UPDATE: India April-June GDP +6.1% On Yr, Monsoon A Worry


By Abhrajit Gangopadhyay, Mukesh Jagota & Neelabh Chaturvedi
Of DOW JONES NEWSWIRES


NEW DELHI (Dow Jones)--India's economy expanded 6.1% in April-June from the year-earlier quarter, gathering momentum on public spending and interest rate cuts but a spreading drought could weigh on the nascent rebound in months ahead.


The increase in economic output was driven by trade, hotel and transportation services, as well as mining and manufacturing. It followed a rise of 5.8% in the January-March period, the Central Statistical Organization said Monday.


The data were in line with expectations. A median forecast in a Dow Jones Newswires poll had pointed to a 6.1% expansion in the fiscal first quarter. Government bonds and local stocks were little changed on the news.


The data show Asia's third largest economy is emerging from the global slump in better shape than many of its regional peers.


India has maintained relatively fast growth this year despite steep downturns elsewhere, as exports play a relatively small role in the rural-demand driven economy. The government has also ramped up spending - increasing its debt burden - to spur activity.


Other Asian economies bounced strongly in April-June from deep contractions early in the year, but many were still below year-earlier levels of output. Malaysia's economy, for example, shrank 3.9% on year, narrowing a 6.2% drop in the first three months of 2009 on rising exports to China, whose reviving economy has been a locomotive for the region's recovery.


Indian government officials said economic growth, which sagged following the recent global financial crisis, would pick up in coming quarters, buoyed by increased output in manufacturing and services sectors.


Finance Secretary Ashok Chawla predicted economic growth will exceed 6.5% this fiscal year although he said it is difficult now to assess the impact of delayed rainfall on India's agriculture-dependent economy.


The Reserve Bank of India expects the economy to expand 6% with an "upward bias" while the federal government has forecast growth between 6.25%-7.75%.


"There are sure signs that the movement to the higher trajectory is well on course," Chawla told reporters after the GDP data release.


But analysts say the poor start to June-September monsoon season has clouded India's near-term economic outlook. Over a third of India's 625 administered districts have declared drought, and analysts warn weak rains will likely crimp output of summer sown crops and squeeze rural incomes, depressing demand for everything from motorcycles to cellphones.


"India will find it difficult to sustain on-year GDP growth of over 6% in the remaining three quarters of the current fiscal year in view of the monsoon setback," said Rupa Rege Nitsure, chief economist at Bank of Baroda.


Morgan Stanley economist Chetan Ahya estimates farm sector output may contract between 2% and 4% this fiscal year, which will result the full-year economic growth to range between 5.8% and 5.2%.


The government is trying to support the agriculture sector by increasing the minimum selling price of rice and sugar. It has also offered to subsidize diesel for farmers to bring down irrigation costs, and provided additional electricity to key farming provinces such as Punjab and Haryana.


Rates Likely Stable For Now


Analysts said the GDP numbers would unlikely prompt any shift in the central bank's neutral policy stance, with signs of improvement in the economy offset by the need to keep rates low to help the bond market absorb the glut of public debt as well as concerns over damage from the monsoon.


Government borrowing of INR4.51 trillion for this fiscal year - up from INR3.06 trillion last fiscal year - has put upward pressure on market interest rates, lifting borrowing costs for companies and consumers despite a series of rate cuts by the Reserve Bank of India since October.


"RBI's policy response will focus more on managing the government's borrowing program. I expect an extended pause on interest rates," Nitsure said.


Growth last financial year ended March 31 slowed to 6.7% from 9.0% the previous year, missing a government forecast for a 7.1% expansion.

Weekly Technical View by Tanmay G Purohit:

Nifty (4732) rose 4.49% this week after taking repetitive support around 4350 in previous week. Nifty has hit new 2009 high at 4743 but Sensex is yet to cross its yearly high 16002 which may happen next week. IIP data was positive at 7.8% and 1st Quarter GDP will be announced on 31 August which will be watched keenly. Global markets are giving support to our markets too and for time being it seems that China worries have been put aside by market players but one should be cautious about that aspect as it may come back to haunt global markets some time in future once again.Rainfall activity is 25% below normal for period 1 June to 26 August. IMD predicts better rainfall next month but expects the whole season activity lower by 20% compared to average which would make it the worst monsoon in 4 decades i.e. since 1972 and it has put our crops and power on risky grounds.

