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JPMorgan Reportedly in Talks to Increase Bear Stearns Offer to $10 a Share

NEW YORK Monday March 24, 6:20 am -- JPMorgan Chase & Co. was discussing a deal that would increase fivefold its offer for Bear Stearns Cos. to $10 a share, The New York Times reported Monday.
The talks Sunday were an attempt to satisfy Bear Stearns stockholders upset over JPMorgan's offer of $2 a share for the struggling investment bank, the newspaper said on its Web site, citing people involved in the negotiations.
The original price for Bear Stearns was part of a deal struck last week at the urging of the Federal Reserve and Treasury Department.

The Fed, which would need to approve any change in the agreement, was balking at the new price, the Times said. Such opposition could postpone the new agreement or derail it entirely.

In an attempt to speed majority shareholder approval, Bears board was trying to authorize the sale of 39.5 percent of the firm to JPMorgan, the Times said. State law in Delaware, where the companies are incorporated, allows a company to sell up to 40 percent without shareholder approval.

A spokeswoman for JPMorgan declined to comment Sunday night, the Times said. A Bear Stearns representative could not be reached.

A spokesman for the Federal Reserve would not comment on the central banks involvement in the negotiations, but denied it had directed the original sale price, the newspaper said.

India is the best bet for foreign investment: Country head Morgan Stanley, India
24 Mar, 2008, 0600 hrs IST,George Smith Alexander ......................Morgan Stanley has come a long way since it ended its partnership with JM Financial. Narayan Ramachandran, CEO of Morgan Stanley Investment Management and country head, Morgan Stanley in India, talks about the firm’s strategy

What are Morgan Stanley’s plans for India?

We have been in India for many years in different avatars. Our asset management firm has been here for well over 14 years, first as a joint venture and then majority owned by Morgan Stanley. Our securities firm was established in the mid-1990s and then went through a joint venture phase, from which we came out last year. Probably among non-Indian competitors, we have been here the longest.

The business footprint here is the same as anywhere else in the world. Securities business - both fixed income and equities, investment banking, asset management and wealth management. The only business that will come up eventually, as circumstances and markets change, is the prime brokerage business, where we help hedge funds go about their business. Other than that, the footprint is intended to be exactly the same as Morgan Stanley in London, New York or Tokyo. The timeframe to establish this is short - no later than middle of this year we would have presence in all of the segments.

What are the plans on the NBFC front? Will you lend to corporates through this route? What about a banking licence?

We got a licence for a fully-owned NBFC last year. It will be used by the fixed-income and private wealth management businesses. We will also engage in a range of capital market activities. We have also applied for a primary dealership licence. The minimum capital has already been invested - $7.5 million, which will be scaled up to $50 million. We are in the process of capitalising it further.

We are not a bank and won’t do a straight lending programme to corporates. The lending will be in the context of their capital market activities. We will eventually look at a banking licence, but are not seriously contemplating it right away. For a capital market participant like us, the advantage of a banking licence is the ability to participate in the forex market. Most likely, we will go in for a partnership before we go ahead and apply for a banking licence.

Would Morgan Stanley look at joint ventures in India?

The operative word, particularly in emerging markets, is never say never. Partnerships and joint ventures are the norm in the future for any business, particularly financial business. We can’t be in every business and in every place all the time. We are seeking all kinds of partnerships. You start with a client- or a market-place need, and you figure out how to solve it.


Are you looking at inorganic growth in India?

We are always open to inorganic modes of entry. But in India, information dissemination is very high. The consequence of which is that you don’t get mid- or small-sized entities that are completely unknown and undiscovered that you might be able to partner at a price that makes sense. Price gets discovered very quickly. In principle, inorganic modes of entry in virtually every business is completely open, adjusted for price that’s probably not that high. That said, we will be open to looking at teams, as we have done in our private wealth management entity and as we will do in others.

What are the plans on private equity front?

We think of private participation in three buckets - private equity, infrastructure and real estate. In real estate, we were among the first in India. But on infrastructure and private equity, we have gone slow in the past year or so, since we were concerned about some of the hype and the associated valuations. But you will see us getting active in both the spaces very soon. At this moment we don’t have any big plan for India-specific funds. But all our global funds are allowed to invest in India, though without targeted allocations. They will make those investments, as real estate has already done.

