested in buying ADB’s stake in Petronet, industry sources suggested that Mittal was keen, but that he would first want the promoters GAIL India, Indian Oil, Bharat Petroleum and ONGC to waive their pre-emption rights. The four state-run companies that each hold about 12.5 per cent stake and their French partner GdF which has 10 per cent, have the first right of refusal on ADB’s stake. GAIL and IOC, it appears, are keen to pick up ADB stake, but they may not be allowed to do so by the petroleum ministry GAIL, IOC, BPCL and ONGC together hold a little less than 50 per cent in Petronet, which is why it is still not a public sector unit. If the promoters were to pick up even half of ADB’s 5.2 per cent, and the remaining is taken by GdF, the company would become a public sector company, and that’s something the petroleum ministry doesn’t want, sources say. Although the petroleum secretary is chairman of Petronet and the company enjoys state patronage, it has not been subject to the scrutiny that PSUs come under. Dasgupta expects that a drawdown from ADB-KfW’s new debt would happen in September/October, when construction at Petronet’s Kochi terminal catches pace. Petronet is expanding its Dahej terminal from 6.5 million tonnes to 10 million tonnes and constructing a 5 million tonne a year new LNG import terminal at Kochi, Kerala, by 2011.

Dollar Falls to Record Low of $1.50 per Euro on Rate Outlook The dollar fell to a record low of $1.50 per euro on speculation Federal Reserve Chairman Ben S. Bernanke today will indicate the U.S. central bank is prepared to keep lowering interest rates. The currency is headed for its second straight monthly decline on expectations a U.S. government report today will show a drop in new home sales, bolstering the Fed's case for cutting its 3 percent target for the overnight lending rate between banks. The euro climbed to a six-week high against the yen as traders bet the European Central Bank will keep its 4 percent benchmark rate unchanged in coming months. ``We're going into a new leg of dollar weakness,'' Tony Morriss, a currency strategist in Sydney at Australia & New Zealand Banking Group Ltd., Australia's third-biggest bank, said in an interview with Bloomberg Television. ``The Federal Reserve is sending a pretty clear signal they need to support growth.'' The U.S. currency touched $1.5047 per euro, the lowest since the European single currency was introduced in 1999, before trading at $1.4991 as of 10:46 a.m. in Tokyo from $1.4974 in late New York yesterday. It was little changed at 107.22 yen. The euro rose to 160.73 yen from 160.67. The dollar may fall to $1.53 per euro in the next three months, Morriss said. The U.S. dollar slid against 11 of the 16 most-active currencies before Bernanke delivers his semi-annual testimony to the House Financial Services Committee at 10 a.m. in Washington today. Fed Vice Chairman Donald Kohn said yesterday turmoil in credit markets and the possibility of slower economic growth pose a ``greater threat'' than inflation.

Railways turnaround exemplary & sustainable We have posted a Rs 25,000-crore profit this year. This is better than the net profit of most of the Fortune 500 companies. Had we listed ourselves, we would have been on the Top 10 list. The operating ratio at 76.3 is one of the best in the world. All these have been achieved without following the conventional approach. Our commonsensical and counterintuitive approach has been the foremost reason behind the turnaround. Nano would make cars affordable for two-wheeler owners in India. Similarly, Garib Rath will make air-conditioned travel affordable for lower middle class and poor section of our society, who usually travel by sleeper class due to cost constraints. This time, we have announced 10 more Garib Raths. Our out-of-box thinking, high-volume game, and boldness in approach have fuelled the turnaround. And, to make this turnaround sustainable, we have multiplied our investment for future by about 4 times, which is exemplary by any given standards, in the last four years. The railways would invest Rs 25,000 crore over the next five years in capacity augmentation, technology urgrade, doubling of tracks and promotion of world-class services to our customers. We have set up a strategic business analyst and innovation group comprising railway experts for creative and strategic thinking in railways on a long-term basis. We would come with a 'Vision Document 2025' for the railways and vision 2012 on IT exclusively over the next few months. The annual plan for the current year is Rs 35,000 crore, which is the biggest till date, and 80% funding of the plan would be done through net budgetary resources and internal generation. The focus over the last three years is not on yield per passenger or yield per train kilometre, rather the yield per train kilometre is the chief concern. We have made money not by increasing tariff, but by increasing length, payload, seating capacity and occupancy levels. At a macro level, the focus is not on denominator but on the numerator. In other words, we have taken steps to revive and regenerate the competitiveness of railways in the market place. Setting up of a tariff regulator, down-sizing or restructuring cannot sort out the problems of competitiveness of railways in the market place. The battle of the market has to be fought and won in the market place and therefore railway's pricing strategy factor is not totally commercial but customer-centric and market-driven. We have a dynamic pricing and commercial policy across routes, regions and periods. The investment strategy focus is on low cost, short gestation, rapid pay-back and high return projects for better operating efficiency, more effective utilisation of rolling stock and removal of capacity bottlenecks on the high-density networks (HDN). Over the medium and long term, the priority areas are throughput enhancement works on the HDN, modernisation and technological upgrade of rolling stock and signalling and telecommunication, wider application of information technology for operational improvements and revenue enhancement and better customer service. We have shown that social obligation of the public utility can be married with a commercial enterprise. It has been possible for us to become profitable and at the same time win hearts of teeming millions of the country. This happens only when we think creative and act swiftly with the time. What the country has seen so far is not even the tip of the iceberg. The Railways have huge potential and coming time would see this magic unfold with all its beauty and charm. Foundation of a mega enterprise has been laid and the identity of the railways as an institution has grown stronger with the morale and pride of employees at an all-time high.