Nifty for next week looks to reach 4790 which is 61.8% retracement of whole fall from 6357 to 2252 and above that levels near 4900-5000 can be possible. More volumes and participation is necessary for indices to march ahead, in case Nifty continues sluggish movement, it will fall on its own weight. As we are trading in new yearly high territory, trading interest should rise and investors need to be cautious with penny stocks as those can easily catch you on wrong foot. Be in such stocks that you are perfectly comfortable to hold even in longer term.

Supp 4642/4573/4450 Res 4793/4872/4994

Stocks looking positive - UNIPHOS, IDBI BANK, CAIRN, TATA COMM, FSL, SUZLON, IGL

Last Week Recap Of Technical View:

Nifty (4528) fell just 52 points week on week as for most of the week it remained in a very tight range between 4350 and 4500 but closed with strong gains on Friday. The rainfall for the country as a whole during this year’s monsoon has been 26% below the Long Period Average, down from 29% deficit last week, which means rains have improved this week, though not out of the woods fully. Nifty has tested 4350-4400 area on all days of this week but never broke through which has started a pullback rally. This week will be having derivative expiry for August and if Nifty crosses 4600 on closing basis, even bearish H&S will be negated which will give way to good amount of short covering. Nifty in that case may even touch near 4900-5000 levels in days to come. Caution advised if now Nifty breaks 4400. 

Supp 4475/4395/4255 Res 4620/4668/4790

Stocks looking positive - ABB, CAIRN, HCC, IVRCL INFRA, SINTEX, TATA COMM

State Bank Of India (Rs 1740):-
The stock is showing weakness owing to a bearish Head & Shoulders pattern. SBIN gapped down on Tuesday and now witnessing selling instead of broader markets being positive. The stock if breaks down below 1680, the pattern will break down and we may see decline of around Rs 150-200 in price. The move will be negated in case SBIN settles above Rs 1820. The stock has a big gap open at Rs 1325-1445 and 200DEMA at Rs 1505 will be important levels in downside as support. Drought situation is not helping agriculture in India and any more debt-related sops to farmers can result in bad news for PSU banks.

Weekly Technical View by Tanmay G Purohit:

Nifty (4528) fell just 52 points week on week as for most of the week it remained in a very tight range between 4350 and 4500 but closed with strong gains on Friday. The rainfall for the country as a whole during this year’s monsoon has been 26% below the Long Period Average, down from 29% deficit last week, which means rains have improved this week, though not out of the woods fully. Nifty has tested 4350-4400 area on all days of this week but never broke through which has started a pullback rally. This week will be having derivative expiry for August and if Nifty crosses 4600 on closing basis, even bearish H&S will be negated which will give way to good amount of short covering. Nifty in that case may even touch near 4900-5000 levels in days to come. Caution advised if now Nifty breaks 4400. 

Supp 4475/4395/4255 Res 4620/4668/4790

Stocks looking positive - ABB, CAIRN, HCC, IVRCL INFRA, SINTEX, TATA COMM

Last Week Recap Of Technical View:

Nifty (4580) rose 2.2% this week. Nifty bounced back from 4359 which was trendline support in weekly graph and it didn't close below 4400. The pullback rally was propelled by changes in Direct Tax Code but the new code is open to public debate and still there is time in implementation. There can be some changes too in this time lag. Monsoon is still worrying market players with rainfall being 29% below normal in 1 June to 12 Aug 2009 period. The rain activity has been deficient or scanty in 27 sub-divisions out of total 36 which translates into 2/3rd of India having below normal rains. India's swine flu toll rose to 23 on Friday and 107 new cases were detected positive for the viral infection, taking the total number of those affected by influenza A (H1N1) virus to 1,390. IIP data has been very encouraging for India on the back of mining growth and Reliance KG basin gas and globally speaking Germany, France and Hongkong have come out of recession after they posted positive GDP figures this week. Long-term outlook is still very bullish for India but short-term can be a bit difficult to trade owing to stretched valuations after recent breathtaking rally. 

