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Stocks Rise As Wall Street Digests Government Overhaul Plan; Chicago PMI Better Than Expected
NEW YORK (AP) -- Stocks rose Monday after a reading on regional manufacturing came in better than expected and as investors examined details of a government plan to overhaul the way Wall Street is regulated. The Dow Jones industrial average rose nearly 100 points in the final session of the quarterThe Chicago Purchasing Managers Index, considered a precursor to the National Institute for Supply Management manufacturing survey on Tuesday, rose to 48.2 in March from 44.5 a month earlier. Economists had been expecting a reading of 47.3, according to Dow Jones Newswires. A figure below 50 indicates a contraction in manufacturing activity.

The market's reaction, however, was likely not as enthusiastic as the Dow's advance made it seem. Volume was very light, which tends to skew price movements, and the final day of the quarter had some institutions buying more for show rather than on any conviction about the economy.

It has been a dismal quarter on Wall Street, with financial companies' continuing credit market losses and the flagging economy wiping out investors' appetite for stocks. While the market has seen a number of up days during the quarter, overall the first-quarter trend was sharply lower.

Wall Street appeared unmoved by a speech from Treasury Secretary Henry Paulson on the plan to reorganize oversight of Wall Street; details of the 218-page plan have been widely reported in recent days. It would give the Federal Reserve increased power to protect the stability of the entire financial system while merging day-to-day supervision of banks into one agency, down from five under the existing system.

Stephen Carl, head of equity trading at The Williams Capital Group, said the overall session was a quiet one but that investors might take some time to square away any loose ends on their books as the quarter ends.

"I think people are kind of where they want to be for the quarter and then may be a little bit opportunistic for the next quarter," he said, suggesting some investors might try to snap up bargains after several sessions of declines.

In early afternoon trading, the Dow rose 91.51, or 0.75 percent, to 12,307.91.

Broader stock indicators also rose. The Standard & Poor's 500 index advanced 6.58, or 0.50 percent, to 1,321.80, and the Nasdaq composite index rose 11.53, or 0.51 percent, to 2,272.71.

Advancing issues outnumbered decliners by about 2 to 1 on the New York Stock Exchange, where volume came to a light 558.6 million shares.

The dollar rose against several other major currencies, including the euro, easing pressure on commodities such as oil and gold. Light, sweet crude fell $3.44 to $102.18 on the New York Mercantile Exchange, while gold dropped $10.70 to $919.90, also on the Nymex.

Bond prices rose. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 3.41 percent from 3.45 percent late Friday.

Scott Wren, senior equity strategist for A.G. Edwards & Sons in St. Louis said Wall Street was seeing a relatively quiet session as investors await economic data due this week on the manufacturing and service sectors as well as employment.

"It's likely to stay a pretty low volume day just in anticipation on what's going to come in the rest of the week. People are not going to do too much. They're just going to try to wrap up and look ahead," he said, referring to quarter's end.

In corporate news, Merck & Co. fell $6.72, or 15 percent, to $37.79 and Schering-Plough Inc. declined $4.98, or 26 percent, to $14.49 after medical researchers said the companies' joint cholesterol drug, Vytorin, failed to improve heart disease. The researchers' findings, published on the Internet by the New England Journal of Medicine, urged a return to more established treatments for cholesterol. Merck is one of the 30 stocks that comprise the Dow industrials and, as a result, dragged on the blue chips.

Citigroup Inc. plans to split its consumer banking unit from its credit card business as part of a broader reorganization to cut costs and simplify the large financial institution's structure. The company suffered billions of dollars in losses from investments in poor-quality mortgages. Citi rose 61 cents, or 2.9 percent, to $21.43.

The Russell 2000 index of smaller companies rose 9.15, or 1.34 percent, to 692.33.

Overseas, Japan's Nikkei stock average fell 2.30 percent. Britain's FTSE 100 closed up 0.16 percent, Germany's DAX index fell 0.28 percent, and France's CAC-40 rose 0.24 percent.

India`s current account deficit rise to USD 5.4 bn in Q3

Mumbai, March 31: A wide import-export gap led to India's current account deficit rising to 5.4 billion dollars in the third quarter of 2007-08, despite a higher surplus of earnings from software services, tourism and remittances from abroad.

A sharp rise in trade deficit due to rise in imports caused the current account deficit to rise by 1.7 billion dollars from 3.7 billion dollars in the corresponding quarter last year, the balance of payment data released by the reserve bank showed.

