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Asian Stocks Advance After Fed Cut, Wall Street Rally, Solid Earnings From Investment Banks

TOKYO (AP) -- Asian stock markets rose Wednesday as investors welcomed a hefty U.S. interest rate cut and a rally on Wall Street overnight.
Sentiment was also lifted by better-than-expected earnings from major U.S. investment banks Goldman Sachs and Lehman Brothers, easing concerns about fallout from the global credit crisis.

Japan's benchmark Nikkei 225 index rose 2 percent to 12,204.8 by early afternoon trading, while Hong Kong's Hang Seng index was up 2.7 percent.

Australia's main index rose 3.6 percent, and markets in South Korea, China and India were also sharply higher.

But analysts warned that the advance doesn't mean the turmoil is over.

"We're just back to where we were at the beginning of the week," said David Cohen, a regional economist with Action Economics in Singapore. "The roller coaster will continue. There's still a lot of uncertainty continuing for the world and U.S. economies."

Tokyo's Nikkei index has tumbled about 20 percent since the start of the year.

In a bid to shore up sagging U.S. growth and bring relief to the struggling financial sector, the Federal Reserve on Tuesday slashed its key interest rate by three-quarters of a percentage point to 2.25 percent, its lowest since December 2004.

While many investors were expecting the Fed to cut rates a full percentage point, they quickly overcame some initial disappointment, especially since a 0.75 point cut is still substantial. The Fed began lowering rates exactly six months ago, after the credit markets seized up due to soaring defaults in subprime mortgages.

The Dow Jones industrial average soared 420 points, or 3.51, to 12,392.66 on Tuesday. That was its biggest one-day point gain in more than five years.

Investors were also heartened by better-than-expected earnings from Goldman Sachs Group and Lehman Brothers Holdings, which came out just a day after markets worldwide were shocked by Monday's news that JP Morgan Chase had bought rival investment bank Bear Stearns for $2 per share, or less than $250 million. That sparked concerns about the full extent of the credit crisis.

The dollar also rose against several main Asian currencies Wednesday, trading just below the 100-yen level at 99.88 yen late Wednesday morning. It had fallen below 96 yen on Monday, its lowest in 12 1/2 years.

Japanese financial markets will be closed Thursday for a national holiday.

no fresh longs to be initiated in gmr and jpa...heavy long unwinding is likely to happen in these scrips....as usual do your own analysis......


happy trading

time is right to buy.but money is the factor.first, sell your costly bought stocks earn money then get into the market.realy hard job. but future looks good................?

Sarabjit`s hanging deferred by a month

External Affairs Minister Pranab Mukherjee on Wednesday confirmed that the hanging of Indian national Sarabjit Singh has been deferred by a month. The minister stated that the Indian High Commission in Islamabad was informed by Pakistan Foreign Office that President Pervez Musharraf has stayed the execution of Sarabjit Singh till April 30. He assured the Lok Sabha that efforts were ongoing to secure his freedom

HDFC plans to raise Rs 40 bn via bonds: Source

Mumbai, March 19: India's biggest mortgage lender, Housing Development Finance Corporation, plans to raise Rs 40 billion (USD 1 billion) by selling bonds in coming months, a source familiar with the matter said on Wednesday.

"It is part of our normal fundraising plans to meet our usual business requirements, but we are in no hurry to enter the markets," the source, who has knowledge of the plan, adding the funds would be raised over the next 18-24 months.

The Business Standard reported that HDFC was raising the funds to pay for a stake purchase in HDFC Bank to maintain its holding at 23.3 percent after the bank's takeover of Centurion Bank of Punjab in an all-stock deal.

Mkt volatility: Bolder FIIs on a buying spree
19 Mar, 2008, 1550 hrs IST.........................

MUMBAI: Even as the deepening financial crisis in US continues to take a toll on the Indian equity market, the bolder ones among foreign institutional investors have started accumulating shares in the hope that the worst may be over.

Funds like Morgan Stanley, Merrill Lynch Capital, Orient Global Tamarind, TCI Cyprus and Macquarie Bank have been bottom-fishing by acquiring small stakes in a host of companies including Reliance Energy, HDIL, Indiabulls Financial Services, PNB, Bank of Baroda, Videocon Inds and JSW Steel. Morgan Stanley and Merrill Lynch were major buyers on Monday when Bear Stearns, the beleaguered US securities firm, sold off its positions in many stocks. Market sources, however, feel some of the block trades on that day could have been transfer of participatory note holdings of Bear Stern to the P-note account of some other funds.

