Time right to build well-balanced portfolio: Puneet Nanda (ICICI Prudential Life Insurance CIO)

Economic Times - Time right to build well-balanced portfolio: Puneet Nanda
24 Feb 2009, 1329 hrs IST, Shailesh Menon, ET Bureau

http://economictimes.indiatimes.com/articleshow/4182153.cms?prtpage=1

MUMBAI: "Unlike a lot of people who believe there is further downside, I don't think the market will breach the (lower) levels it reached last

October. Thanks to good liquidity, I expect buying to start in some time. I feel the Sensex would range between 8000 and 11,000 in the coming months," said ICICI Prudential Life Insurance CIO Puneet Nanda.

According to Mr Nanda, the March quarter "could be similar or worse" than the third quarter. "But all that has been factored in by the market. Lower interest rates and fallen commodity prices will catch up the economy towards the second half of current year," he added.

Mr Nanda is of the opinion that more than fourth quarter results, it will be election and global markets that will have bearing on where the Indian market is headed.

"People are clearly expecting a fractured mandate this time round. If the newly-elected government is headed by either of the two national political parties, there shouldn't be anything for India Inc. to worry about. Only a highly-fragmented coalition can scare corporate India and markets," Mr Nanda opined.

According to Mr Nanda, investors should be buying equity shares at this point of time. "Now is the time to build a well-balanced portfolio," he added.

Among sectors, Mr Nanda likes banks and financial services institutions. "Every bank today is virtually below its book value. Contrary to popular perception, almost all Indian banks are well-capitalised; their NPA ratios are at pretty comfortable levels," he said.

Mr Nanda also had good things to say about two-wheeler auto companies and four wheeler manufacturers that make entry-level cars. "Two wheelers should benefit from upbeat rural consumption story. Companies with entry-level cars are likely to do well once demand gather steam. Lower financing cost and reduced input costs coupled with fallen fuel charges will help growth in actual demand for cars and two-wheelers," added Mr Nanda.

With respect to infrastructure companies, Mr Nanda advises investors to pick companies that get government orders. "Infrastructure companies that are largely dependent on corporate capex are in trouble," warns Mr Nanda.

According to Mr Nanda, real estate, fundamentally, has a very positive outlook over the long term, say 10 to 20 years. "Clearly there is demand for real estate; the problem is too much expectation-build-up around the sector. We've not invested in real estate companies for the simple reason that they are not very transparent; we did not like their valuations as well," Mr Nanda added.

According to Mr Nanda, insurance sector has been net buyer in the equities market for quite some time now. "Insurance companies have invested (in to stocks) close to a billion dollar in January. The trend of investing into equities will continue, thanks to healthy inflows through renewal premium," he added.

Speaking of investment strategies adopted by insurance companies, Mr Nanda said: "We do not essentially go for flavours of the day. We are not investing for short-term quick returns; we're aiming at long-term out performance. We're not passive investors, but we do not punt in market either. On the fixed income side, we are risk-averse about credit risk in investments. We only invest in highly-rated securities or Government papers. This may be compromising of returns, but we're fine doing that."

AIG in talks with U.S. government, sees $60 billion loss: source

NEW YORK (Reuters) - American International Group Inc, rescued twice last year by the U.S. government, is asking for more aid and bracing for a fourth-quarter loss of roughly $60 billion, a source familiar with the matter said. It would be the biggest loss in a quarter in corporate history.

The $60 billion would exceed Time Warner's $54 billion single-quarter loss in 2002 and dwarf the $24.5 billion loss AIG posted in the third quarter, when the government increased its rescue package for the insurer to about $150 billion.

By contrast, two analysts polled by Reuters Estimates have forecast on average a net loss of $5.46 billion.

The latest round of talks with the government include the possibility of additional funds for the insurer and trading debt for equity, another source said on Monday.

The situation is fluid and other options are being discussed, this second source said, adding that it was unclear where the talks would lead.

AIG may look to convert preferred shares held by the government into common stock, Bloomberg reported, citing an unnamed source.

The discussions are going on as U.S. financial authorities try to put out other fires, as well. Citigroup Inc, whose stock has been pounded by fears that the government may seize the bank and wipe out shareholders, is also in talks to give the government a larger stake, a person familiar with the matter told Reuters.

CNBC, which first reported AIG's discussions, said the losses to be announced next Monday were due to writedowns on commercial real estate and other assets. It said the insurer's board will meet next Sunday to work out an agreement with the government.

In case they do not reach a deal, AIG's lawyers at Weil, Gotshal & Manges LLP were preparing for the possibility of bankruptcy, CNBC said.

But the first source told Reuters that while AIG has retained Weil Gotshal, the insurer has no plans to file for bankruptcy.