Nifty once crosses 4650 and closes comfortably above that, we can see  4900-5000 levels in days to come. Failure to move past 4650 will make a case for a bearish Head & Shoulders pattern (shown in daily graph below) which will break down below 4400. Short-term players can consider 4370-4400 area as important support but below that caution is advised as Nifty may try to touch 4100 levels too.

Supp 4450/4365/4235 Res 4670/4789/4855

Stocks looking positive - FSL / TATACOMM / NDTV / SUNTV / GICHSG

CAIRN INDIA CMP Rs 242:-

About CAIRN -

http://www.cairnenergy.com/

http://www.cairnindia.com/

Cairn is an oil and gas exploration and production company based in Edinburgh. Cairn has been listed on the London Stock Exchange since 1988.  Its current focus is on India, where it is developing significant production in Rajasthan, and Greenland where it has established a material exploration position. 

Cairn holds a 65% interest in Cairn India – which is listed on the Bombay Stock Exchange and the National Stock Exchange of India. Cairn India has interests in 14 blocks in India and Sri Lanka. Cairn India holds a 70 percent stake in RJ-ON-90/1 block in western India and state-run explorer Oil & Natural Gas Corp holds the balance.

On the verge of starting oil production:-

CAIRN is on the verge of starting oil production in the western state of Rajasthan. The company has also received approval from the government to sell crude to MRPL, IOC and HPCL, Bill Gammell, non-executive chairman of Cairn India, said in a speech to shareholders during the company's annual general meeting. "The commercial terms and pricing negotiations for the initial offtake of the Rajasthan crude have been concluded with IOC and MRPL," and the company is in the advanced stage of concluding the crude oil sales agreements, Gammell said. The Mangala Processing Terminal is ready to start production with a capacity of 30,000 barrels a day of oil, which will be increased by a further 100,000 barrels per day in the first half of 2010, he said. Cairn India will transport oil in trucks to the Gujarat coast for shipping to Indian Oil and MRPL until a crude oil pipeline is completed by December 2009, he said. "The Rajasthan project is one of the biggest onshore oil and gas developments undertaken in India in recent years and the production from Rajasthan at the current envisaged rates has the potential to create significant value for all of our stakeholders," he said. Production from Rajasthan could eventually exceed 175,000 barrels a day, he said. However, extreme weather in Gujarat, and monsoon rains and heat in Rajasthan along with other factors could "pose schedule risks" to the company's target of reaching the second phase of oil production and constructing the pipeline,  Gammell said. Cairn India is also expected to soon start production from its Barmer field in Rajasthan.

Low Cost of production at around $5 per barrel:-

Cairn expects to hold costs at about $5 per barrel for crude oil produced from its Rajasthan fields, a top official said, helping it reap strong revenues this fiscal year. "We intend to keep our costs low and see production cost at about $3.5 per barrel. Transportation cost will be another $1.5 (per barrel)," Chief Executive Officer Rahul Dhir told reporters at the annual meeting of shareholders. The company, a unit of UK explorer Cairn Energy, has secured deals to sell crude to state-owned refiners Mangalore Refinery and Petrochemicals Ltd  and Indian Oil Corp  at a 10-15 percent discount to Brent LCOc1. 

Investing $4Bn in Rajasthan:-

Cairn India and ONGC will jointly invest $4 billion (Rs 20,000 crore) to scale up the production capacity of their oil fields at Barmer in Rajasthan by 25,000 barrels of oil per day (bopd) to two lakh bopd. They had earlier revised their production target from 1.50 lakh bopd to 1.75 lakh bopd. While addressing the shareholders of Cairn India in Mumbai, chairman Sir Bill Gammell said: “By 2011, Cairn and its joint venture partner will invest up to $4 billion on the development of Mangla, Bhagyam and Aishwarya fileds.” The investment will be shared between Cairn India and ONGC in the ratio of 70:30 in line with their equity holding in the oil fields

Technical Outlook:-

CAIRN (Rs 242) is trading in a narrow range between 252 and 230 but sustaining above all moving averages. CAIRN is in an uptrend and can target Rs 274-278 in current move. Short-term players can keep a stop loss below Rs 230. Long term investors can accumulate this stock at current levels and in dips for a target of Rs 340 in next 1-2 years.

