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Tremendous pressure to fight inflation: P Chidambaram

New Delhi, March 17: Finance Minister Palaniappan Chidambaram said on Monday there was tremendous pressure on the government to fight inflation.

There is still a mismatch between the demand and supply of food articles, he told lawmakers in Parliament, which was adding to price pressures.

"Our intention is to ensure and make all efforts to sustain growth of more than 8 percent and close to 9 percent in 2007/08," Chidambaram added.

Finance Minister P Chidambaram also said the government would make efforts for an economic growth rate of well above 8 per cent and close to 9 per cent in 2008-09.

"We have delivered high growth... We will make every effort to maintain growth rate at well over 8 per cent and close to 9 per cent (in 2008-09)," he said replying to the debate on the budget in Rajya Sabha here.

The Indian economy has moved on to a higher growth plane, he said.

The average growth rate during the four years of UPA government was 8.7 per cent, the minister said adding the sixth five year plan has set a target of average growth rate of 9 per cent and a 10 per cent growth rate in the terminal year (2011-12).

"Growth is imperative. Growth is important. If there is growth there is chance of inclusive growth. Without growth there is no chance of inclusive growth," he said.

The UPA government, he said, was striving for an inclusive growth.

BHEL bags Rs 2,030 cr order for Nabinagar Power Project

New Delhi, March 17: Power equipment maker Bharat Heavy Electricals Ltd on Monday said it has secured order worth Rs 2,030 crore for supply of main plant package to a 1,000-mw project in Bihar, being set up by NTPC and Indian Railways.

The order for the 1,000-mw Nabinagar Thermal Power project has been placed by Bhartiya Rail Bijlee Company ltd, a joint venture of NTPC and Indian Railways, BHEL said in a statement.

"With this, BHEL has won all the thermal power plant orders finalised by NTPC and its joint ventures," it added.

The scope of work in the present contract involves supply and commissioning of steam generators, turbine generators and associated auxiliaries with controls and instrumentation system.

Won under competitive bidding, the project includes four units of 250 mw each, slated for synchronisation during 11th five-year plan period. The units will add 24 million units every day to the grid on commissioning.

BHEL has enhanced its manufacturing capacity to 10,000 mw per annum and is further augmenting it to 15,000 mw per annum in the next two years.

Oil Prices Rise to All-Time High of Almost $112 a Barrel As US Dollar Sinks
VIENNA, Austria (AP) -- Oil prices jumped to an all-time trading high of almost $112 a barrel Monday as the tumbling U.S. dollar and plunging stock markets prompted investors to seek shelter in commodities.Investors fled the dollar after a surprise move Sunday by the U.S. Federal Reserve to provide cash to financially squeezed Wall Street investment houses pushed the battered dollar deeper into multiyear lows against the yen.

"The Fed's move overall will help the liquidity of the U.S. dollar, and that will really further soften the dollar," said Victor Shum, an energy analyst with Purvin & Gertz in Singapore. "Meanwhile, investors seem to be just following the mantra of buying oil and commodities to hedge against the falling dollar and inflation."

Light, sweet crude for April delivery on the New York Mercantile Exchange spiked $1.59 to a record $111.80 a barrel in electronic dealings in Asian trading. By noon in Europe, it had slipped back to $110.34 a barrel.

On Friday, the contract fell 12 cents to settle at $110.21 a barrel.

Analysts blame the weak dollar for oil's recent rally. Crude futures offer a hedge against a falling dollar, and oil futures bought and sold in dollars are more attractive to foreign investors when the dollar is weak.

Interest rate cuts in the U.S. further weaken the dollar and have helped drive oil's rise. In an extraordinary weekend move, the Fed cut its discount rate on Sunday by 25 basis points to 3.25 percent. The Fed is also expected to cut the benchmark federal funds rate at its regularly scheduled monetary policy meeting on Tuesday.

"The inverse link between the dollar and oil prices seem to be strengthening. While we have new records for oil almost daily now, we're also seeing daily new record lows for the dollar," Shum said.

The same dynamic has sent gold, another prime destination for investors worried about the falling dollar and rising inflation, to record prices. On Monday, gold rose 3 percent, or almost $30, to a record $1,032.35 an ounce.

Shum said the surge in investor demand for commodities as a hedge against inflation has created a self-fulfilling cycle that causes prices to keep rising.

"When there is more liquidity, it will raise inflation. So investors pump more money into oil as a hedge, and that further fuels inflation," he said. "It points to the risk in the oil market that the fundamentals don't really support such continual strengthening in pricing."