"Is it likely that $60 billion more of capital has been destroyed? Or is it likely that they are just accounting for that which already happened?" said Thomas Russo, a partner at Gardner, Russo & Gardner, which manages more than $2 billion. "I suspect it's more of the latter than the former."

AIG said in a statement it had not yet reported results and would provide an update when it does so in the near future.

"We continue to work with the U.S. government to evaluate potential new alternatives for addressing AIG's financial challenges," AIG said.

U.S. Treasury officials declined to comment. Weil could not be reached immediately for comment.

AIG shares closed down 1 cent at 53 cents on the New York Stock Exchange on Monday.

AIG was first rescued in September after bad mortgage bets left it on the verge of collapse. The government stepped in with $85 billion in bailout financing, as thecredit crisis peaked with Lehman Brothers Holdings Inc filing for bankruptcy and Merrill Lynch agreeing to be bought by Bank of America Corp.

The rescue swelled in November as AIG posted its then-largest ever loss, hurt by writedowns on assets linked to subprime mortgages and capital losses. The Federal Reserve and U.S. Treasury stepped in with even more money to buy mortgage assets that had left AIG deeply in the red, and eased the terms of its loan repayment.

AIG has said it plans to sell all assets except its U.S. property and casualty business, foreign general insurance, and an ownership interest in some foreign life operations, as it looks to raise money to pay back the government.

Although AIG has announced some sales, it is trying to sell assets at a time when buyers are often dealing with their own problems and credit for acquisitions is scarce. The insurer's ongoing troubles are likely making things harder.

"The seller is in a rather perilous position," Russo said. "And buyers typically appreciate the amount of leverage they have."

(Additional reporting by Chris Kaufman and Euan rocha; Editing by Richard Chang, Jeffrey Benkoe, Tim Dobbyn, Gary Hill)

http://www.reuters.com/article/newsOne/idUSTRE51M6LT20090224?pageNumber=1&virtualBrandChannel=0

DLF slashes prices in Bangalore

DLF slashes prices in Bangalore

Pooja Sarkar / DNA

DLF, the country's largest real estate player according to market capitalisation, has re-launched its Bannerghatta Road project in Bangalore with a revised price tag of Rs 2,100 per sq ft from Rs 2,775 a sq ft earlier. The specifications have changed, too. The homes will now be 1,085-1,820 sq ft in size, down from the minimum size of 1,310 sq ft planned earlier. The project was first launched in October last year and DLF sold about 50% of the total 440 flats, said an analyst report. The developer will compensate its existing customers who paid a higher price by adjusting the outstanding amount against future payments. Earlier, the cost of a 1,310-sq ft flat was Rs 36.35 lakh. Now, this cost has come down to Rs 27.51 lakh, a fall of Rs 8.84 lakh. A DLF spokesperson said, "We have launched our Bangalore project in 4 categories, where the base price ranges between Rs 1,800 and Rs 2,100 per sq ft." This relaunch comes close on the heels of DLF's Hyderabad project launch at Rs 1,850 per sq ft last month, which received a fairly good response after a dismal December quarter. JP Morgan analysts Saurabh Kumar and Gunjan Prithyani, in a February 2 report, wrote, "Mid-income housing performance was most disappointing as the company booked just 77 units in the last two months against almost 400 units per month over the last two quarters. Expected rate correction and reducing unit prices may trigger a volume recovery at the earliest by second half of FY10." Analysts, however, said developers who have already launched their projects would find it hard to compete with DLF's prices. The real estate firm's price cuts are to the extent of 40%, much more than what others are offering. This could hit competitors' sales as they are offering a minimum size of 1,445 sq ft with a base price of Rs 2,500 per sq ft. DLF's rivals in Bangalore include the Prestige group and L&T Properties. Ravi Ramu, director at another competitor Puravankara Projects Ltd, said, "We are selling projects at about Rs 2,750 per sq ft. We cannot go lower than this." Analysts warn that sticking to their pricing could cost developers volumes and hurt their topline. Sobha Developers, another major real estate player in the IT city, is offering a paltry 8% discount on its ready projects.