Analysts Rajasthan Site Visit_Feb09
Analyst Meet - 3rd Feb09

Cairn India:On Verge Of Starting Rajasthan Crude Ops http://online.wsj.com/article/BT-CO-20090818-702166.html
Cairn India sees Rajasthan crude costs at $5/bbl http://www.reuters.com/article/rbssEnergyNews/idUSBOM43417820090818
Cairn, ONGC to invest $4 b in Rajasthan http://economictimes.indiatimes.com/News/News-By-Industry/Energy/Cairn-ONGC-to-invest-4-b-in-Rajasthan/articleshow/4908449.cms

3i INFOTECH CMP Rs 78.05:-
Buy Rs 76-77 Stop Loss Rs 71 Target Rs 85-86
The stock has broken triangle with huge volumes indicating inherent strength in the stock, the stock trades above all short term and long term moving averages. Rs.83 would be important resistance for the stock being triple top breaking above this stock can target Rs 94-95 which was double top. This stock has shown strength in a weak market and can give handsome returns.

Previous posting on 3i INFOTECH:- http://tanmaygopal.blogspot.com/2009/04/3i-infotech-httpwww.html

This article is about Warren Buffett, no one likes to miss any writings about him, hope you enjoy this also!
  
Warren Buffett's rock star status is evident from the fact that each year tens of thousands of fans from all over the world travel to Omaha, Nebraska, to listen to him speak at his company Berkshire Hathaway's shareholder meeting. For many at this event, which Buffett calls the "Woodstock for Capitalists," it is an annual ritual of paying homage to the man who made them money through Berkshire's stock and from his investing and business insights. Little wonder that Alice Schroeder's insightful biography titled, The Snowball: Warren Buffett and the Business of Life, has proved popular among readers. She seeks to explain how Buffett became one of the world's richest men and why he is admired for his business ethics and for uniquely pledging most of his money to philanthropy.

Buffett-Rockstar

Weekly Technical View by Tanmay G Purohit:

Nifty (4580) rose 2.2% this week. Nifty bounced back from 4359 which was trendline support in weekly graph and it didn't close below 4400. The pullback rally was propelled by changes in Direct Tax Code but the new code is open to public debate and still there is time in implementation. There can be some changes too in this time lag. Monsoon is still worrying market players with rainfall being 29% below normal in 1 June to 12 Aug 2009 period. The rain activity has been deficient or scanty in 27 sub-divisions out of total 36 which translates into 2/3rd of India having below normal rains. India's swine flu toll rose to 23 on Friday and 107 new cases were detected positive for the viral infection, taking the total number of those affected by influenza A (H1N1) virus to 1,390. IIP data has been very encouraging for India on the back of mining growth and Reliance KG basin gas and globally speaking Germany, France and Hongkong have come out of recession after they posted positive GDP figures this week. Long-term outlook is still very bullish for India but short-term can be a bit difficult to trade owing to stretched valuations after recent breathtaking rally. 

Nifty once crosses 4650 and closes comfortably above that, we can see  4900-5000 levels in days to come. Failure to move past 4650 will make a case for a bearish Head & Shoulders pattern (shown in daily graph below) which will break down below 4400. Short-term players can consider 4370-4400 area as important support but below that caution is advised as Nifty may try to touch 4100 levels too.

Supp 4450/4365/4235 Res 4670/4789/4855

Stocks looking positive - FSL / TATACOMM / NDTV / SUNTV / GICHSG

Monsoon May Start to Withdraw From Mid-September http://online.wsj.com/article/SB125016080848728733.html

Solicitor General’s opinion on the entire gas battle to NTPC, has lambasted RIL saying that if this is the way internationally-bided contracts are treated with disdain—this is a quote from the SG. This is something that the SG has actually severally come down with. Thus, RIL’s letter or intervention to the Power Ministry assumes significance in the backdrop of this particular statement from the SG. http://www.moneycontrol.com/mccode/news/article/news_article.php?autono=411273&special=mkt_topnews

L&T, EADS defence JVs hit hurdle, FIPB seen not comfortable with stake levels in manufacturing venture. FDI coming directly in the manufacturing JV is below 26%, the remaining equity is also being routed through the services JV, in which the foreign collaborator has 49% stake.

