SumanSpeaks: The Information Super Highway

Brokerage Report: Banking Sector Update: Credit growth at yearly low : RBI released its fortnightly bulletin for 16 December 2011, with updates on bank credit and deposit growth. Credit growth fell to 17.1%, below the RBI’s trend growth expectation of 18%, while deposit growth was largely flat at 18%. Credit growth : Credit growth fell to 17.1% yoy vs. 17.7% yoy (all comparisons with the previous fortnight, unless specified). YTD FY12 credit growth stood at 8.3% vs. 12.3% in the same period of FY11. Given the high base of last year and slowdown in industrial activity, we can expect credit growth numbers to slip further. Deposit growth : Deposit growth was at 18% yoy an increase of 10bps. Time-deposit growth was strong at 20.9% but demand deposit growth was poor at -3.2% yoy. Incremental CD ratio was at 71.8% : Absolute CD ratio came in at 75.2% vs. 74.2%. Bank credit was Rs.42,670bn, up Rs.316bn, while deposits were at Rs.56,726bn, down Rs.375bn.  On a yoy basis, credit off-take...

" It's time to quit India ?" MUMBAI, India—Ajay Piramal is sitting on a mountain of cash. Yet the billionaire Indian tycoon, working in one of the world's fastest growing economies, is struggling to figure out what to do with the money. The problem isn't opportunity, he said. It's India. "Every large investment, there was no transparency," Piramal said. His dilemma is a worrying sign for India. With the country mired in corruption, bureaucratic red tape and unclear and changing government policies, many of the men who made their billions here are saying maybe it's time to quit India. It's got to be easier to do business elsewhere. In May last year, Piramal's healthcare business sold its generic drug operations to U.S. pharmaceutical giant Abbott Laboratories for $3.8 billion. Piramal, a tall big man in a country that still measures prosperity by girth, was eager to set that cash pile to work. He wanted to expand one of his chemical pl...

Banks have to meet the requirement for a capital conservation buffer between 31 March 2014 and 31 March 2017: The RBI According to RBI’s Basel-III draft norms, banks will need common equity tier-1 capital equal to 5.5%, up from 3.6%, of their risk-weighted assets, and overall tier-1 capital of 7% of RWAs. The Reserve Bank of India (RBI) on Friday proposed stricter norms for Indian banks as part of a plan to migrate to the Basel-III global regulatory framework to create a healthier banking system. The central bank has suggested enhancing minimum capital standards, the creation of a capital cushion and better risk coverage mechanisms for domestic lenders. While the proposed new standards will help build a stronger banking system in the long run, in the coming years, they are likely to put more pressure on most public sector banks to raise large amounts of capital in potentially tight cash conditions, bankers and analysts said. According to RBI’s Basel-III draft norms, banks will need ...

Government sets up 6 panels to monitor performance of textiles sector news      The government has constituted six high-level inter-ministerial committees to review and evaluate the performance of the textiles industry, including exports. The committees consist of representatives from the various ministries and departments, including the Planning Commission, textile minister Anand Sharma told the Lok Sabha today. He said despite the global economic downturn the government has set an export target of $33 billion for the textiles sector next year. The current year's target is $28 billion. Sharma said the slowdown in the textiles sector has been due to various factors, including the poor global economic situation. He, however, said the government has been taking steps to meet the problem faced by the global economic downturn, which is a ''serious concern.'' Sharma said there has so far been no complaint of Chinese raw silk being dumped in the country. Chinese silk ...

  Profitability of textile companies to improve from H2FY12 Decline in input costs and moderate demand growth will help improve the profitability of cotton yarn and man-made fibre (MMF) manufacturers to improve over the next few quarters, after facing severe profitability pressures which led to significant erosion in their market capitalisation in first half of the current financial year. In the past one year, cotton yarn and MMF players have registered a negative return of 48 per cent and 37 per cent, respectively, compared to negative 20 per cent return for S&P CNX NIFTY. However, according to CRISIL Research, the current valuation of these manufacturers discounts the current negative sentiments around the sector and offers good scope for upside. Further, stocks of ready-made garment (RMG) companies seem to be fairly priced in spite of being at historical highs, as they offer relatively high and stable returns among the textile companies during the present uncertain times. ...