25-Feb-09 mcx settlement prices

Today's Settlement Prices
Gold :: 15494 :: Silver 22762 :: Copper 167.90 :: Lead 50.85 :: Nickel 505.40 :: Zinc 56.25 :: Crude Oil 2111 :: Natural Gas 203.40 :: Crude Palm Oil :: 284.40 :: Heating Oil 62.05 :: Soya Oil 453.20 & INR 49.94
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History of gold prices

History of gold prices
1930:180 per 10 g
1940:360 per 10 g
1950:1000 per 10 g
1960:1110 per 10 g
1970:1840 per 10 g
1975:5,400 per 10 g
2000:3,000 per 10 g
2006:5,400 per 10 g
2009:15,700 per 10 g
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24-Feb-09 close - settlement prices

Today's Settlement Prices :: Gold 15484 :: Silver 22689 :: Copper 163.80 :: Lead 49.75 :: Nickel 486.60 :: Zinc 54.30 :: Crude Oil 1932 :: Natural Gas 205.40 :: Crude Oil Palm 283.90 :: Heating Oil 59.85 :: Soya 446.45 & INR 49.84
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Breaking News

US IMF Fund can sell 403 Ton Gold in coming 15 days

SBI is now worth a lot more than Citigroup

SBI is now worth a lot more than Citigroup

Vivek Kaul / DNA

"May you live in interesting times," goes an old Chinese curse. And these are interesting times for sure. State Bank of India (SBI), the largest bank in India, is now worth more than Citigroup, one of the world's largest banks. The market capitalisation (number of shares outstanding x the closing price of the share) of SBI on Friday closed at Rs66,285 crore. This is around 25 per cent more than the closing market capitalisation of Citigroup on the New York Stock Exchange on Friday. The market capitalisation of Citigroup was Rs52,931 crore. The Citigroup stock fell by 22.3 per cent on Friday to close at $1.95 per share (around Rs97). This was primarily on account of fears of the US government nationalising the bank, which would wipe out the shareholders. Hence the mad rush to get out of the share. A day earlier, the market capitalisation of Citigroup stood at Rs67,944 crore, around Rs700 crore more than that of SBI. Over the last four quarters, Citigroup has earned Rs230,485 crore as revenue, which almost eleven times more than the revenue earned by SBI. But when it comes to profits Citigroup over the last four quarters has suffered total losses of Rs83,474 crore. During the same time SBI has made profits of Rs8,262 crore. And that precisely explains why SBI is now worth more than Citigroup. The market capitalisation of Citigroup has fallen by around 90 per cent in the last one year. As the huge losses clearly tell us, the current financial crisis has hit Citigroup hard and experts now say it is a zombie bank, which is surviving primarily because of the billions of dollars of support that it has been receiving from the government. "Citicorp is now a "zombie bank" — its future is uncertain. I am not confident that they will be able restructure themselves and change their business model in a very challenging economic environment," saysSatyajit Das, an internationally renowned derivatives expert and the author of Traders, Guns & Money: Knowns and Unknowns in the Dazzling World of Derivatives. Citi has received $45 billion (Rs2,25,000 crore) out of the troubled asset relief programme (better known as the $700billion financial bailout launched by George Bush and Henry Paulson). Other than this it has also received guarantees worth $301 billion (Rs15,05,000 crore) on its assets from the government.   Martin Hutchinson, an economic commentator, recently put out a list on the status of the 12 largest banks in the US. He categorised Citi as a zombie bank. "Citi has been a serial flirter with bankruptcy over the past 30 years and remains a basket case," he wrote.

Govt cuts service tax

GOV CUT SERVICE TAX ..NOW 10% V 12.36%
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Govt cuts excise duty by 2percent

Finance ministry says india govt plans for 3rd stimulus package and govt to cut 2% excise duty more on autos& other sectors including cement
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Bharat Heavy, Infosys, Satyam, Sobha: India Equity Preview

Feb. 24 (Bloomberg) -- The following companies may have unusual price changes in India trading. Stock symbols are in parentheses and share prices are as of close on Feb. 20. Markets were shut yesterday for a holiday.

The Bombay Stock Exchange's Sensitive Index, or Sensex, fell 2.2 percent to 8,843.21. The S&P CNX Nifty Index on the National Stock Exchange declined 1.9 percent to 2,736.45. The BSE 200 Index retreated 2.1 percent to 1,044.06. SGX CNX Nifty futures for February delivery dropped 1.2 percent to 2,692 at 10:46 a.m. in Singapore today.

Overseas investors sold a net 3.2 billion rupees ($64 million) of Indian stocks on Feb. 19, according to the nation's market regulator.

Bharat Heavy Electricals Ltd. (BHEL IN): India's biggest power equipment maker won a 31.5 billion rupee order to supply generating units to a project in central India. The shares fell 1.4 percent to 1,364.10 rupees.

Infosys Technologies Ltd. (INFO IN): The nation's second- largest software developer is evaluating BCC and Ciber Novasoft, European providers of services based on SAP AG's software, as acquisition targets, the Economic Times reported yesterday, citing two unidentified persons familiar with the discussions. The shares retreated 2.6 percent to 1,177.15 rupees.

Satyam Computer Services Ltd. (SCS IN): The Indian software provider at the center of the nation's biggest corporate fraud inquiry will seek approval from regulators next week for its plan to sell a stake to a strategic investor. The company said it won orders worth $250 million in the last seven weeks. Satyam fell 1.4 percent to 45.55.