U.S. consumer sentiment index unexpectedly declined in early August to 63.2 from 66.0 in July, according to media reports on Friday of the Reuters/University of Michigan index. Americans in no mood to spend as Consumers are still facing several challenges, including large job losses, weak income growth, falling house prices, rising energy prices, and too much debt. 

Last Week Recap Of Technical View:

Nifty (4481) fell 3.34% this week after being distributed for first 3 sessions. Inadequate rains have been a worry since the start of monsoon this year and now market is feeling the pinch of it. The rainfall for the country as a whole during this year’s monsoon has so far (1 June to 5 August) been 25% below normal, says IMD. With Food prices rising because of low rains, inflation can be a factor to watch. Monsoon, Swine Flu and RIL-RNRL fight can be the major worry for stock markets going forward. 

Nifty may test support near 4420/4380 this week and the correction may be considered as a bull market correction until it doesn't close below 4400 for 2 days. Short-term trend may turn bearish in case Nifty sustains below 4400. After finding support near 4400, Nifty may try to bounce towards 4568/4600 which can resist the up move.

Stocks looking weak - CROMPTON, LT,BHEL, ABB, AXISBANK, ICICIBANK, BANKINDIA, HDIL, IVRCL – caution advised while going long in these stocks for short-term trade.
Shipping stocks look bad after Baltic Dry Index hit 2 and a half month low - MLL, GESHIP, SCI
• Stocks that can outperform - NPTC,POWERGRID,PTC,HPCL,BPCL,IOC,NEYVELI,BIOCON,ORCHID

TATACOMM Cmp Rs.489----Looks value buy---

The Telecom Commission will decide on August 26 on the seven-year-old spat between the Government and Tata Group over hiving off Videsh Sanchar Nigam Ltd’s (now called Tata Communications) surplus land into a separate company. The Commission, which is the apex decision making body in the Department of Telecom comprising representative from the Ministry of Finance, has three options to deal with 773 acres located in four cities. The options are to hive off the surplus land into a realty company, allow the Tatas to retain the land at a ‘fair consideration’, or auction the land to a third party.

http://www.thehindubusinessline.com/2009/08/13/stories/2009081351730400.htm


Technical View:-
TATA COMM has formed an island reversal and the stock can return 15-20% from current levels in weeks to come. Buy in cash as investment for target near Rs 580-600 in 6-8 months time.

Previous Developments:-
Tata Sons hikes stake in Tata Comm

Tata Sons, one of the promoters of Tata Communication, has increased its stake to 10.88% - up 2.37%
The company acquired 67.53 lakh shares through an inter se transfer i.e. transfer among group companies. Current holding of Tata Sons is now 3.10 crore shares.
http://www.business-standard.com/india/news/tata-sons-hikes-stake-in-tata-comm/19/56/51627/on
Surplus land valuation
Tata Communications holds 773 acres of surplus land across various parts of India. According to the "Share Purchase Agreement" entered between the promoter Panatone Finvest, a subsidiary of the Tata Group and the government, the surplus land must be split into a separate entity and the shares or the proceeds on the sales of the land must be distributed pro-rata among the shareholder on record, prior to the stake sale to the Tata group in 2002. Until this split, the land will remain in possession of TCOM.
The government will get 51% of the proceeds of the land based on the 25% stake it sold to the Tata group and its existing share holding of 26%. The Tata group will transfer 20% of the land proceeds for the stake they acquired through an open offer to the external shareholders who tendered their shares to the Tata group (based on the terms of the open offer). The benefit on additional 5% stake, which the Tata group acquired from the open market will be retained by the Tata Group. The balance of 24% will accrue to current shareholders of TCOM as they hold the TCOM share including the land.

Over the last five years, the sale of the surplus land has been fraught with regulatory and bureaucratic issues, which delayed the process of the split or sale of the surplus land. The Tata group has refused liability on the capital gains and stamp duty to be paid from the sale of the land, based on the share purchase agreement with the government. Company management has also noted that the original land was classified for telecom use and the government will have to intervene to allow the land to be used for residential and commercial purpose.