The trade deficit widened to 25.4 billion dollars from 16.5 billion dollars as import payments registered a jump of 41.4 per cent with growth in oil imports after international crude oil prices surged.

On a net basis, the invisibles account recorded a surplus of 20 billion dollars in Q3 as against 12.8 billion dollars in the corresponding quarter last year, mainly led by remittances from overseas Indians and software services.

For the April-December period, the trade deficit widened to 66.5 billion dollars from 50.3 billion dollars a year ago and the current account witnessed a deficit of 16 billion dollars as against 14 billion, the data showed.

The merchandise exports recorded a growth of 34.9 per cent in q3 of 2007-08 as compared with 20.9 per cent in the same quarter last year, led by engineering goods, petroleum products, gems and jewellery and ores and minerals.

A substantial increase in portfolio investment under the capital account contributed majorly to the net capital flows of 31.5 billion dollars during the quarter.

The net portfolio investment in the quarter witnessed almost over four-fold jump to 14.7 billion dollars, as against 3.6 billion dollars in the corresponding quarter last year.

Other components of capital flows were external commercial borrowings raised by corporates, which stood at 5.3 billion dollars, and short term trade credit of 4.3 billion dollars.

Inflation `unacceptably` high, admits RBI chief

New Delhi, March 31:Concerned over ballooning inflation, the Reserve Bank on Monday hinted at tighter monetary measures in its forthcoming credit policy, saying it was in "full readiness" for appropriate action to contain prices.

`Inflation is unacceptably high...we are very, very concerned...we are in full readiness to take appropriate action to contain inflation," Reserve Bank governor Y V Reddy said, a month ahead of the credit policy, to be announced on April 29.

Inflation spiralled to 6.68 per cent, much beyond the RBI`s comfort level of five per cent, prompting Finance Minister P Chidambaram to stress that the government would take all measures, monetary, fiscal and supply side, to combat it.

Attributing the sudden spurt in inflation to a surge increase in prices, mainly of food, fuel and metals, Reddy told reporters that some inflationary pressures were expected when the central bank reviewed its monetary policy in January.

"Inflation has (now) turned out to be well more than anticipated," Reddy said on the sidelines of a function.

The RBI was "very concerned" about the impact of recent spurt in prices and inflationary expectations, Reddy said, adding that the government was already taking some measures on the supply side.

"This would help to contain inflation," he said. While RBI was in full readiness to take appropriate action to contain inflation, "any decision has to be taken carefully as the situation is extremely complicated," he said.

The RBI governor Y V Reddy said the central bank was confident in terms of growth and stability and added the country would continue to be one of the best-performing economies in the world in the months ahead.

"RBI is confident (on economic growth). In terms of growth and stability, India will continue to be one of the best-performing economies in the world in the months ahead," he said.

On liquidity management, Reddy said there were many instruments available to contain liquidity. "We will not hesitate to use those instruments," he said.

On credit derivatives, there have been reports of dialogues between select banks and corporates on the subject and the apex bank has also received communications from some corporates, he said.

The RBI had issued comprehensive guidelines on derivatives some time back.

"As long as (these) guidelines are followed in letter and spirit, there is no cause of dispute," the RBI governor said, adding that "as per our current assessment, the RBI does not anticipate any systemic problem (on account of derivatives)," he said.

RBI likely to raise CRR to curb inflation

The Reserve Bank is likely to tighten money supply in its annual credit policy on April 29 to rein in inflation, but the move may not push interest rates up because of huge liquidity in the banking system.

With inflation over a year high of 6.68 percent, there is widespread expectation of RBI increasing cash reserve ratio (CRR), amount of mandatory deposits each bank has to keep with the Central Bank.

There is a high probability of hike in CRR and further rupee appreciation in the near term, standard chartered said in a report.

But, deprecation is likely in the Indian currency to 42.50 per dollar level by September, it said.

Risks of hikes in CRR have increased substantially, it said, adding that though growth has moderated in the recent months and tight money supply can slow it further, the hastened pace of increase in inflation in the backdrop of moderating growth raises concern about price stability.

"Hence the central bank can resort to a CRR hike (perhaps a 50 basis points hike from the current 7.5 per cent) as a last resort if inflation continues to fly," it said.

