Lower inflation, in-line GDP boosts market sentiment

After lying low for the entire week, Indian stock market benchmarks surged on Friday to close over 3 per cent higher backed by host of positive cues from domestic and global markets.

Market opened with a gap-up reacting to drop in inflation to 12.40 per cent against expectation of 12.83 per cent, on moderation in prices of vegetables, meat, cement and a few non-administered petroleum products.

Directionless till Thursday, investors took this opportunity to build positions in recently beaten down banking and realty stocks as fears of Reserve Bank of India raising interest rates eased.

Market also got a lift from a rally in Asia and the US earlier on the back of a surprise 3.3 per cent first quarter GDP growth in US. Retreating oil prices as traders discounted threat of hurricane Gustav to US installations boosted sentiments further. However, oil climbed back up to $117 in Friday’s trade as threat from Gustav continued to loom.

Back home, data showed the Indian economy grew at 7.9 per cent in the April-June quarter against previous quarter’s 8.8 per cent. The numbers were also disappointing compared with previous year’s 9.2 per cent growth.

This is the first time in last thirteen quarters that GDP growth has fallen below 8 per cent, but India is still expected to clock an annual growth of 8 per cent.

“Moderation will continue for at least for two more quarters (factoring the further tightening by RBI). However, we do not expect GDP to fall below 8 per cent in 2008-09. The consumption demand (both from consumer and government) is still strong which should support the manufacturing sector. Investment and savings are also satisfactory and is reflected in growth of construction sector in this quarter (11.4% against 7.7% a year ago),” said Krupresh Thakkar, research analyst, India Capital Markets.

“Growth in agriculture holds the key, as a good season would increase demand for other products from industrial and service sectors boosting the economy. The slight slowdown in service sector is an area of concern but we would like to watch the figures for one more quarter,” he added.

Bombay’s Stock Exchange’s Sensex closed at 14,564.53, up 516.19 points or 3.67 per cent. The 30-share index touched a high of 14,586.16 and low of 14,279.02.
National Stock Exchange’s Nifty ended at 4,360, up 3.46 per cent or 146 points. It touched a high of 4,368.80 and low of 4,230.60.
Hitendra Nayee, institutional-head, dealing, India Capital Markets, said, “domestic funds and foreign institutions both turned buyers. After months, we saw inflation climbing down and GDP numbers were also in line with expectations. The good thing is volumes were high, that shows interest returning back into the market. Now, the NSG meet will be keenly watched. We are expecting short-term uptrend in the market.”

However, second rung stocks were behind in the race as compared with heavyweights. BSE Midcap Index closed 2.38 per cent higher at 5,742.29 and BSE Smallcap Index gained 1.61 per cent to close at 6,891.64.
State Bank of India (7.19%), Reliance Infrastructure (5.97%), ICICI Bank (5.93%) Tata Motors (5.44%) and DLF (5.35%) were the major Sensex gainers. There were no losers in the index.
Shares of Tata Steel surged nearly 5 per cent after the company posted 60.5 per cent rise in April-June consolidated net profit late on Thursday. The company’s shares ended up 4.99 per cent at Rs 600.35 with volume traded at 22,11,323 against two-week average of 14,78,472 shares. The steel maker is in talks to raise at least $1 billion from a stake sale to private equity firms or a private placement of shares, according to media reports.

Gammon Infrastructure Projects ended up 1.17 per cent at Rs 94.95 on BSE after it got an order for a bridge project worth Rs 8 billion.

Jai Corp ended up 5 per cent at Rs 324.30 on market talk that Mukesh Ambani’s Reliance Industries may grant it a gas distribution contract.

On BSE , advances were 1,851 and declines 790.

According to NSE website, total turnover was Rs 10,626.94 crore (provisional), up from Rs 8,769 crore Wednesday—a prior to settlement day. Avdhoot Investment

IDFC MF launches IDFC Strategic Sector (50-50) Equity Fund

IDFC MF has launched of IDFC Strategic Sector (50-50) Equity Fund, an open ended equity fund that will invest up to 50 per cent of the assets in a chosen sector that is positioned for high returns while the balance amount may be invested in companies across market capitalisations and sectors.
The scheme opened on Thursday and will close on September 18. The investment objective of the scheme is to generate long term capital appreciation from a portfolio of predominantly equity and equity related instruments. The portfolio would acquire small and medium size companies with good long term potential.