The location and valuation of the land bank:-

Location	Land Area
	Acres	Mn Sq Ft
Delhi - Greater Kailash	70	3.05
Delhi - Chhattarpur	58	2.53
Pune - Dighi	524	22.83
Kolkatta - Halisahar	35	1.53
Chennai - Padinallur	86	3.74
Total	773	33.68

Brokerage House	Value per Share	Time
IIFL	141	Jul-08
JP Morgan	198	Oct-06
Kotak	169	Oct-06
BNP Paribas	151	Apr-08
CLSA	180	Jun-08
IndiaBulls	126	Aug-08
Religare	110	Sep-07

Govt fiscal deficit is running high so it would like to mop-up revenue by selling stake in PSUs. TATACOMM surplus land minority stake in Companies like MARUTI and TATACOMM can get disinvested in future. 


Valuation of TATA COMM LAND http://www.4shared.com/file/124744149/e618185/TATACOMM.html

Weekly Technical View by Tanmay G Purohit:

Nifty (4481) fell 3.34% this week after being distributed for first 3 sessions. Inadequate rains have been a worry since the start of monsoon this year and now market is feeling the pinch of it. The rainfall for the country as a whole during this year’s monsoon has so far (1 June to 5 August) been 25% below normal, says IMD. With Food prices rising because of low rains, inflation can be a factor to watch. Monsoon, Swine Flu and RIL-RNRL fight can be the major worry for stock markets going forward. 

Nifty may test support near 4420/4380 this week and the correction may be considered as a bull market correction until it doesn't close below 4400 for 2 days. Short-term trend may turn bearish in case Nifty sustains below 4400. After finding support near 4400, Nifty may try to bounce towards 4568/4600 which can resist the up move.

Stocks looking weak - CROMPTON, LT,BHEL, ABB, AXISBANK, ICICIBANK, BANKINDIA, HDIL, IVRCL – caution advised while going long in these stocks for short-term trade.
Shipping stocks look bad after Baltic Dry Index hit 2 and a half month low - MLL, GESHIP, SCI
• Stocks that can outperform - NPTC,POWERGRID,PTC,HPCL,BPCL,IOC,NEYVELI,BIOCON,ORCHID

Supp 4380/4236/4155 Res 4568/4636/4730

CAG seeks oil ministry help to access RIL books http://www.business-standard.com/india/news/cag-writes-to-oilmin-to-access-ril-books/366481/   Five Reasons the Market Could Crash This Fall http://seekingalpha.com/article/153555-five-reasons-the-market-could-crash-this-fall  

Ambani Vs Ambani http://www.business-standard.com/india/news/sunil-jain-ambani-vs-ambani/366168/

33% Indians likely to get H1N1: Azad http://timesofindia.indiatimes.com/news/india/33-Indians-likely-to-get-H1N1-Azad/articleshow/4875199.cms   

Admitting that the no government measure could prevent the spread of the H1N1 influenza in India, Union health minister Ghulam Nabi Azad said on Sunday that around one-third of the Indian population was likely to get infected with the virus over the next two years, in accordance with WHO predictions. But most people would suffer only mild symptoms of the disease, he added. 

Last Week Recap Of Technical View:

Nifty (4636) rose 68 points or 1.49% this week. RBI kept interest rates unchanged and corporate performance continued to be strong. Monsoon has been 19% below average in period from 1st June to 29th July and IMD forecast of better monsoon added to the positive sentiment this week. Apr-June qtr results annoucnements are almost over and for 2165 companies declaring results, the Sales have fallen 5% (YoY) while PAT has risen by 18.5% driven by 35.7% rise in Other Income (mostly because of reversal of forex losses). Rise in PAT has also been on account of cut in overall interest rates, decrease in employee costs and increased operational efficiency by corporates. India has faced a slowdown in global recession but companies here have cut down on unncessary costs and responded well in difficult times.