Leading US-based fund Morgan Stanley picked up 1.4% equity in Reliance Energy for Rs 421 crore in a bulk deal at the BSE on March 11. The acquisition of the shares at Rs 1,240 per share followed the company’s announcement to buyback shares at a price not exceeding Rs 1,600 per share. Morgan Stanley was also involved as the buyer in two other deals transacted in Jai Corporation and Jain Irrigation Systems. The fund bought 26.8 lakh shares and 22.9 lakh shares respectively for Rs 177 crore and Rs 145 crore on March 11.
TCI Cyprus Holding was another major buyer on the Indian bourses. Its focus, however, remained mainly on banks as it bought stakes between 2% and 5% in four public sector banks, including PNB, BoB, IOB and Vijaya Bank, for the total consideration of Rs 1,500 crore between February 28 and March 14. The investor also bought a 2% stake in Housing Development and Infrastructure for Rs 245 crore on March 13. In another example, Orient Global Tamarind bought 1.7% equity of Indiabulls Financial Services for Rs 372 crore on January 15, ‘08.

The combined investment of these funds amounted over Rs 3,000 crore during January 15 to March 17 when net FII outflows amounted to over Rs 16,000 crore. During the period, the Sensex tanked 5,400 points to end below 15K at 14,809 on Monday. Market sources, however, point out that buying from select funds may not be indicative of things to emerge in future. The liquidity problem will continue to haunt the Indian stock market until major global concerns like fears of the US slowdown and sub-prime crisis are eased. Domestically, the trend in corporate earnings will also influence the sentiment in coming weeks, according to market sources.

Fund managers say the sharp fall in valuations could have prompted select funds to churn their portfolios in favour of such companies where the latter feel valuations have fallen to attractively cheap levels and growth prospects are better. Some analysts feel the concerned funds might be buying on hopes that valuations will show some improvement once expectations about Q4/FY08 earnings start building up in the market.

Is the market back from the brink?
27 Jan, 2008, 0055 hrs IST,Shubha Ganesh, TNN


What a week that was in the stock markets. The domestic stock markets were cruising along after making a new high of 6,288 in the Nifty on January 8, 2008.

Who would have thought at that point of time that markets would collapse to sub-5,000 levels during the following week? But nosedive it did in line with all global markets giving the decoupling story the thumbs down.

The domestic markets, which had made new highs when global markets were falling, fell in double quick time in catch up mode and overcorrected itself as compared to its Asian peers. A look at closing nifty index values for the last seven days emphasises the swiftness of the fall.

The markets lost nearly 22 per cent in a short span of a week in a sudden and shocking correction. Why did it all happen so swiftly? What are the reasons that lead to sharp corrections?



JANUARY 2008 NIFTY INDEX
FALL BY

22 4,899
309

21 5,208
497

18 5,705
208

17 5,913
22

16 5,935
139

15 6,074
—
It could be called a conspiracy of fate or draw of luck that so many independent factors fell in place at that particular time to create an environment for the crash. During a global sell-off, a major part of domestic money was locked up in mega IPOs unable to absorb the crash. So, two uncorrelated events happened at the same time.

Foreign institutional investors (FII) continued selling. As the markets declined on a few days on the trot the ticking time bomb of highly leveraged positions just went off.

Negative global factors

The year began on a dull note for the US stock markets on fears of recession. Other global markets too echoed US markets and corrected 15-18 per cent in this first half of the month.

India resisted the negative global sentiments initially only to capitulate swiftly this week. Markets here are now in line with global markets. But for how long this trend will be in tandem is difficult to predict.

Unlike US which is heading for a recession, the domestic economy is strong and the markets are going to take cognisance of this fact sooner or later.


FII selling

FIIs have been net sellers, booking profits since October. Bearish sentiments at home, redemption pressures, booking profits, participatory note redemption and risk-aversion are some of the reasons for the steady selling by FIIs. They have been regularly offloading equities in the markets for the last three months.

However, the impact till January was very muted due to heavy demand from the domestic financial institutions and retail investors.

Between January 16 and 22 their sales of Rs 5,821 crores was accentuated due to absence of a local demand for securities.

Margin problems

The continuous bull run from the 15,000 levels in August 2007 to 21,000 levels in 2008 attracted retail interest in the stock markets. The lure of easy money-making brought in thousands of new investors.

With a small amount of margin they could leverage to get high returns on their investments. The markets were delicately poised with margin calls being paid on marginal decline in the index till January 18.