We have invested around $1 billion in real estate while the investments through the other two funds have been small - a couple of small deals. We have examined a lot of infrastructure deals in India, but we don’t have on the ground capital allocation of any serious magnitude. But as the hype gets worn out, we will be much more interested to put this money to work in both private equity and infrastructure.

How much capital is Morgan Stanley looking to deploy in India?

I think given the attractiveness of the Indian markets over time, we will eventually have billions of dollars of capital deployed through the three private equity entities and also through fixed-income proprietary investments.

You have been speaking of a bull market next year. What is the reasoning behind this theory?

Policy, particularly in the US, will react fast and furiously. If risk preference changes in the US, where do you put the money? The most likely destination is emerging markets, of which India is one.

My observation for a bull market in 2009 is really an emerging market observation, which then translates into an observation about India. I think it’s possible and that it’s not 10% and 20% returns, but 50% to 75% returns. In India, there was a need for earnings expectation adjustments as we are going through a slowdown.

Four months from now, you will get the full impact of fiscal policy, the early stage impact of a 300 basis point cut by the Fed. Just watch for the “dollar carry trade”. At 2.25% it’s days away from being kicked off. Hold everything constant - dollar being financed at 2.25%, don’t change the PEs of Indian stocks, just give me 15% earnings growth. This is without leverage.

All it requires is a little mind shift towards risk preference and you will get the carry trade coming back. We have stabilised and will hang in there for a while. The markets will start responding by June-July. It’s better that it gets steadily built so that it will last longer.

Indices up on frontline support; smallcaps hit
24 Mar, 2008, 1551 hrs IST.................

MUMBAI: Buying in frontline stocks saw indices close higher Monday but the broad market remained weak as heavy selling was seen in tier II and III stocks.

Bombay Stock Exchange’s Sensex closed at 15,335, up 341 points or 2.27 per cent from Wednesday’s close. The index touched a high of 15,340 and low of 15,056 intraday.

National Stock Exchange’s Nifty ended at 4623, up 50 points or 1.08 per cent. It touched a high of 4649.45 and low of 4539.80.

Heavy profit booking in midcap and smallcap shares kept the market edgy throughout. BSE Midcap Index ended 2.43 per cent down at 5,819.01 and BSE Smallcap Index closed at 6,970.81, down 3.48 per cent.

Among the sectors, BSE Bankex gained 3.89 per cent and BSE IT Index advanced 2.28 per cent. BSE Metal Index declined 5.23 per cent to close at 12,792.11 and BSE Realty Index ended at 6,846.50, down 3.40 per cent.

HCL Technologies (up 9.02%), HDFC (7.86%), HDFC Bank (5.93%), NALCO (5.72%), Wipro (5.71%) and ICICI Bank (5.23%) were the top Nifty gainers.

Cairn India (down 8.28%), Tata Steel (7.34%), SAIL (5.33%), Sterlite Industries (5.07%), Unitech (4.66%) and DLF (4.12%) were biggest index losers.

Market breadth remained negative with 2,121 declines and 563 advances on the BSE. On the NSE, there were 1,016 losers and 231 gainers.

6th Pay Panel recommends 40% salary hike

Justice B N Srikrishna on Monday submitted the Sixth Pay Commission’s report to Finance Minister P Chidambaram. The Commission has recommended a hike of about 40% in salaries of Central government staff and officers, along with their counterparts in defence and paramilitary forces. Among other recommendations, the Commission has asked the government to retain the current HRA in A1 cities. For HRA in non-A1 cities, the panel has recommended a hike of 10-20%.

SBI aims at $250 mn business in Sri Lanka

Colombo, March 24: Indian banking titan State Bank of India (SBI) hopes to do business of the order of USD 250 million in Sri Lanka in the coming three years. The bank already has a balance sheet size of USD 150 million, though it has only four branches - three in Colombo city and one in the hill town of Kandy - a company source said.