Oriental bank of commerce Executive Director Allen C A Perriera said the situation is quite complex for the RBI. It is difficult to say what monetary initiative would come to sooth inflationary expectations.

However, interest rates seem to be stable in the short term, he said.

According to another senior banker, it would be a tough call for the RBI to raise interest rates in the backdrop of falling rates globally.

Any upward rate revision would lead to inflow of capital by virtue of differential rates, he said.

UK`s IHG to start 20 hotels in India

New Delhi, March 31: UK-based InterContinental Hotels Group (IHG) on Monday said it plans to open 20 hotels in India with over 5,000 rooms under its different brands, including the InterContinental, Crowne Plaza and Holiday Inn, as a part of its strategy to strengthen presence in the country.

The world's largest hotel group with the most number of rooms, is developing 14 new-look Holiday Inn hotels with more than 3,700 rooms, which are scheduled to open over the next three years in 11 cities nationwide.

"India is an important market for IHG, where both domestic and international traffic is increasing and new travel segments are opening up. In the Indian hotel business, the greatest opportunity for growth is in the mid-scale segment, in which Holiday Inn has a leading position," IHG Asia Pacific Chief Executive Peter Gowers said in a statement.

IHG, with an existing portfolio of 13 hotels in India, including five Holiday Inn hotels, is also developing hotels under the InterContinental and Crowne Plaza brand names besides Holiday Inn. It, however, did not disclose any investments for the planned expansion in the country.

Gowers said Holiday Inn accounts for almost three quarters of the company's new developments in India.

Three of the Holiday Inn hotels will be located in Bangalore, with the remaining in Delhi, Dehradun, Cochin, Coimbatore, Kolkata, Mumbai, Pune and Nagpur.

RCom launches free calls offer in Punjab

Chandigarh, March 31: Reliance Communications on Monday announced a special offer for its existing and new subscribers in Punjab ‘free unlimited outgoing calls` to all Reliance mobile subscribers in the state.

Now Reliance subscribers can made unlimited calls to more than 10 lakh Reliance mobile subscribers in Punjab, including Chandigarh, for just Rs 99 per month, a company spokesman said here.

This offer will enable a large cross section of users including businessman, students, professionals, housewives to cut down their communications costs substantially and help them in conducting their business or other activities without worrying about their mobile bills, he said.

The launch of this unlimited outgoing calling in Punjab provides heavy users an ideal product enabling them to speak to any Reliance mobile user for unlimited duration for free.

This new product will attract more and more heavy usage subscribers to the reliance community.

This unlimited calling pack is available at Rs 99 with validity of 30 days for all Reliance mobile subscribers including lifetime subscribers.

It is a compelling proposition for Reliance customers to form their own communities of interest and get maximum benefits out of this extraordinary value offer.

Nikkei up 1.4 pct, shrugs off weak tankan survey
Mon Mar 31, 2008 10:55pm EDT

TOKYO, April 1 (Reuters) - The Nikkei average rose 1.4 percent on Tuesday, led higher by exporters such as Canon Inc (7751.T: Quote, Profile, Research), tracking gains on Wall Street.

The market rebounded from a tumble on Monday, despite the weaker-than-expected results of a Bank of Japan tankan business sentiment survey.

"There was not much surprise in the tankan. The market has already priced in weak readings," said Harushige Kobayashi, head of research at Maruwa Securities. "It's natural to see a rebound of this size, given yesterday's sharp fall."

Business sentiment among big Japanese manufacturers sank to a four-year low in the March tankan, adding to evidence of a worsening economic outlook and reinforcing some market speculation that the central bank may cut interest rates later in the year.

Worries about the global credit crunch, rising raw material costs, fragile stock prices, and a rise in the yen contributed to weakening business confidence, and the outlook for the coming quarter was even more bleak. [ID:nT32965]

Trade in Tokyo remained thin, with investors opting to sit tight ahead of a raft of economic data and earnings from U.S. banks later in the month.

"Investors don't feel an urgent need to buy any particular sector, and they are also holding off ahead of earnings," said Norio Shimura, deputy head of the equity department at Chuo Securities.

The benchmark Nikkei .N225 ended the morning session up at 12,697.99. The broader TOPIX gained 1.4 percent to 1,230.17.

U.S. stocks gained on Monday as a report showing stronger-than-expected Midwestern business activity eased worries about the economy and a plan for a regulatory overhaul raised hopes for calmer financial markets.