Sobha Developers Ltd. (SOBHA IN): The Indian real estate developer had its stock rating downgraded to "underweight" from "equal-weight" and had its price target cut 79 percent at Morgan Stanley, citing weak demand. Sobha slid 0.9 percent to 80.60 rupees.

Tata Power Ltd. (TPWR IN): India's biggest electricity generator outside state control may not bid for projects that can generate 4,000 megawatts of electricity. Raising funds in the current situation is difficult, said Banmali Agrawala, executive director. Tata Power fell 1.9 percent to 737.9 rupees.

UltraTech Cement Ltd. (UTCEM IN): India's second-biggest producer of the material had its rating raised to "equal- weight" from "underweight" at Morgan Stanley. The shares declined 0.5 percent to 416.95.

Indian Railways Scraps Joint Venture Plans for Factories

Feb. 23 (Bloomberg) -- Indian Railways, the state-run network that carries 15 million people daily, abandoned joint venture plans for factories to make locomotives and railcars after failing to identify partners.

The monopoly will now build the factories on its own, Home MinisterPalaniappan Chidambaram told reporters after a cabinet meeting in New Delhi today.

General Electric Co.'s India unit had planned to build a diesel engine factory in collaboration with Indian Railways and state-run Bharat Heavy Electricals Ltd. if it won the contract for the program.

Indian Railways is seeking to add trains to carry more freight and passengers in the world's second-most populous nation as more of its 1.2 billion people traverse the seventh- biggest country by area.

The cabinet approved the setting up of a diesel locomotive factory at Marhowra, Bihar, as a fully owned unit of the Indian Railways at a cost of 20.5 billion rupees ($413 million), the minister said. The factory will make 150 locomotives a year.

Indian Railways will also build a wholly owned railcar plant at Rae Bareilly in Uttar Pradesh with an investment of 16.85 billion rupees, Chidambaram said. The factory will build 1,000 railcars a year.

The cabinet also approved the proposal by Indian Railways to set up a factory as a "departmental production unit" to build electric locomotives at Madhepura in Bihar state, following a failed bid to attract joint venture partners.

"In response to the Ministry of Railways Request for Proposals, only one, non-compliant bid was received," the government said in a release today. "Bidders have represented that the joint venture model represents insurmountable challenges and risks."

The government didn't give any details about the bid.

Before the factories start production, Indian Railways proposes to import 50 electric and 50 diesel locomotives over the next three years, Chidambaram said.

 

http://www.bloomberg.com/apps/news?pid=20601091&sid=akM4nzL_fPqM&refer=india

Global economic data to watch for the day (Feb 24)

Global economic data to watch for the day (Feb 24)

The Nifty & The Sensex Are Resting Upon Bank stocks-the collapse is imminent

Martin Weiss: The Chaos Theory At Work

It's the US and European Banks for now, but ultimately the global financial system will collapse. Then investors would question DV Rao's stupidity in lowering interest rates and encouraging unbridled lending to Real Estate, Durable and Automobile segments. But by then the over-owned SBI, PNB, BOB, BOI, HDFC, HDFC Bank, Kotak and a host of small NBFC type banks would have collapsed.

 

The nation's largest banks are so close to collapse and the world economy is coming unglued so rapidly, a major Wall Street meltdown is now imminent.

Specifically, it's now increasingly likely that virtually all of our forecasts of recent months could come to pass in a very short period of time, including ...

 

• Stock market crash: A swift plunge in stocks to about 5000 on the Dow, 500 on the S&P 500 and 900 on the Nasdaq ... or lower.

 

• Corporate bankruptcies: A chain reaction of Chapter 11 filings or federal takeovers, including not only General Motors and Chrysler, but also Ann Taylor, Best Buy, Jet Blue, Macy's, Saks Fifth Avenue, Sears, Toys "R" Us, U.S. Airways and even giants like Ford or General Electric.
  
  
• Megabank failures: Bankruptcies or nationalization not only of Citigroup and Bank of America, but also JPMorgan Chase and HSBC.
  
• Nationwide epidemic of small and medium-sized bank failures: Outright FDIC takeovers, with little prospect of nationalization.

 

• Insurance failures: State takeovers of companies like Ambac Assurance, Bankers Life and Casualty, Conseco, FGIC, Medical Liability Mutual, Mortgage Guaranty Insurance, Nuclear Electric Insurance, PMI Mortgage, Standard Life of Indiana and many others. (Our free guide also contains a more extensive list of insurers.)
  
  
• Cities and states: An epidemic of defaults by thousands of cities, states and other issuers of tax-exempt municipal bonds.
  