As the domestic markets reacted to global cues and fell, the retail investors could not honour margin calls leading to distress sales on a large scale in the afternoon trade on January 21 and 22.

Many retail investors lost their savings at the stock markets. This was probably due to their lack of understanding of the futures and options market and the ill effect of leverage.

Liquidity squeeze

The two large IPOs of futures group and reliance power caused a liquidity squeeze in the system. The sheer numbers of the reliance IPO is mind-boggling. The issue was oversubscribed 72 times and raised Rs 11,700 crores. All of this money is now lying in an escrow account. It is expected that once the IPO process is over, these funds will find their way into the markets.

In fact, the company is now in talks with the regulators to expedite refunds to the qualified institutional buyers (QIBs) who have bid $125bn. Due to this, the participatory note headroom for QIBs to the tune of $25-30bn is locked up and this amount too could not be invested in stock markets adding to liquidity issues.

In a sudden move, the US Fed has cut interest rates by 75 bps. Whether this can bring in the much-needed liquidity to the markets or not is a question on everybody's mind.

At the time of writing this, Nifty had smartly recovered from its low, obliterating completely the nightmares of Tuesday, to close at 5,144. Whether this rally will sustain or is just a relief rally, only time will tell.

A report of 27th Jan ,posted today,could not get the significance.

Gold gains, crude oil declines after US Fed rate cut

Singapore, March 19: Gold rose and oil fell after the US Federal Reserve cut its benchmark interest rate less than many traders expected because of concern inflation may accelerate.

Gold gained 8.36 dollar to 990.60 dollar an ounce, still 4 per cent below the record 1,032.70 dollar set March 17 and crude oil for April fell 1.30 dollar, or 1.2 per cent to 108.12 dollar a barrel on the New York mercantile exchange.

The precious metal gained 0.8 per cent and crude dropped one per cent. The dollar fell 0.3 per cent today against the yen after its biggest rally in nine years yesterday.

Corn, soybeans and wheat in Chicago declined on fears that the dollar's rebound might reduce the appeal of the US crop to overseas importers. Soybeans and wheat also fell.

Corn for May delivery fell 13.5 cents to 5.3375 dollar a bushel on the Chicago board of trade. Soybeans for May dropped 39 cents to 12.68 dollar a bushel.

The federal open market committee said the outlook for "economic activity has weakened further" and "some indicators of inflation expectations have risen."

A slowing economy may curb consumption of energy and the risk of faster inflation may spur investor demand for gold as a hedge.

Gold is posting gains for an eighth year, beating returns on financial assets as rising consumer prices and slowing growth erode the value of currencies, bonds and stocks.

The metal rose 51 per cent in 2007, outperforming a 12 per cent return on us treasuries, according to Merrill Lynch indexes. The Standard Poor's 500 index fell 5.1 per cent.

Oil prices doubled in the past year to a record as the UBS Bloomberg constant maturity commodity index of 26 raw materials gained 38 percent on demand led by China and supply disruptions.

The Fed cut its main lending rate yesterday by three- quarters of a percentage point to 2.25 per cent as officials try to prop up the faltering economy and restore faith in the US financial system.

Indian cos to face biggest fraud risks from IT, IPR

Mumbai, March 19: Theft of intellectual property rights (IPR) and deceptions related to e-commerce and IT pose the greatest risk of frauds for Indian corporations in the next three years, according to a survey by consulting firm KPMG India.

These frauds are seen replacing supplier kickbacks and bribery as the biggest risks that organisations currently face, KPMG said in its India Fraud Survey report.

"Fraud and white collar crime have increased considerably over the recent years, and respondents believe this trend is likely to continue," the survey of senior executives from more than 1,000 Indian firms, said.

Almost 60 percent of respondents, compared with about 39 percent in the last survey in 2006, have experienced fraud in their organisation in the last two years, the survey found.

The financial sector was perceived to be the most vulnerable to frauds, followed by real estate/infrastructure and IT/ITeS sectors.

"The cost of fraud to businesses is difficult to estimate because not all fraud and abuse is discovered, not all uncovered fraud is reported, and civil or criminal action is not always pursued," it said.

About 70 percent of the respondents said it was important to conduct integrity due diligence on senior management and strategic alliance partners to help control the risks.

More than 60 percent of the respondents in the survey said their organisations did not have a complete understanding of the various risks of frauds faced by them and lacked effective internal control mechanisms to mitigate these risks.

It found almost a third of all frauds were detected by accident or through anonymous letters and not by the company's internal controls framework.

However, about 72 percent of the respondents said their companies carried out background checks on new recruits.