“Over the last three years, there has been a 50 percent growth, and the profit is of the order of USD 3.80 million,” the source said.

Worldwide, in 2006-07, SBI had assets totalling USD 130.33 billion, total deposits of USD 100.19 billion and a net profit of USD 1.04 billion.

In its Sri Lankan operations, the Net Non-Performing Assets (NPA), in both the Domestic Banking Unit (DBU) and the Foreign Currency Banking (FCBU), have always been less than two percent.

The SBI began its operations in Sri Lanka way back in 1864, and is the island’s oldest bank.

In its previous avatar as the Imperial Bank of India, it funded the operations of the Ceylon government, and the then-nascent tea industry. Today, as SBI, it is aggressively into financing the working capital needs of the Sri Lankan corporate sector, even as it has strengthened its traditional hold on the financing of exports and imports, especially Sri Lanka-India trade.

Colombo is currently hosting a two-day conference of SBI branches in the south Asian region.

REL seeks shareholders nod for buy-back

Mumbai, March 24: Anil Ambani group firm Reliance Energy on Monday said it will seek shareholders approval for various proposals, including the buyback of shares worth Rs 2,000 crore.

The shareholders by way of postal ballot would consider change in name of the company to `Reliance Infrastructure Ltd` and buy-back shares worth Rs 2,000 crore.

Further, the shareholders would take note of the company`s decision of not claiming its entitlement of the bonus shares as proposed by Reliance Power and a gift of 6.15 crore shares of Reliance Power from AAA Project Ventures Pvt Ltd to the company.

The board of directors has appointed Anil Lohia as scrutiniser to conduct the voting through postal ballot, Reliance Energy said in a filing to the Bombay Stock Exchange.

Lohia would submit his report to the chairman after completion of scrutiny and results of the postal ballot would be announced on or after April 17, the company added.

Besides, the shareholders would also consider the appointment of S C Gupta as whole-time director of the company for a period of five years from January 18.

Earlier, on March 10 the board of directors had approved to change the name of the company to Reliance Infrastructure, in a bid to adequately reflect the current nature of businesses in the company.

On March 5, the board of REL had approved a buy-back of its outstanding equity shares for an aggregate amount of up to Rs 2,000 crore, in two phases.

DoT warns Blackberry service providers

New Delhi, March 24: Having come under scanner for security lapses in the use of Blackberry services, the government has issued a stern warning to telecom companies to put the required security system in place within 15 days or stop the services.

The directive has been issued to the respective service providers to work out with officials of Blackberry licensor Research in Motion (RIM) of Canada to provide full-proof security system in the country, senior officials in the Department of Telecom (DoT) said.

If the services were stopped, over four lakh users of Blackberry would not be able to use this premium service which enables users to access e-mail in the form of SMS.

The DoT secretary had recently said that the government was keen to resolve the matter at the earliest.

When contacted RIM, licensor of Blackberry services, spokesperson told agencies that RIM operates in more than 130 countries around the world and respects the regulatory requirements of governments. RIM does not comment on confidential regulatory matters or speculation on such matters in any given country.

Telecom Minister A Raja had also said that security of nation was of paramount concern and this would not be sacrificed at any cost.

C-Dot, a technical wing of dot, has the monitoring capabilities provided the licensor puts the server in India enabling interception of contents of e-mails, if required, on the Blackberry handsets.

Currently, Bharti Airtel, Vodafone-Essar, BPL Mobile and Reliance Communications are offering this premium service. According to sources, most of the high-end users of these companies have shifted to blackberry services.

The controversy over Blackberry service came to public after Tata Teleservices was denied the permission to offer this value-added service by the ministry of home affairs saying there was no provision of lawful interception in the services.

Tatas had said that there should be a level playing field.

Sources in the DoT said that Tata`s application for permission to launch Blackberry services was still pending and may not be cleared till the matter was resolved. It also pointed out that DoT must verify whether the existing service providers took government`s permission to start services or they started on their own. There should be a proper investigation in the entire matter.

When contacted, the operators said they were not aware of any such directive from the government to put the required security system in place or any action to be taken against them by the government.