This scheme may also invest in debt and money market instruments. This fund is benchmarked against the Nifty and will be managed by Kenneth Andrade, VP – Equities, IDFC MF.
The fund plans to invest 50 per cent of its AUM in sectors like auto, real estate, metals, energy, capital goods and telecom, while the balance will be invested in companies that attempt to give returns in line with the market.
Units of the scheme can be subscribed / redeemed at the applicable NAV, subject to applicable load, on all business days during the continuous offer.
Entry load will be charged as follows: amount to be invested being less than Rs. 5 crore — 2.25 per cent, Rs. 5 crore or more – Nil.
Exit load will be nil in case of purchase of Rs. 5 crore or more. In case of purchase of less than Rs. 5 crore (if redeemed within 1 year) the entry load is 1.00 per cent.
Naval Bir Kumar, managing director, IDFC MF said, “to create wealth you need to identify growth sectors, invest early and have conviction to hold for the longer term and most importantly create the right structure for these investments to blossom. The launch of this fund underlines our commitment to this objective.Avdhoot Investment

Systematic investing pays when markets correct

For those expecting the Sensex to touch 16,000 in the near term, last week’s market trend came as a jolt. With inflation continuing its upward trend, there wasn’t much good news and as a result, on Thursday, the Sensex lost over 400 points. It has once again brought back the fears of corrections at regular intervals and consensus is growing in favour of a weak market in the near term.

While the earlier sore points of high inflation and resulting higher interest rate regime continue to exist, the bad news during the week came in the form of higher crude oil prices. The mild surge in oil prices has strengthened the case for bears who are once again back in action. With traders too taking comfort in going short, one cannot expect a huge recovery in the stock prices in the coming days. Much of the uptrend would be triggered by short covering than value buying.

But the good news for long-term investors is that the market has begun to show resilience and the current weakness has factored in most of the bad news. The intermittent selling pressures , largely driven by foreign financial institutions, needs to lose momentum for the local investors to commit larger cash. The local institutional investors like insurance companies and mutual funds, have been sitting on a larger components of cash and have preferred to play the wait and watch game. For More click here

Savings bonds can be collateral: FM

NEW DELHI: Indian savings bonds could now be used as collateral for obtaining loans from banks, the finance ministry said late on Tuesday.
The scheme is applicable for 7 percent Savings Bonds issued in 2002, 6.5 percent Savings Bonds issued 2003 and for 8 percent Savings Bonds issued in 2003, it said.
Savings bonds were issued by the government in those years as a saving avenue for officials who took voluntary retirement or retired at the time. for full story click

Loan growth better than 2007: RBI

BANGALORE: Growth in advances by Indian banks was better than last year, Reserve Bank of India deputy governor V Leeladhar said on Tuesday when asked whether high interest rates were hurting loan growth.
The central bank raised its key lending rate to a seven-year high of 9 percent in July to rein in double-digit inflation.
Loans by Indian banks as at Aug 1 were 25.8 percent higher than a year earlier, RBI data showed.

SBI life plans overseas foray

Riding high on the strong brand identity of State Bank of India, SBI Life Insurance is now looking to foray into overseas market next year by targeting Indian expatriates in the Middle East countries for selling insurance products.
“We have plans to enter Middle East countries as there is a huge potential for life insurance business here because of the large presence of the Indian expatriates. Moreover, SBI has a strong brand identity which will also help us.(to penetrate there),” SBI Life Insurance Managing Director and CEO US Roy told reporters here on Tuesday.
Stating that the company is still in negotiation with concerned authorities for overseas foray, he said it hopes to start operations in 2009-10. However, he said the company has still not decided on the distribution model for marketing products in the overseas market.
SBI Life Insurance, a 74:26 joint venture between SBI and BNP Paribas Assurance, has targeted to achieve over 70 per cent growth in new premium income at Rs 8,500 crore in 2008-09 against collection of Rs 4,800 crore in last fiscal. The company is also looking to achieve over Rs 10,000 crore of total premium income in this fiscal against Rs 5,622 crore in 2007-08.
The company has plans to open 250 new branches this year, besides doubling the headcount of insurance advisors in 2008-09. Presently it has 180 branches and 43,000 agents.
However, he said the company would not go for any fresh capital infusion this year because of healthy solvency ratio of 2.2 per cent with paid up capital of Rs 1,000 crore. Last year, it invested Rs 600 crore on expansion purposes. click here for more

US stocks fall on inflation data, financial worries

NEW YORK: Stocks fell sharply on Tuesday after a hefty jump in wholesale inflation and a drop in new home construction gave investors more reasons to believe the economy won’t rebound anytime soon. The Dow Jones industrial average dropped by more than 100 points.
The Labor Department said its Producer Price Index rose by 1.2 percent in July, more than double the expected rate. The increase means prices have risen in the past 12 months at the fastest pace in 27 years.
The data also showed that core wholesale inflation, which excludes food and energy prices, rose 0.7 percent — the biggest increase since November 2006 and more than triple the 0.2 percent rise in core prices that had been expected.
“Maybe investors were hoping to shrug off the challenges of high commodity prices and inflation,” said Jack A. Ablin, chief investment officer at Harris Private Bank. “But now we find out that perhaps the inflation situation is worse than we thought.”
A weak report on new home construction did little to quell investors’ worries. The Commerce Department said July housing starts fell to an annual rate of 965,000 units — higher than analysts predicted, but the lowest level in more than 17 years nonetheless.
Tuesday’s pair of economic reports indicated not only that the financial sector is struggling to right itself after billions of dollars in credit losses, but also that the rest of the economy is still showing significant signs of stress.