Adding to upward pressure on oil prices are expectations by the Organization of Petroleum Exporting Countries that non-OPEC members will fall short of production targets. Factoring in that forecast, the Schork report, edited by Stephen Schork, suggested little relief ahead from climbing prices.

"As we look ahead to this week, OPEC's downward forecast on Friday of nonmember supply growth this year, plus continued dollar woes likely shorten the odds we will close higher once again," said the news letter.

Equities investors also sought refuge from Asian stocks, which declined sharply Monday after the stunning collapse of Bear Stearns Cos., one of the world's largest investment banks.

JPMorgan Chase & Co. agreed Sunday to buy Bear Stearns for $236.2 million in a deal aimed at averting a Bear Stearns bankruptcy and a spreading crisis of confidence in the global financial system.

But investors chose to see the move as a sign that fallout from problems in the U.S. housing market is far from over.

On Monday in Tokyo, Japan's benchmark Nikkei stock index plunged 3 percent, while in Hong Kong the Hang Seng fell almost 5 percent. Markets in South Korea, Singapore, Australia and New Zealand also fell.

In other Nymex trading, heating oil futures rose less than a penny to $3.1525 a gallon while gasoline futures increased by over a cent to fetch $2.7015 a gallon. Natural gas prices added nearly 17 cents to sell at $10.037 per 1,000 cubic feet.

In London, Brent crude futures rose 30 cents to $106.50 a barrel on the ICE futures exchange.

Associated Press writer Gillian Wong contributed to this report from Singapore.

Farm Bill stalled by funding: Congress at odds even as Bush threatens veto

SACRAMENTO, Mar 15, 2008 (The Record - McClatchy-Tribune Information Services via COMTEX) -- A new Farm Bill is crashing on the rocks of the Democratic-controlled Congress' vow of fiscal responsibility.

Most of the policy differences guiding federal farm policies for the next five years have been settled. It is paying for them that's the problem.

It has been nearly two years since debate began on the first Farm Bill in history to include significant funding support for fruit, nut and vegetable farmers who represent the bulk of the San Joaquin Valley's agriculture.

San Joaquin County's economy runs on agriculture: Crop values in 2006 reached $1.68 million, larger than that of 14 states and equal to the combined output of the entire New England region.

The new bill would give farmers who don't grow grain or cotton more federal aid to expand research on new varieties, help growers comply with California's strict environmental law and increase funds to open overseas markets for their crops.

Congress' new pay-as-you-go rules have trimmed the legislation down from $14 billion to $10 billion over the five-year life of the legislation. Most of this new money is for the federal Food Stamp Program, which is included in the Farm Bill.

Since the House and Senate passed their versions of the bill last year, the House has rejected the Senate's financing plan, and the Senate has rejected the House's. President Bush has threatened to veto the both plans -- even sending acting Agriculture Secretary Chuck Conner to Stockton on Jan. 21 to deliver this message.

Bush says he may veto the legislation if it does not limit subsidies for crops such as rice, corn or wheat, and if it preserves a cotton subsidy that the World Trade Organization says is illegal. The Pima cotton widely grown in the San Joaquin Valley is not at issue.

Few San Joaquin County farmers would fall under the president's proposed $500,000-a-year income limit for crop subsidies, according to a Record analysis of subsidy data provided by the Environmental Working Group.

Bush's veto threat, delivered to his backyard, did not please Rep. Dennis Cardoza. The Atwater Democrat represents much of Stockton and is among the Farm Bill's chief negotiators.

"I'm not sure the (Bush) administration wants a bill," Cardoza said. "So the conferees are working to craft a bill with enough bipartisan support that it can override any veto threat."

House Agriculture Committee Chairman Collin Peterson of Minnesota has taken a crucial step toward that by promising his Republican colleagues he will not support a tax increase to pay for the Farm Bill.

Republicans abandoned the House bill en masse last summer when the House Ways and Means Committee closed several tax breaks to pay the bill's tab.

Conservatives viewed this as raising taxes.

But neither Peterson nor Cardoza are masters of their own fate.

In the House, there is almost total separation between the policymakers and those who must find the money to pay for that policy.

The Agriculture Committee is stacked with moderate-to-conservative Democrats, while the Ways and Means Committee is dominated by urban liberals.

Not so much on the Senate side, where seven Agriculture Committee members also serve on the Finance Committee.

This means the Senate has greater negotiating power than the House.

Add to this the fact that 77-year-old Ways and Means Committee Chairman Charlie Rangel of New York is in the hospital, and the process has been, well, "inartful," as Cardoza calls it.