Tata to seal Jaguar, Land Rover deal on Wednesday

London, March 24: After months of fevered speculation and several postponements, Tata Motors of India is finally set to become the new owners of two of the world's best-known luxury car models - Jaguar and Land Rover - on Wednesday.

"We have been told that the MoU will be signed on Wednesday," Andrew Dodgson of the influential workers' union Unite, which represents Ford workers, told agencies.

According to Dodgson, Tata has agreed to retain the manufacturing base of the two marques in Britain and source the supply of engines and transmission from Britain.

On its part Ford, the American carmaker which owns the iconic British brands, has agreed to plug a "substantial" deficit in the workers' pension fund. "They have either put some money in or plan to do it," Dodgson said.

Tata, whose offer is said to be in the region of $2 billion, has assured Ford that it has no plans to 'Indianise' Jaguar and Land Rover.

Group chairman Ratan Tata said recently the practise of moulding an acquired company to look and function more like its new parent is a "more Anglo-Saxon" phenomenon, with "an expectation that if you're acquired, you will look like the owner."

He seems to have soothed the nerves of British workers, with Dodgson saying, "We're quite happy with what we have. After all kinds of rumours about job losses, the story is that that's not going to happen."

Scotching rumours of outsourcing, Tata is said to have assured Unite that it will keep all three of Jaguar and Land Rover's British plants at Solihull and Castle Bromwich in the Midlands and Halewood on Merseyside.

While Unite represents some 12,000 Ford workers, Dodgson said the total number of jobs at stake could be anywhere between 35,000 and 40,000 when ancillaries are taken into account.

Ford acquired Jaguar for $2.5 billion in 1989 and Land Rover for $2.75 billion in 2000 but put them on the market last year after posting losses of $12.6 billion in 2006 - the heaviest in its 103-year history.

Tata was named by Ford as the preferred bidders after it beat off competition from fellow Indian competitor Mahindra and Mahindra and an American buy-up specialist One Equity, headed by former Ford chief executive Jacques Nasser.

Jaguar said last month that it is "entirely relaxed" about a Tata takeover.

"We have shown Tata our new model lines and the planned product cycle. The two national cultures appear to fit together very well and Tata is being very respectful about what we are doing," said Ian Callum, the director of design who is responsible for the new Jaguar XF and XK model ranges.

MARK HULBERT
Double or nothing
Commentary: A "double nine-to-one" signal was triggered Tuesday
By Mark Hulbert, MarketWatchANNANDALE, Va. (MarketWatch) -- You could almost hear investors' collective sigh of relief Tuesday as they decided that the financial system wasn't about to completely disintegrate after all.
The Dow Jones Industrial Average ($INDUow Jones Industrial Average
News, chart, profile, more
Last: 12,361.32+261.66+2.16%

4:06pm 03/20/2008

$INDU 12,361.32, +261.66, +2.2%) ended the day with a gain of 420 points, the biggest one-day point gain in more than five years. ( Read full story.)
But there's more reason for the bulls to cheer than the magnitude of the day's point gain. Tuesday's action also was strong enough to trigger a bullish technical event known as a "Double Nine-To-One" signal.
This indicator is based on the volume of all NYSE-listed stocks that go up on a given day, expressed as a percentage of the total volume of all stocks that rose or fell on that day. On a day when rising stocks' volume is the same as declining stocks' volume, for example, this ratio would be exactly 50%.
A single "Nine-To-One Up Day" occurs when this ratio is 90% or higher on a given day. According to Martin Zweig, who helped to develop this indicator several decades ago, such a huge imbalance of up volume over down volume "is a significant sign of positive momentum. In other words, when daily up volume leads down volume by a ratio of 9-to-1 or more, that tends to be an important signal for stocks." The quotation comes from Zweig's 1986 book, "Winning on Wall Street."
An even more bullish signal, according to Zweig, is when two "Nine to One Up Days" take place within a short period of time -- something he called a "Double Nine-to-One" signal. It is this more bullish signal that got triggered on Tuesday: March 11, one week ago, was a Nine-to-One Up Day, and so was Tuesday, when up volume constituted more than 95% of the combined volume of both rising and falling stocks.
How bullish is a "Double Nine-to-One" signal? One answer is provided by David Aronson, an adjunct professor of finance at Baruch College. Professor Aronson is the author of a book titled, "Evidence-Based Technical Analysis" (Wiley, 2007), in which he discusses how to use the "scientific method and statistical inference" when judging investment strategies.
Aronson, along with the students in a class he teaches at Baruch College, tested the statistical significance of "Double Nine-to-One" signals. Aronson told me that he and his "class used data from the beginning of 1942 through fall of 2006, and we looked at what happens in the stock market in the 60-trading-day period following a ... double Nine-to-One signal, versus what happens the rest of the time. In those 60-trading-day windows, the S&P 500 index (SPX:S&P 500 Index
News, chart, profile, more
Last: 1,329.51+31.09+2.39%