In Tokyo, digital camera maker Canon rose 3.1 percent to 4,730 yen. Video game maker Konami Corp (9766.T: Quote, Profile, Research) shot up 7.5 percent to 4,030 yen, the biggest contributor to the Nikkei.

Japan's three largest banks gained, with No. 1 Mitsubishi UFJ Financial Group (8306.T: Quote, Profile, Research) climbing 1.4 percent to 871 yen.

Computer memory chip maker Elpida Memory Inc (6665.T: Quote, Profile, Research) surged 7.2 percent to 3,560 yen, extending gains after the company said on Monday it aimed to raise prices 20 percent in April to reverse a brutal industrywide slump. [ID:nN31427886]

Chiyoda Corp (6366.T: Quote, Profile, Research) was overwhelmed by sell orders indicated at 805 yen, down by its daily limit of 100 yen from Monday's close after the plant and engineering firm slashed its earnings estimates and dividend outlook.

Chiyoda cut its operating profit outlook for the year that ended last month to 7 billion yen, a 68 percent drop from an earlier estimate, battered by labour shortages and construction delays for projects in Qatar.

Ajinomoto Co Inc (2802.T: Quote, Profile, Research) jumped 3.6 percent to 1,046 yen after Nomura Securities maintained its "buy" rating on the stock even after Japan's largest seasonings maker said it would miss its profit forecasts for the year ended on Monday.

Trade was moderate, with some 732 million shares changing hands, compared with last week's morning average of 740 million.

Advancers outnumbered decliners by more than 2 to 1.

India ranks 44th among most-preferred retail locations: Report

New Delhi, March 31: India, which boasts of a growing retail market, ranks 44th in the list of most preferred retail destination in the world due to factors like FDI restrictions and lower average per-capita income, a report has said.

According to the report `how global is the business of retail`, which maps the global footprint of 250 of the world`s top retailers, India is at number 44 in the list of preferred destinations in relation to market, regional trends and other influences.

"Even though the Indian economy is growing at a rapid pace with consumers having more buying power, we are still only at the 44th position on this list. This is primarily due to FDI restrictions in retail and also relatively lower average per-capita income in the country," CB Richard Ellis South Asia Chairman & MD Anshuman magazine said in a statement.

He hoped that India would move up in the rankings if FDI norms are relaxed and economic growth continues.

Out of the bric (Brazil, Russia, India and China) countries, China and Russia are in the top 10 of the rankings. Brazil is also lower in the order.

The report ranks the UK as the current global leader in relation to the presence of international retailers. The UK hosts 55 retailers that were surveyed.

Spain`s position as the second-ranked market, closely trailing the UK, gives perspective to the market`s new global significance. It houses 51 per cent of retailers surveyed.

Spain`s growing ability to attract global retailers to its shores is fuelling its rise as a global retail destination and threatening the UK`S title as the `most international retail market` in the world, according to the report.

The top 10 also included France, Germany and UAE.

Infy, TCS, Wipro among 1,000 to lose market wealth in FY`08

Mumbai, April 01: Investors mostly got a raw deal from the stock markets, with as many as 1,000 companies, including top five IT firms Infosys, TCS, Wipro, Satyam and HCL Tech, collectively losing over Rs 2,50,000 crore in market value in 2007-08.

The total market cap of all the listed companies in the country, however, rose by about Rs 18,00,000 crore during the fiscal, counting close to 100 that got listed during the year.

But as many as 1,000 companies, including newly listed firms, recorded a fall in their market capitalisation, while another 1,400 firms managed to add about Rs 15,00,000 crore to their valuations.

Those that witnessed a fall in their market cap include the big names of IT sector, such as Infosys, Tata Consultancy Service, Wipro, Satyam Computer, HCL Technologies, Tech Mahindra, I-Flex, MphasiS, Patni Computer and Moser Baer.

Besides, firms like Tata Motors, Dr Reddy's, Cipla, Hindustan Zinc, Mahindra and Mahindra, Zee Entertainment, Jet Airways, Parsvnath, Videocon Industries, Financial Technology, United Breweries, Indian Hotels and Container Corporation also shed value.

Infosys, TCS and Wipro lost Rs 18,000-42,000 crore, while Satyam, HCL Tech and Patni lost Rs 2,000-4,500 crore.