"Pay-go has complicated the bill-crafting process," Cardoza said. "You can't just throw money at the problem to grease the wheels any longer. But at the end, you get bills that cost the taxpayers less and are ultimately better bills."

Earlier this week, Congress extended the existing Farm Bill until April 18. Cardoza thinks it will be the final extension.

"I think we will have a Farm Bill by April 18," Cardoza said. "There's nobody who still wants to be negotiating on May 1."

80-90% chance of US seeing 1920s situation: First Global
2008-03-17 09:35:04 ................................................
Shankar Sharma of First Global said investors need to be cognizant of changing market conditions. "The global bull market that started in 2003 seems to have ended. The final capitulation has not happened as too much noise out there. There is no point looking at Sensex PEs as one is not getting value stocks to buy," he told CNBC-TV18.



He feels that trade is no longer in equities and sees value in other asset classes. FY09 estimates are very optimistic, he said. "However, we are likely to see lower numbers. India does not have legs to sustain 9% growth. Even GDP is heading downward. The political situation is also a concern. We see elections this year. The risk reward is not favourable, while the downside may not be limited."



According to Sharma, China and India are likely to underperform while Thailand is likely to outperform.



The US is heading into a very bad recession like the 1920s, Sharma said. "Large write-downs can erode financial wealth in the US. The Fed's move is not enough to stop the credit contagion. and some banks can go under. Petro dollars may also not come back."

Wall Street Poised to Tumble at Open

17 Mar 2008 | 08:42 AM U.S. stock index futures indicated a sharp drop for Wall Street to start the week, with investors spooked by the cash crisis at Bear Stearns that forced its sale for $2 a share to JP Morgan Chase.

JPMorgan Chase buys Bear Stearns for about $2/sh
2008-03-17 08:51:05
JPMorgan Chase has announced it is acquiring Bear Stearns for about USD 2 a share in stock. JP Morgan has agreed to buy Bear Stearns for USD 236 million. Bear Stearns has agreed to the JP Morgan buyout to avoid bankruptcy. Bear Stearns was forced into a government-led bailout on Friday.


JPMorgan has said that they will ensure that the stock trades till the deal is completed.

On Friday Bear Stearns had received emergency funding from JPMorgan Chase to stave off liquidity problems arising from the credit crisis.

JPMorgan Chase, in association with the Federal Reserve Bank of New York, will provide a secured loan facility for an initial period of up to 28 days, allowing Bear Stearns to access liquidity as needed.

Bear Stearns also said it is talking with JPMorgan Chase regarding permanent financing or other alternatives. The Board of the Federal Reserve has approved the proposal for such a bailout.

The Bear Stearns stock plunged almost 50 percent after the news of the financing came in.

James Glassman, Senior Economist at JP Morgan Chase Bank said that Bear Stearns will be folded with JPMorgan; it will be integrating its operations with the JPMorgan family.

Tata Steel cons Q3 net profit at Rs 1,415 cr

Tata Steel has annonced its third quarter consolidated numbers. It has posted Q3 net profit at Rs 1,415 crore as against Rs 1,055 crore, in same quarter of last year. Income stood at Rs 32,096 crore versus Rs 6,072 crore. Other income increased at Rs 197 crore versus Rs 101 crore.

Tata Steel consolidated Q3 result included Corus Financials.

84% new listings crash below issue price
2008-03-17 18:02:25 ...............................
Markets have knocked down very badly today on the back of weak US cues, which impacted global markets as well. Sensex plunges more than 1000 points and slipped below 15000 mark during the day. Largecap stocks are also hitting new 52-week lows following midcap stocks. The impact of secondary market has seen on primary market as well.

19 stocks have listed in the year 2008, out of which 84% or 16 stocks are below their issue price. Porwal Auto fell 68% at Rs 24.05 as against its issue price of Rs 75, Manaksia closed at Rs 62.55, down 61% from its issue price and Precision Pipes dipped by 58% to Rs 62.85 versus offer price of Rs 150.

Half of the stocks have slumped more than 30%. Amongst the big listings, ADAG’s Reliance Power (collected more than Rs 11,000 crore) and Kishore Biyani’s Future Capital (raised over Rs 450 crore) plummeted nearly 30-31%. Rural Electrification, which raised over Rs 1600 crore, also fell below issue price today.

However, GSS America, Onmobile Global and Burnpur Cement are still above their issue price, gained 50%, 12% and 85%, respectively.