5:00pm 03/20/2008


SPX 1,329.51, +31.09, +2.4%) produced an average annualized return of over 22%, on the assumption that an investor entered the market on the close the day after a double Nine-to-One signal was triggered and held until the end of the 60th trading day later."
"In the non-signal periods," Aronson continued, "in contrast, the return averaged 4.5% annualized. The difference between these two average returns is statistically significant."
Aronson told me that these calculations do not include dividends.
Are there are flies in the ointment? Of course. There always are.
One is that "Double Nine-to-One" signals aren't foolproof. Such a signal was triggered last November, for example, and, far from rising at an above-average rate over the subsequent three months, the stock market fell.
Another objection is that it may not be entirely fair to consider March 11 to have been a "Nine-to-One Up Day." That's because NYSE up volume on that day, as a proportion of total volume of both rising and falling issues that day, came to 89.998%.
A technician who rounded percentages to two or fewer decimal points would have concluded that March 11 was a Nine-to-One Up Day. But someone who calculated the ratio out to more decimals would have concluded that March 11 didn't qualify and, if so, then we didn't get a Double Nine-to-One signal this week.
However, Aronson, in an interview Tuesday afternoon, indicated that in his opinion, March 11's volume data came close enough to qualify. Had it been included in the sample studied by him and his class, March 11 would have been considered a "Nine-to-One Up Day."
Finally, a more serious objection is that there have been around a dozen nine-to-one down days over the past couple of months. However, Zweig argued in his book that Nine-To-One Down days do not have as much bearish significance as Nine-to-One Up days have bullish significance.
The bottom line? Tuesday's "Double Nine-to-One" signal may not prove to be as reliable a signal as it has in the past. But the bulls can nevertheless console themselves that the burden of proof has shifted so that it's now the bears poking holes in the bullish argument rather than the other way around.
Mark Hulbert is the founder of Hulbert Financial Digest in Annandale, Va. He has been tracking the advice of more than 160 financial newsletters since 1980.

Industry hails 6th Pay Commission report

New Delhi, March 24: India Inc has welcomed the sixth Pay Commission report that suggested an average increase of 40 per cent in salaries of Central government employees and said the move will not lead to a rise in inflation and revenue deficit of the government.

Industry body FICCI said the pay hike would not add to inflationary conditions and revenue deficit due to buoyant revenue collections.

"The revenue collections and the overall economy is growing. If these trends are kept intact, then this additional expenditure should not be too much of a problem," FICCI secretary general Amit Mitra said.

Echoing similar sentiments, Assocham said increase in salaries would not fuel inflation and increase revenue deficit as the country is witnessing increased direct and indirect tax collections as a result of higher tax compliance.

"The government is going to witness substantial hike in its revenue collections, benefits of which ought to be given to its employees and there should be no grudge against such pay commissions recommendations," Assocham president Venugopal Dhoot said.

Assocham said the move would make the Central government employees more accountable, productive and responsive as the exchequer would shed Rs 12,561 crore in 2008-09 itself on account of higher package.

Also, FICCI said the hike would reduce the problem of governance and attract talented personnel, besides making the employees more responsible.

The sixth Pay Commission submitted its report to Finance Minister P Chidambaram recommending implementation of the revised pay from January 1, 2006, which would impose an arrear payout burden of Rs 18,060 crore on the government.