  
• Stock market shutdowns: Trading halts on major, big-cap stocks ... plus on-again, off-again exchange shutdowns, making it increasingly difficult for investors to liquidate their holdings at any price.
  
  
• Credit market deep freeze: A virtual shutdown in all debt markets except U.S. Treasuries. An avalanche of selling — and virtually no buyers — for corporate bonds, commercial paper, asset-backed securities, municipal bonds and all forms of bank loans.
  
  
• Government bond collapse: A steep decline in the price of medium-and long-term government securities, as the U.S. Treasury bids aggressively for scarce funds to finance a ballooning budget deficit.
• 
  

Shocking? Perhaps. Avoidable? No.

 

Nor am I alone in anticipating this rapid unraveling of the economy and financial markets. This past Friday, at a Columbia University dinner reported by Reuters ...

 

• George Soros said the financial system has effectively disintegrated, with the turbulence more severe than during the Great Depression and with the decline comparable to the fall of the Soviet Union, while ...
  
  
• Paul Volcker said he could not remember any time, even in the Great Depression, when things went down so fast and quite so uniformly around the world.
• 
  

Both recognize that we're in a new era of chaos. What's the landmark event that separates us from the past era of relative stability?

 

The collapse of Lehman was the final straw that punctured the already imploding bubble. And it was the first major domino that set off the chain reaction of events now careening out of control: The collapse of consumer credit markets ... surging unemployment ... and now, a new set of even larger financial failures looming.

 

The Raging Debate Right Now Is How To Prevent A Banking Collapse: To Nationalize Or Not To  Nationalize. But It's A Moot Point.

 

The fact is that the banking collapse has already occurred! Soon in many parts of Asia investors would be asking the same questions-why are SBI, BOB, BOI, PNB, Kotak, HDFC and HDFC Bank still standing, when the World around them has collapsed.

 

Investors will be fed the drivel that all these banks are adequately capitalised. But what the new RBI Governor is doing by artificially lowering interest rates is to feed the unproductive sectors of the economy..durables, housing and automobiles. Loans given out at the lowest possible rates in hard times suggest only one thing-the Indian Banks too would collapse, maybe over the next 6 to 12 months.

Tatas may drop another Bengal plan - Jai ho (Mamta) :)

Less than five months after Tata Motors [Get Quote] relocated its Nano project from West Bengal to Gujarat over land issues, another Tata group company, Tata Metaliks [Get Quote], is reviewing its expansion project in the state on similar grounds.

The West Bengal Industrial Development Corporation (WBIDC), which has been acquiring land in Kharagpur for Tata Metaliks' diversification project, has already initiated dialogue with the company. But land prices remain a contentious issue.

Subrata Gupta, managing director, WBIDC, said that land prices in the last three years have doubled. Prices, which were around Rs 3.5-4 lakh an acre three years ago when WBIDC started acquiring land, have now doubled to Rs 8 lakh.

Gupta said the company has been asked to pay a higher price. "Tata Metaliks has sought 15 days to respond," he said, adding that WBIDC officials had recently met a Tata Metaliks team after the company expressed its intent of withdrawing the project from the state.

Harsh K Jha, managing director, Tata Metaliks, confirmed that the company has sought time, but did not elaborate on the details. However, the company's board has decided not to wait for the land indefinitely. The company has already waited for four long years to get the required land, Jha said.

West Bengal Chief Minister Buddhadeb Bhattacharjee had promised Tata Metaliks on February 26, 2005, that the state would allocate land on a "priority basis". The company had applied for land on March 15, 2005.

Tata Metaliks, a pig iron producer, had initially sought 500 acres for its diversification into billets, but the land requirement was later scaled down to around 300 acres as contiguous land was not available.

Gupta said more than 150 acres has been acquired by WBIDC and the company has made an initial payment of Rs 9 crore for the land.

He also added that WBIDC would go ahead with land acquisition irrespective of the Tata Metaliks' decision. "Even if they do not set up the project, we will develop an industrial park," said Gupta.

WBIDC has decided not to acquire land for individual companies. Instead, it will set up industrial parks where companies will become anchor investors in a bid to maximise employment.

Tata Metaliks has also held discussions with the Karnataka government for an iron ore mining lease and for setting up of a plant. A high-level clearance committee of the state has already given approval for a steel plant in Haveri district.

At present, Tata Metaliks has pig iron facilities at Kharagpur in West Bengal and Redi in Maharashtra. The company has an annual capacity of 650,000 tonnes. Even though the diversification plan at Kharagpur is under the cloud, the company has lined up expansion of the existing plant. A sinter plant is being set up which will be commissioned in 2010.