Sensex has hit a new 2009-high but Nifty is yet to cross 4700 which can happen this week. Next important level for Nifty is 4790. Fall below 4540 and some more selling can be seen. Correction may deepen if 4380 is broken. Failure to sustain above 4790 will be negative for short-term trend. Risk reward doesn't look favourable at current levels thinking on index basis, but there are opportunities for long term investors. Markets can go up even when they are more than fairly valued so one needs to have a stock-specific approach and accumulate stocks slowly for longer term growth so that even in 20-30% correction one can average and be safe. Stocks looking positive - VOLTAS, TECH MAH, MAH LIFE, SINTEX

Right now market is facing many negative factors and that is bringing the markets down on its own weight. Most important factors being Swine Flu, RIL-RNRL fight and Monsoon, this update tries to throw light on the same -

One of the few certainties about the H1N1 swine flu virus is that it would have to turn much deadlier than it seems right now to 

 

cause a major drop in global economic output. A renewed rash of media headlines suggests the virus, the subject of a World Health Organisation (WHO) pandemic alert since June 11, could deliver the next big blow to the global economy. 

Here are some of the potential ways by which the H1N1 virus could affect markets and economies across the world: http://economictimes.indiatimes.com/H1N1-downturn-Impact-on-financial-market/articleshow/4871881.cms

 

 

India PM: Deficient Rains May Fuel Food Price Inflation

MUMBAI (Dow Jones)--The delayed and erratic monsoon rains across India have adversely impacted crop sowing operations and this may have an inflationary affect on food prices in coming months, Prime Minister Manmohan Singh said Saturday. "A deficit of more than 6 million hectares has been reported in paddy [rice], which is the worst affected crop. [But] we are in a position to ensure adequate availability of food grains in drought affected areas," he said in his address at a meeting of top bureaucrats from the provinces. The annual monsoon rain, crucial to the summer-sown crops - since about 60% of farmland is rain-fed - was 25% below normal between June 1 and Aug. 5. Rainfall in the country for the week ended Aug. 5 was 64% below normal, worse even than the 18% below the 50-year average measured the previous week. Apart from rice, the deficient rains will also seriously impact the output of summer-sown sugar cane and pulses, according to industry and analysts. 

 

Singh said though the current food stock position is comfortable as there has been a record production and procurement by the government in the last two years, the country is facing a difficult situation. "The governments at the federal and local level should not hesitate to take strong measures and intervene in the market if the need arises," Singh said. He said the country should start planning for winter sown crops so that that they could compensate for whatever loss in production in summer sown crops.

 

UPDATE: Reliance Industries: Anil Ambani Trying To Influence Case

 

 

(Adds comments by Anil Ambani-controlled Reliance Power)

 

NEW DELHI (Dow Jones)--Mukesh Ambani-controlled Reliance Industries Friday accused Anil Ambani of trying to influence a legal dispute between the company and RNRL, in the latest turn in the feud between the two billionaire brothers. The comments come more than a week after Mukesh Ambani's estranged younger brother Anil Ambani, who controls RNRL, criticized the oil ministry of favoring RIL in the dispute over the pricing of natural gas from a Reliance Industries offshore block. "Anil Ambani's public statements, many of which have been directly made to the press, are a part of an orchestrated campaign designed to bring into public debate and prejudge the issues that are pending before the Supreme Court of India," Atul Chandra, Reliance Industries' president of international operations, said during a press briefing in Mumbai. Chandra said Anil Ambani's personal comments against his Mukesh Ambani, had "profoundly saddened" him.

 

Reliance Natural Resources has been locked in a three-year long legal battle with Reliance Industries over the pricing of gas to be supplied by RIL from its Krishna Godavari D6 basin. Anil insists he has the right to buy gas at $2.34/per million British thermal units, a price which was agreed on four years ago when the brothers divided the empire of their late father Dhirubhai Ambani. However, RIL says that the gas should be sold at the state-mandated price of $4.20/mmBtu. The Bombay High Court ruled in favor of RNRL, allowing it to buy gas at the cheaper price of $2.34/mmBtu. The Supreme Court is set the hear the case on Sept. 1. Responding to RIL's charges, Anil Ambani-controlled Reliance Power Ltd Chief Executive J. P. Chalasani cited Anil Ambani as saying that he is "pained" that RIL is doing "everything in its power to renege on its binding commitment to supply gas to us."

 

"I have no idea what it is - corporate greed, personal vendetta, misguided advice" that has prompted Mukesh to act in this way, Anil Ambani said.