Promoters doing bottom fishing... iDevelop has been ushering that the current melt down is an oppurtunity for the promoters and value buyers for bottom fishing and now one of the leading paper media has gone on record to say that the same is being happening which reads as follows: It’s not just the portfolio investors who were bottom-fishing in the market. Promoters of a bunch of mid and small-cap firms have taken advantage of the market meltdown to buy shares of their own companies from the open market through the creeping acquisition route. Some companies whose promoter groups have bought shares in the last fortnight when the market crashed include NIIT, Maharashtra Seamless, Gujarat NRE Coke, Uflex, KRBL, Hitech Gear, Birla VXL and Jyoti Structures, among others. Promoters raise their equity stake for various reasons. Typically for shoring up equity holding or infusing funds into the company, the owners go for preferential allotment of shares or convertible instruments such as warrants. The creeping acquisition route of buying shares, for which there is a mandatory ceiling in a particular year, entails buying shares from the secondary market is typically done when promoters feel the price in the market is low enough to justify such a purchase. Some firms with healthy cash reserves even go for equity buybacks which in turn tends to increase promoter holding while repricing undervalued stock. So it is clear that if the businessmen think that their businesses won't be affected by the current global scenario so everyone should also look at it in a very positive manner. Like what Mukesh Ambani did when he picked stake in RIL at 1800 ..........

Reliance Industries Rises on East Coast Natural Gas Discovery Reliance Industries Ltd., owner of the world's third-biggest oil refinery, gained after saying it discovered natural gas in a field off India's east coast. The Mumbai-based company said yesterday the discovery was made in the shallow-water area of NEC-Mahanadi field, off the eastern Indian state of Orissa. Reliance Industries owns 90 percent in the area and Canada's Niko Resources Ltd. holds 10 percent, according to a statement. This is the eighth gas discovery in the field, the company said

Kal Aaj aur Kaal.... The crisis period of 45 days is over. Market has consolidated from 4700 to 5300 in a most professional manner. The gaps were bridged perfectly to create an ideal launch pad for the Bull’s onslaught. The DON is back… I have kept you guessing with almost last 25 days which must have even caused some panic hitting with wavered minded members. In fact, there were 2 reasons as most of the punters and even investors were not ready to hear me or my bullish views as they wanted to be with the wind. Two that some crooked members were always on the wrong side of the table being extremely frustrated by the huge losses. I was never bearish and held my views all along that Nifty will travel to 7K though timing was a matter of concern as usual simply because it is not in my hands. Wishfully I would have been operator I would not have allowed this to happen. Any case we have tried to keep our nerve cool and create some opportunities for die hard traders and kept generating out of the world calls which has helped many. I know I can’t satisfy 70 K same time in the given circumstances. Petronet LNG now finds news that ADB is selling its stake to LM. Power Grid came in Nifty. RIL found gas. R Power announced bonus. IDBI is the latest to announce probable candidate of rights issue la SBI. This clearly suggests there could be even some package in Budget for IDBI which could create spark and greater valuation. Thus the process of stock selection is proved beyond doubt though the carnage was never in our hands. Those who were raising voices are also forgetting that CNI is the only agency which was giving warning after warning not to go overboard in futures and therefore they have caused damage to their financial health only they are responsible. Even in cash stocks lot of value surfacing has happened. CNI management succeeded in its endeavor to kill the bad time of consolidation and volatility to best of its ability and tried to keep faithful members interest alive. We clearly believe that the economic survey will spur the demand fro papers in a big way and then finally the Budget. Chinese railways are talking of an IPO of 420 bn USD whereas India Rail Budget is still talking of Rs 25000 crs surplus budget. Make comparison of an elephant and ant and you will find that India is not even 3% of China then how can you thinking that the Bull run is over….? This correction is like all previous corrections and Nifty is going to stop even at 7K its next destination is 10 K which you all will accept when it really crosses 7K. We will be matching China in next 5 years viz a viz consumption of commodities and therefore I have every reason to believe that we will start getting above 100 bn USD right from this years as announced by F M and hence market has to test new levels. The liquidity which was the key issue of market at 21000 and it will again remain the key issue when market crosses 21000 therefore we should not really bother whether this carnage has wiped out retail investors. This is going to happen every time even in future and no sympathy is required to those who are buying hugely priced stocks on here and say and then crying out in public. They should really back only research stories that at entry point which is the forte of Cni. In this market also there are 100 odd items which can help you to earn at least 100% in less than 6 months which should be a great return by any standard of imagination. Just crying and criticizing others will not help you in any manner. You have to follow the KARMA theory of Mahabharata. We believed all along and we are always on strong footing whether market corrects or otherwise. Nothing is there to come, and nothing past, but an eternal now does always last.