 

http://www.rediff.com/money/2009/feb/24tatas-may-drop-another-bengal-plan.htm

The Next 18 Months: Recession, False Recovery, Depression

The Next 18 Months: Recession, False Recovery, Depression

Sam Vaknin, Ph.D. - 2/22/2009

The Obama stimulus package, worth some 800 billion USD, the 1.9 trillion USD in TARP funds and the endless Fed injections and auctions are bound to revive the moribund American economy by the third and fourth quarter of 2009. The Dow-Jones is likely to touch 10900, consumption will recover, as will housing starts and, in some markets, housing prices.

But this "recovery" will prove to be a false dawn. It will last 2 quarters at most and will be followed by a recession so deep and dangerous that it would truly qualify as a Depression. The current recession is merely a prelude to the depression of 2010-5.

Here are the reasons:

(i) The stimulus should have been more sizable, taking into account the dimensions of the crisis.

The fate of modern economies is determined by four types of demand: the demand for consumer goods; the demand for investment goods; the demand for money; and the demand for assets, which represent the expected utility of money (deferred money).

Periods of economic boom are characterized by a heightened demand for goods, both consumer and investment; a rising demand for assets; and low demand for actual money (low savings, low capitalization, high leverage).

Investment booms foster excesses (for instance: excess capacity) that, invariably lead to investment busts. But, economy-wide recessions are not triggered exclusively and merely by investment busts. They are the outcomes of a shift in sentiment: a rising demand for money at the expense of the demand for goods and assets.

In other words, a recession is brought about when people start to rid themselves of assets (and, in the process, deleverage); when they consume and lend less and save more; and when they invest less and hire fewer workers. A newfound predilection for cash and cash-equivalents is a surefire sign of impending and imminent economic collapse.

This etiology indicates the cure: reflation. Printing money and increasing the money supply are bound to have inflationary effects. Inflation ought to reduce the public's appetite for a depreciating currency and push individuals, firms, and banks to invest in goods and assets and reboot the economy. Government funds can also be used directly to consume and invest, although the impact of such interventions is far from certain.

(ii) The US government should have nationalized the big banks, let other financial institutions that are not too big to fail do so, and force mergers and acquisitions on the rest. Half-hearted measures intended to provide balance-sheet relief are unlikely to restore trust in financial intermediaries. In the absence of such trust, banks will not resume their traditional roles of capital allocation and interbank lending. As it is, we are likely to see a run on some of the banks, including at least one major (probably Wells Fargo).

(iii) Europe's real economy as well as its financial sector are a mess. France, in sliding officially into a recession, has joined Spain, Ireland, and, now, the United Kingdom and Germany. Battered by a strong euro, expensive energy, and mighty competition from China, the US, and India, European exports have stagnated. As opposed to the USA (where exports constitute 18% of GDP), Europe is dependent on foreign carbon fuels and foreign markets for its goods and services. Exports constitute more than 40% of Eurozone GDP.

Moreover, Europe's commercial banks are in horrible shape - far worse than America's. This year alone, European banks must pay 1.41 trillion US dollars in principal and interest, mainly to bondholders. They don't have the money and they cannot borrow it from other banks because interbank lending has all but dried up. Many of them are already technically insolvent. They are also over-exposed to emerging markets in Eastern Europe, Latin America, Africa, and Asia.

Car repossessions are up 25% in Romania, as the members of a newly-minted class of consumers are unable to meet their obligations. Austrian, Greek, Swedish, and German banks are exposed to default risks throughout Central and Eastern Europe. Consumers and businesses in Serbia, Ukraine, Hungary, and other teetering economies owe Austrian financial institutions $290 billion - almost the entire GDP of this country!

As local currencies depreciate, debts, denominated in foreign exchange, grow more expensive to service. As the real economy contracts, in the first phase of what appears to be a prolonged recession, bad loans mushroom and reserves are exhausted. This requires cash-strapped governments to recapitalize major banks. Faced with current account and budget deficits, some of these sovereigns are scrambling for outside infusions from the likes of the IMF.

Europe's recession will be profound and protracted. Asia is likely to follow suit: Singapore, Japan, South Korea, and Taiwan are already technically in recession and China's growth rate is abating. A contraction of GDP in both India and China is no longer inconceivable. It seems that yet again, the USA will be faced with the daunting task of dragging the rest of the world back to growth and profitability.

(iv) To finance enormous bailout packages for the financial sector (and potentially the auto and mining industries) as well as fiscal stimulus plans, governments will have to issue trillions of US dollars in new bonds. Consequently, the prices of bonds are bound to come under pressure from the supply side.

But the demand side is likely to drive the next global financial crisis: the crash of the bond markets.