JPMorgan acquires troubled Bear
The deal values Bear Stearns at just $2 a share. Regulators hope purchase will stave off wider chaos in financial markets.
Last Updated: March 17, 2008: 4:56 AM EDT
NEW YORK (CNNMoney.com) -- JPMorgan Chase & Co. said Sunday that it would acquire troubled Wall Street firm Bear Stearns for a mere fraction of what it was once worth amid deepening fears about further erosion of the world's financial markets.

The rock-bottom price left investors feeling queasy. Asian markets tumbled, with Japan's benchmark Nikkei index finishing Monday's session nearly 4% lower. U.S. stock futures plunged, indicating a miserable start for Wall Street.

The all-stock deal values Bear Stearns at $236 million, or just $2 a share. The company's stock had closed at $30 on Friday, down a staggering 47% for the day.

Regulators support the deal and the Federal Reserve provided $30 billion in funding: With the global credit crisis worsening, the Fed has been taking dramatic action to help banks and prevent widespread panic.

Over the past three days, roughly 200 JPMorgan staffers were working on the deal, assessing the strengths of Bear Stearns' different businesses and its exposure to toxic mortgage securities, JPMorgan executives said during a conference call held Sunday night.

They noted that the offering price, which comes at a steep discount to Bear Stearns book value price of $84 per share, was to provide a cushion to protect JPMorgan in turbulent times and would provide the company "margin for error."

The fire-sale price raises questions about the value of other investment banks.

"A $2 per share price will send a shudder through every investment bank investor in the world," said James Ellman, head of San Francisco-based Seacliff Capital, a hedge fund specializing in financial services. "Many will say that stand-alone investment banks' days are numbered."

That could spell trouble for firms such as Lehman Brothers and Jefferies Group, which, like Bear Stearns, don't have large asset or wealth-management businesses for support. These divisions are helping prop up firms such as Morgan Stanley during these tough times on Wall Street.

Bear Stearns was on the brink of financial collapse Friday when JPMorgan (JPM, Fortune 500) and the Federal Reserve Bank of New York said they would provide the brokerage a short-term loan. Bear was dealing with a classic run-on-the-bank: The firm's short-term creditors refused to lend the firm any more money and simultaneously demanded repayment of outstanding debt.

Treasury Secretary Henry Paulson said on Sunday that talks about how to rescue Bear had continued throughout the weekend. He defended the Fed's bailout on Friday as "the right decision" and said the Bush administration was ready to take other actions to bring stability to the financial markets.

The fast-track deal, which is expected to close by the end of June pending shareholder approval, is expected to generate roughly $1 billion in after-tax earnings for JPMorgan over the next 12 to 18 months.

Risks and opportunities for JPMorgan
JPMorgan has been on the prowl for a prime brokerage business, which services hedge fund clients. This was one of Bear Stearns' specialties, though many of its customers started fleeing last week.

JPMorgan will likely focus on retaining clients of this division, while trying to wring out costs from businesses the two have in common, such as investment banking, mergers and acquisitions, and research. But at $2 a share, the bar is not too high to make the deal profitable, experts said.

The danger for JPMorgan will be its potential exposure to lawsuits from Bear Stearns' subprime mortgage division and risks from its derivatives business.

Bear Stearns has approximately 14,000 employees worldwide and plans for them were not made clear.

As part of the deal, JPMorgan Chase will essentially act as a backstop for any current or future business transactions with Bear Stearns until the deal is completed. Even if Bear shareholders were to reject the buyout, which the JPMorgan executives believed was unlikely, any transactions leading up to then would still be guaranteed.

At the same time, JPMorgan would also take on Bear Stearns' mortgage portfolio, worth an estimated $33 billion as of the end of February. Just $2 billion of that amount was made up of subprime, with the remainder made up of both commercial mortgage backed securities as well as other residential mortgage securities.

Bear Stearns issued a statement late Sunday saying that as a result of the announcement, it would not report its first-quarter results on Monday, as previously scheduled.

Downward spiral
The deal marks an inglorious chapter for 85-year-old Bear Stearns, a storied Wall Street firm whose unraveling has been fast and furious.

Rumors that Bear Stearns was on the verge of collapse started buzzing around Wall Street trading desks last Monday. Chief Executive Alan Schwartz appeared on television on Wednesday afternoon to reassure the markets that the firm was stable. But on Thursday, the run on the bank picked up speed, forcing the government and JPMorgan Chase to step in the next day.

Shares of Bear Stearns (BSC, Fortune 500) opened last week at $69.75 and traded as high as $159 last year, before the firm's bad bets on subprime mortgages blew up two of its hedge funds last summer.

First Published: March 16, 2008: 4:31 PM EDT