Worst is over... Railway Budget was generally in line and market movement too was in line. Market closed 100 points plus though at one point in time it was looking like closing 200 points plus. Rollover till yesterday was Rs 26000 crs out of Rs 81000 crs which means lot of positions are yet to be rolled over. ADAG after controlling R Power to a respectable level through GANIMI KAWA method now played their cards in REL by announcing buyback. May be the next counter for damage control operations is RNRL as Reliance Capital does not require any operation and it will stand on its own. Most of the strong promoters have used this opportunity of crash for increasing their stake either through preferential rout or creeping acquisitions rout and I would advise investors too to respect such promoters who have shown guts and characters to raise their stakes. Either cash strapped promoters or promoters having very low confident on the self have failed to capitalize this opportunity. Now with just 2 trading sessions left I can just vouch for the fact that WORST is over for the market. Even if everything turns out to be negative market cant fall below 4910 which is close 350 points and hence investors can for sure take it for granted that 14000 is now history. For those who have short positions in the market the warning bell is already out. More and more new hedge funds stepping out the matter is getting worse for short sellers. Only 2 days left for them to cut their short. I have reason to worry about the Bulls because they had done patience game this time and retail completely out of fray market is now heading for 5500 plus in next 10 days. I am sure and very confident now that market will test 7000 levels that too in 2008 itself. This month was very critical for market and if it had to test lower levels second time this could have happened in FEB alone. Now March is starting and broking houses are not going to open the margin limits till 31st March 2008 because if they open now again in 2 weeks they will have to ask their clients to close the accounts. They are busy solving their own tax problems by adjusting the huge losses they have met in the recent crash. If they show these losses in the Balance Sheet openly then their valuations will get affected like the sub prime story. This is a big plus for market drivers to bridge the gap in cash stocks in March to a great levels and then bring back retail in April 2008 the things will be stream lined as usual. If this does not happen then they will have to close 50 of the recently opened franchises which seem impossible. Now as far as the rational behind B gr recovery in March is concerned I would like to state that operators, Funds, market makers, MF and major Corporate Houses all have huge exposure and in B gr shares and their losses in valuation is only on paper because they have not sold a single share. The F & O or A gr is only their face saving where they might incur actual losses but the fact remains that their real wealth generation happens only through B gr shares. Therefore bringing back Nifty to 7000 is the only answer to their wealth generation. Because by the time this happens all cash stocks will literally double. Which means a recovery of 30% in Sensex could mean 100% rise in paper wealth. Alternatively exit in so called paper wealth is just impossible without Nifty rising and sustaining new levels. I had promised you to enlighten on market course at appropriate time and I think though Nifty has not crossed my desired level of 5500 I had discharged my duty because now I think even if conspiracy has to work market can’t dip to certain levels. This is more so in the light of the fact that FII had sold naked Nifty this time to cover their cash stocks and they will to have cut their Nifty short in next 2 days. Therefore for even global markets fail to respond the possibility of huge fall is now ruled out. I must thank my team of S C to maintain their constant stand of hold positions irrespective of huge volatility in FEB. Otherwise for them it was so simple like all others to close the calls on paper. We have no approach of who cares….? All the stocks appearing in the S C sections are going to see the light of the day. Those who have lost and are out I can’t help it and those who are still holding positions may be benefited. It is worth taking risk ahead of Budget for new comers as there is no reward without risk in equity markets. Before I could spell out the course of my reading I had followed one principle… “whereof one cannot speak, thereof one must be silent”

Rail budget updates... Railways to make steel coaches from now onwards this should benefit steel producing companies. Railways to implement IT technologies, and smart cards, online booking facilities on mobiles, etc. This should provide oppotunities to software and IT companies for providing the same facilities. Railways to also implement professionals fro cleaning and other services this should benefit service sectors providing these types of facilities. Railways to improve port connections, coal-carrying network. Indian railways expects to load 790mn tons of Freight FY08. Cash Surplus with railways in 07-08 at Rs250bn