Anil Ambani eyes big pie in DTH space

 Anil Ambani’s Reliance Big TV forays into the growing Direct to Home (DTH) services and draws up an ambitious plan to capture 40 per cent of the market share within 12 months.

Reliance Big TV, a subsidiary of Reliance Communications, will offer 202 channels initially and increase the bouque to 330-350 over a period of time, company CEO Arun Kapoor said here on Tuesday.

Against 120 million TV homes in India, world’s second largest, only six million are connected to DTH services being provided by four players namely, Tata Sky, Dish TV, Sun TV and DD Direct.

“The number of DTH TV homes is likely to grow by an additional 11-12 million in a year from now and we aim to have 40 per cent market share of that,” Kapoor said.

The DTH subscriber base is likely to go up to 60 million by 2015, he added.

The service will be available in over one lakh outlets across country’s 6,500 towns including over 2,000 exclusive Reliance branded stores. By March next year, the reach would be extended to 10,000 towns, he said.
“We are ready to provide the service to five million homes,” Kapoor said adding that STBs would be outsourced from various vendors including Hyundai and ZTB.
He, however, did not rule out the possibility of setting up a Group-owned STB manufactruing facility in the distant future, saying,” As of now, we don’t have any plan. We will see that in future”.

To facilitate the service roll out, Reliance Big TV has set up a call centre which would operate from two locations and capable of handling over 50,000 calls a day.

“An army capable of installing over 15,000 daily connections with specially trained installers would ensure fulfilment of every customer order within 48-72 hours,” Kapoor said.

Apart from the existing four players, Bharti and Videocon are also planning to launch DTH service in the next few months.
Kapoor, however, is optimistic of being emerge as the leading player in the field through its ’superior product’ and ruled out roping in any celebrity to endorse the brand.
“Big TV will mark the shift of TV content control from broadcaster to customer hands and define the future of TV viewing in India. We believe our product is superior and thus we don’t need a big celebrity to endorse it. Our product is itself a big hero,” Kapoor said.

Life Insurance

Life Insurance : Top things to know
1. All policies fall into one of two camps.
There are term policies, or pure insurance coverage. And there are the many variants of whole life, which combine an investment product with pure term insurance and build cash value.
2. Insurance is sold, not bought.
Agents sell the vast majority of life policies written in the U.S. because the life insurance industry has a vested interest in pushing high-commission (and high-profit) whole-life policies.
3. Whole life is expensive.
Policies with an investment component cost many times more than term policies. As a result, many people who buy whole life often can’t afford an adequate face value, leaving themselves underinsured.
4. Whole-life policies are built on assumptions.
The returns quoted by the agent are simply guesses – not reality. And some companies keep these guesses of future returns on the high side to attract more buyers.
5. Keep your investing and insurance strictly separate.
There are better places to invest – and without the high commissions of whole-life policies.
6. Buy enough term coverage to fill your needs.
Life insurance is no place to skimp, especially with rates at historic lows.
7. Match the term of the policy to your needs.
You want the policy to last as long as it takes for your dependents to leave the nest – or for your retirement income to kick in.
8. Buy when you’re healthy.
Older people and those not in the best of health pay steeply higher rates for life insurance – so buy as early as you can, but don’t buy until you have dependents.
9. Tell the truth.
There’s no sense in shading the facts on your application to get a lower rate. Be assured that if a large claim is made, the insurance company will investigate before paying.
10. Use the Web to shop.
Buying life insurance has never been easier, thanks to the Internet. You can get tons of quotes – and avoid the pushy salespeople. for more detail visit Avdhoot Investment

Auto Insurance

Auto Insurance: Top things to know

1. You’re a statistic.
To an insurer, you’re not a person, you’re a set of risks. An insurer bases its premium (or its decision to insure you at all) on your “risk factors,” including some things that may seem unrelated to driving a car, including your occupation, who you are, and how you live.
2. Insurers differ.
As with anything else you buy, what seems to be the same product can have different prices, depending on the company. You can save money by comparison shopping.
3. Don’t just look at price.
A low price is no bargain if an insurer takes forever to service your claim. Research the insurer’s record for claims service, as well as its financial stability.
4. Go beyond the basics.
Most states require only a minimum of auto-insurance liability coverage, but you should look for more coverage than that.
5. Demand discounts.
Do not ask for any Discount it will affect u after sales services
6. Ask for the real thing.
Insurers cut costs by paying only for car parts made by companies other than the car’s manufacturer. These parts can be inferior. Demand parts by the original equipment manufacturers (OEMs).
7. At claims time, your insurer isn’t necessarily your friend.
Your idea of fair compensation may not match your insurer’s. Your insurer’s job is to restore you financially. Your job is to prove your losses so you get what you need.
8. Prepare before you have to file a claim.
Keep your policy updated, and re-read it before you file a claim so there are no surprises. For more detail visit Avdhoot Investment