As the Fed takes US dollar interest rates below 1% (and with similar moves by the ECB, the Bank of England, and other central banks), buyers are likely to lose interest in government bonds and move to other high-quality, safe haven assets. Risk-aversion, mitigated by the evident thawing of the credit markets will cause investors to switch their portfolios from cash and cash-equivalents to more hazardous assets.

Moreover, as countries that hold trillions in government bonds (mainly US treasuries) begin to feel the pinch of the global crisis, they will be forced to liquidate their bondholdings in order to finance their needs.

In other words, bond prices are poised to crash precipitously. In the last 50 years, bond prices have collapsed by more than 35% at least on three occasions. This time around, though, such a turn of events will be nothing short of cataclysmic: more than ever, governments are relying on functional primary and secondary bond markets for their financing needs. There is no other way to raise the massive amounts of capital needed to salvage the global economy.

http://www.globalpolitician.com/25449-depression-recession-stimulus-europe-recovery

Bangalore airport to charge a development fee from all passengers

If you are traveling from Bangalore, please note that the Bengaluru International Airport is now charging a User Development Fee of Rs 260. This fee will be charged effective January 16, 2009 and be collected directly by the airport.

Who will be affected?
All passengers travelling out of Bangalore from the Bengaluru International Airport will have to pay Rs 260. However, infants under 2 years are exempted.

Where to pay the UDF?
You can pay the fee at the specially built counters just outside the terminal. You will then have to show the receipt before entering the terminal.

How can I pay?
You can pay by cash, credit cards or debit (only Visa, MasterCard and American Express) at the UDF counters outside the terminal. If you are paying by cash, we would advise you to have the exact change ready.

Will it take time?
While the airport has made provisions to provide enough counters, it may take up to 10 minutes during peak hours - from 6am to 10am and 5:30pm to 8:30pm. While at other times, it may take no more than 3 to 4 minutes.

But why is this extra amount being charged?
The UDF of Rs 260 has been approved by the Ministry of Civil Aviation, Government of India. This amount will be used for the development and maintenance of this state of the art airport and to provide other services and amenities.

For any other information, you can contact the Bengaluru International Airport at 080 - 66782251 or 666782255 or visit their website: www.bengaluruairport.com.

Movies on Stock Market

Following are some I found, along with links to description pages on
the Internet Movie Database. Obviously, some have more to do with the
stock market than others do, but all of them have at least one central
figure who is involved in the market.

Wall Street (1987)

The Family Man
(disillusionment of an investment broker)
http://www.imdb.com/title/tt0218967/

American Psycho
(homicidal stock broker)
http://www.imdb.com/title/tt0144084/

Other People's Money
(ins and outs of hostile takeovers and such; the play was better)
http://www.imdb.com/title/tt0102609/

The Bonfire of the Vanities
(main character is financial wizard)
http://www.imdb.com/title/tt0099165/

The Cheat
(charity money used to buy Wall Street investments)
http://www.imdb.com/title/tt0005078/

The Day the Bubble Burst
(historical TV drama about that day)
http://www.imdb.com/title/tt0082238/

Stocks and Blondes
http://www.imdb.com/title/tt0019423/

Changing Lanes
(one of my favorite movies; story involves questions about business
ethics)
http://www.imdb.com/title/tt0264472/

The Wheeler Dealers
http://www.imdb.com/title/tt0057681/

Money-Go-Round
http://www.imdb.com/title/tt0295449/

The Crash
(yes, that crash)
http://www.imdb.com/title/tt0022784/

The Boss' Wife
(stock broker has affair with title character)
http://www.imdb.com/title/tt0090767/

Net Worth
(trying to get rich quick)
http://www.imdb.com/title/tt0163764/

Buy & Cell
(that's jail cell for stock fraud)
http://www.imdb.com/title/tt0096997/

Wanda Whips Wall Street
(just what it sounds like, rated X)
http://www.imdb.com/title/tt0083314/

Don't Tell the Wife
(stock fraud)
http://www.imdb.com/title/tt0028799/

Wolves of Wall Street
http://www.imdb.com/title/tt0339918/

Boiler Room (2000)

http://www.imdb.com/title/tt0181984/

 

http://rapidshare.com/files/133755250/.B.R..part1.rar

http://rapidshare.com/files/133771512/.B.R..part2.rar

http://rapidshare.com/files/133790672/.B.R..part3.rar

http://rapidshare.com/files/133911137/.B.R..part4.rar

 

 

Rogue Trader (1999) - Based on Barrings Bank Fiasco by over trading by one of its Employee

http://www.imdb.com/title/tt0131566/

This 13-year old documentary is very relevant to the current crisis..