 

While RIL talked of continued restraint in the verbal duel with Anil Ambani, it simultaneously lashed out at him, rejecting "the baseless, tendentious and motivated allegations and insinuations made by Anil Ambani and his associates." The simmering dispute between the brothers flared up on July 28 when Anil Ambani accused the oil ministry of favoring RIL in the legal dispute. A sparring match then broke out between RNRL and the government. Oil minister Murli Deora shot back, saying the government has no intention of intervening in a private dispute and it was merely trying to protect its legal rights. Later, India's upstream regulator, the Directorate General of Hydrocarbons, too joined the fray, rebutting allegations from RNRL that RIL inflated its capital expenditure to deprive the government of its due share from KG-D6 gas sales. The KG basin is India's largest gas find, with a peak output of 80 million metric standard cubic meters a day. RNRL is depending on the gas supply from RIL to power its proposed power plant in north India's Dadri town. In Friday's press briefing, RIL said the company has invested INR320 billion in the KG Basin

 

It said it has a "full sense of responsibility" as a "contractor to the government," and has gone about developing the KG basin project "in complete compliance with all obligations attached to our role as the contractor." Chalasani accused RIL of "shamefully appropriating illegal and unethical super-profits" of INR500 billion, by denying the government its share of KG basin gas revenues.

SINTEX CMP Rs 217
Buy around Rs.215-220 Target Rs.310 8-12months
http://sintex-plastics.com
http://www.sintex-india.com/index.html

Sintex Industries Textile company forayed into the plastics business in 1975 with storage tanks and gradually expanded into doors, windows, frames and pallets. Company later commenced production of sheet moulding compound (SMC) and resin transfer moulded products along with a structured yarn dyeing business.
The company’s textiles division operates in niche areas like high-end men’s  shirting material and corduroy fabrics. Buyers include Lacoste, GAP, Marks & Spencer, etc. But the biggest gains for Sintex would come from its diversification into the housing and infrastructure sector.
Apart from the water tank business Sintex is into the infrastructure sector via its pre-fabrication business. This segment is likely to see exponential growth as the government concentrates on affordable housing.

Global Presence:-
http://www.sintex-india.com/alliances.html#wa
With a view to strengthen the position, Sintex offers itself as a global solutions provider to clients both in India and abroad. To achieve this they have adopted an aggressive strategy of inorganic growth. Under this strategy they have acquired companies that are specialists in their respective areas -
Wausaukee Composites Inc. - USA
Nief Plastic SAS
Bright AutoPlast Pvt.Ltd.
Zeppelin Mobile systems India Limited

Further growth possible:-

• Government spending on low cost housing and deficient rain fall would increase sales of Sintex and Textile business worst seems to be over - The Indian government, through its Union Budget 2009-10, reiterated its thrust on rural and urban spend through schemes such as Bharat Nirman, Jawaharlal Nehru National Urban Renewal Mission, Sarva Shiksha Abhiyan, etc. This is expected to sustain demand for Sintex’s pre-fabricated structures business in the form of rural classrooms, health clinics, toilets, worker shelters, etc.
• Sintex’s monolithic construction business has an order backlog of Rs18b to be executed in the next two years.
• Sintex’s French subsidiary, Nief, caters to auto, electricals, aerospace, defense, and medical equipment sectors. It has lowered its exposure to auto, and also extended its presence to Hungary and Tunisia. 
• During the quarter, Sintex’s auto components subsidiary, Bright Autoplast commissioned its second unit in Chennai for ‘under the hood’ auto components for global OEMs. Towards end 2009, the unit will also produce electrical components for supplies to companies such as Schneider of Germany.
• Sintex had made an initial payment of €7m (US$10m) towards the acquisition of Geiger, Germany, which has since gone into liquidation. As a result, Sintex has decided to write off the same (depending on the liquidator’s ruling, it may consider acquiring Geiger at a much lower valuation than the earlier €35m). 
• Sintex has also indicated that it would go ahead with its capital expansion plans costing Rs 200 cr.

Technical Outlook Strong:-
SINTEX is making an Inverse Head & Shoulders pattern on weekly graph (shown below) and over medium term (8-12 months) the stock can reach Rs 310-330 while long term target can be (2-3 years) Rs 400-450. Short-term players can buy it near current levels with stops below Rs 200 and target Rs 235-240.