Tata Motors, M&M, Hindustan Zinc, Cipla, Container Corp, Dr Reddy's, Tech Mahindra, I-Flex, Videocon, MTNL, Bharat Forge, Sobha Developers, United Breweries, Amtek Auto, Cadila, Wockhardt, Aventis Pharma, Ansal Properties, Aurobindo Pharma, Mindtree Consulting, Hexaware, Subex and NIIT Tech all lost between Rs 1,000-10,000 crore each.

Together these 1,000 firms saw their market value falling to about Rs 7,24,000 crore, from about Rs 9,82,000 crore at the end of fiscal ended March 31, 2007.

Manufacturing growth at 8-month low: PMI

Indian manufacturing activity grew at its slowest pace in eight months in March, slipping further from its peak in December as consumer demand softened due to high interest rates, a survey showed on Tuesday.

The ABN AMRO Bank Purchasing Managers` Index (PMI) softened to a seasonally adjusted 57.5 in March, its lowest reading since July, from 59.5 in February and below December`s 61.9, which was the highest reading since the survey began in April 2005.

A reading above 50 signals expansion while readings below 50 suggest contraction.

The index reflects government data, which has shown annual industrial output growth slowing in recent months from double-digit rates at the start of the fiscal year in April 2007.

The PMI, compiled by UK-based NTC research and sponsored by the Dutch bank, tracks changes in manufacturing business conditions by polling 500 companies each month on output, new orders, employment and prices.

Inflation, including higher prices for raw materials, lower export orders and a slump in consumer demand have depressed manufacturing output in recent months.

The output index fell to an eight-month low of 60.3 in March from 62.2 in February. The new orders index eased to an eight-month low of 64.0 in March from 68.4 in February.

The export index dropped to an eight-month low of 53.0 in March from 55.7 in February.

The input price index fell to 53.8 in March from 57.5 in February, and factory-gate prices fell to an eight-month low of 51.7 in March from 54.2 in February.

In contrast, government data on Friday showed wholesale price inflation soared to a 14-month high of 6.68% in the middle of March, well above the central bank`s comfort zone of around 5%.

Most forecasters expect India`s economic growth to have slowed in the fiscal year that ended on Monday from the year-earlier pace of 9.6%, which was the strongest growth in 18 years.

The central bank has kept its main lending rate unchanged at 7.75% for a year, having raised it five times between June 2006 and March 2007. It also raised the proportion of cash that banks have to keep in reserve with the central bank to keep monetary conditions tight.

1992 securities scam: Ketan Parekh, Hiten Dalal get 1-yr RI each

Mumbai, April 01: The Bombay High Court on Tuesday sentenced stock broker Ketan Parekh to one-year rigorous imprisonment in the 1992 securities scam case. The court also handed one-year rigorous imprisonment each to stock broker Hiten Dalal and five others, while two other accused were sentenced to six months imprisonment. However, the bails of all convicts will continue till July 31, Justice V M Kanade of Special Court (For trial of Offences Relating to Transactions in Securities Act) held.

The special court had on March 14 convicted Parekh and Dalal, alongwith six others including the then top officers of Canfina (Canbank Financial Services), in connection with the scam.

Justice Kanade held that Parekh, Dalal and Canfina officials had entered into a criminal conspiracy to "siphon off Rs 47 crore".

Bangalore-based Canfina, a subsidiary of Canara Bank, was the victim of the scam.

Prosecution had told the court during the trial that money belonging to Canfina was transferred to accounts with Canbank Mutual Fund in Mumbai by default, but instead of returning the money to Canfina, CBMF diverted it to the accounts of Parkeh and other stock-brokers.

Apart from Parekh, those convicted of criminal conspiracy and misappropriation of funds were: stock brokers Hiten Dalal, S K Jhaveri, Pallav Seth and Navinchandra Parekh; Canfina`s former assistant vice presidents Sainath Mohan, M K Ashokkumar and former general manager of CBMF BR Acharya.

The court had acquitted former assistant vice president of Canfina N Balsubramaniam, former general manager of CBMF P J Subbarao and B V Shrinivasan of Vysya Bank.

These fraudulent transactions took place in October 1991 and January 1992. Total loss to Canfina was of Rs 47.7 crore.

Besides the 1992 securities scam, Parekh is also facing charges of involvement in the 2001 Ahmedabad-based Madhavpura Bank scam, in which the financial institution was duped to the tune of crores of rupees.