The Money Masters - How International Bankers Gained Control of America

http://video.google.com/videoplay?docid=-515319560256183936

http://www.themoneymasters.com/reviews.htm

Zeitgeist, The Movie - Remastered / Final Edition 

http://www.zeitgeistmovie.com/statement.htm

http://video.google.com/videoplay?docid=-594683847743189197&ei=QIyiSf36BI-2wgPT7LjICg&q=zeitgeist+

Zeitgeist: Addendum 

http://video.google.com/videoplay?docid=7065205277695921912&ei=1YuiSb73Bo-4wgPfg4G2Bw&q=zeitgeist+addendum

BSNL slashes mobile STD rate to 50 paise/min

BSNL slashes mobile STD rate to 50 paise/min



Chennai: Ahead of the Lok Sabha elections, BSNL is ringing in good news for lakhs of phone users. Its India Golden 50 scheme will cut mobile STD or long-distance tariffs to 50 paise a minute. The scheme will be launched for pre-paid mobile services on March 1.
   Charges for the scheme will be Rs 375 plus applicable taxes with free talk value of Rs 50. In addition, customers can make local and STD calls to select BSNL numbers at 20 paise and 30 paise per minute respectively. Each SMS will be charged 50 paise.
   BSNL has also tweaked its landline plans. The hitherto 60-second pulse for a call has been doubled to 120 seconds. This effectively allows the caller to speak for twice the time at the same tariff.
   Union telecom minister A Raja said DoT would introduce mobile number portability (MNP) in major cities by August. This service will allow subscribers to migrate from one operator to another without changing their numbers. TNN

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Equity funds sitting on Rs 20,000-cr cash chest

Equity mutual funds are choosing to hold sizeable cash positions in view of current market uncertainties. 
Data from Indsec Securities, based on January-end portfolios, show that average cash positions across equity funds were as high as 20 per cent, amounting to over Rs 20,000 crore across fund houses. 
Mutual fund managers say that unprecedented volatility has prompted them to wait on the sidelines for buying opportunities. The proportion of cash to total equity assets has gone up from 10.1 to 20.5 per cent between January 2008 and now. Though the actual cash holdings have only increased from Rs 18,000 crore to Rs 20,000 crore, the contraction in equity fund assets (due to NAV declines and some outflows) has resulted in a larger proportion of cash. Cash includes cash and cash equivalents such as money market instruments and short-term debt instruments.
Among the larger asset management companies (AMCs) Reliance Mutual Fund and UTI Mutual Fund hold cash positions amounting to about 30 per cent of the equity assets while those such as SBI and HSBC Mutual hold about 20-22 per cent. 
These cash holdings are not evenly spread across schemes. 
Thematic funds, which typically focus on one sector (say, infrastructure) or theme (mid/small-cap stocks), account for a big portion of the cash holdings, while diversified equity funds have lower cash on their portfolios. 
Reliance Diversified Power, Reliance Natural Resources, UTI Infrastructure and DSP BlackRock TIGER fund are some thematic funds which are high on cash and cash equivalents. 
In some cases, cash positions (for funds such as Reliance or Birla Sun Life) are held against their exposure to derivatives in select schemes.

Are equity fund managers holding high levels of cash anticipating pullouts from the funds? Fund houses deny that that is the case. 
Equity funds saw relatively small net outflows (redemptions) of Rs 1,378 crore in the choppy October-December 2008 quarter. In January, there was Rs 338 crore of new outflows. 
Fund managers who are high on cash appear to be taking the view that the worst isn't over yet for the stock markets. Mutual funds have made net sales in stocks amounting to Rs 2,521 crore so far in 2009. 
Mr Sanjay Dongre, Senior Equity Fund Manager, UTI Mutual Fund, says that redemption pressures faced by the equity funds were at "negligible" levels, as the investor base was mainly retail. 
"We are holding higher cash positions on our funds given the uncertainty prevailing in the marketplace, where the risk appetite of investors is extremely low. Our diversified funds hold a 15-18 per cent allocation to cash and the thematic funds hold larger cash positions."

Asked if the fund house is looking for a specific market level (say, a Sensex of 8,000 or 8,500) to deploy this cash, Mr Dongre replied that it is uncertainty rather than the prevailing market valuation, that is prompting the cautious stance. "If we see risk capital returning to the markets and the uncertainty receding, we will go ahead and deploy that cash, even if market levels are higher than they are currently," he said. 
At the other end of the spectrum, fund houses such as HDFC Mutual Fund and Franklin Templeton Mutual hold only about 7 per cent of their equity fund portfolios in cash. 
These AMCs have consistently followed a practice of remaining more or less fully invested, irrespective of market swings.

Source: http://www.thehindubusinessline.com/2009/02/23/stories/2009022351410100.htm <http://www.thehindubusinessline.com/2009/02/23/stories/2009022351410100.htm>

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