In association with 'Visa', ItzCash, DCB Bank unveil new prepaid card It is a multi-purpose prepaid card, designed to provide e-payments facility to millions of unbanked and under-banked Indians who continue to transact in cash. Development Credit Bank Ltd (DCB) is amongst the fastest growing private sector banks in the country today with a history of operating in the financial services arena for more than 70 years.More recently the Bank has seen a rapid expansion in its retail operation and DCB currently has a network of 82 branches and extension counters....... MUMBAI, INDIA: Prepaid card company Itz Cash Card Limited, and Development Credit Bank Limited have launched a multi-purpose prepaid card, in association with payments technology company Visa. Called Freedom Prepaid Card, it is a multi-purpose card that can be issued to under-banked and unbanked individuals, said a press release. The card would be issued at an initial cost of Rs.50 and can be recharged any number o...

~: Imposition of net excise duty of 5 per cent on branded garments in the 2011-12 Budget  is creating lot of problems for the Textile Sector :~ NEW DELHI: Sluggish demand in domestic and export markets, besides heavy debt, weaved a tangled web for India's textiles industry in 2011, resulting in 1.23 lakh job losses during the year. It was trouble from the start of the year itself. The industry had to grapple with the high cotton prices resulting in increased cost of production. In January, prices of cotton touched an all-time high of about Rs 65,000 per candy (356 kg each) in the local 'mandis.' In a policy that was seen by industry as a knee-jerk response to the high prices, the government not only restricted exports of cotton, but also yarn. Units, particularly those dependent on yarn exports, found themselves stuck with huge inventories, which added to their financial woes. While the Commerce Ministry relaxed the restrictions on cotton and yarn exports dur...

The Union Government is considering a Moratorium of 1-2 years for the Textile Industry??!! In an interview with ET Now, Rita Menon, Secretary Ministry of Textiles, gives her views on textile industry. Excerpts: ET Now : Recently the textile ministry had a meeting with Indian Bank Association along with textile industry representatives to discuss possible debt restructuring and plans for the sector but nothing concrete has really come from this yet. So, what exactly is the demand for the industry and how exactly do you think textile companies will be able to cope up with the demand which currently some of the banks are demanding for? Rita Menon : The cotton textile industry has been experiencing a gradual slide down from April 11 and a part of the reason is the fact that cotton prices last year were extraordinarily high, so there was a lot of investment in stocks. You are aware that cotton textile mills stock, cotton stocks for a duration of between two to three on an average months ...

~: Statistical Jugglery by the Government??!! Food Inflation drops to 0.42% from 10% plus, in just a little over Three months : Why are the morons in RBI still waiting for the CRR or Interest Rates to be cut, if we are really in a Recession as far as the food price is concerned :~ NEW DELHI: Food inflation fell to its lowest level in almost six years at 0.42 per cent for the week ended December 17, with a sharp decline in prices of essential items like onions and potatoes likely to prompt the RBI to cut interest rates at its policy review next month. With food inflation declining to below 1 per cent, the lowest since April, 2006, Finance Minister Pranab Mukherjee hoped that headline inflation would drop to 6 per cent by March-end. "If this trend continues, then you will have year-end (headline) inflation around 6 per cent (plus/minus)... But it can not be lower than 6 per cent, because inflationary pressure was higher in weeks before," he told reporters. Food items have a...

 From Indian economy to EU: Why 2012 will be better? Luckily, most of us are not Mayans, who predicted the end of the world in 2012, and will survive the year. Unluckily, most of us are not Maya either, unable as we are to transcend harsh reality and live the illusion whereby the empowerment of one means empowerment of the many. Yet, if for no reason other than that farce is superior to tragedy, 2012 is likely to be superior to the year that is drawing to a close. The coming year will be more democratic than 2011. The Arab Spring always had the promise of giving way to a torrid summer. With the US completing its troop withdrawal from Iraq, the Egyptian army called upon to transfer power to civilians and Syria likely having to choose between cracking up or cracking down, 2012 is likely to see some climate change in the Arab lands for the better. The US will not be able to sustain its double standards forever, either on Saudi or Israeli repression. But for proliferation of standar...

~: Market Mantra :~ Markets could improve in the 2nd half Buy : (i) Nifty Futures at 4670---4680, SL--4640, T--4720.  (ii) VIP Industries at Rs.88, T-Rs.104, SL---Rs.79.  (iii) DCB Ltd at Rs.32.50, T--Rs.35, SL--Rs.31.    Stocks to watch out for in today’s trading session are : • (+VE) DLF : The company and HUBTOWN have sold their respective stakes in JV DLF Ackruti Info Parks (Pune) for a total of 8.1 bln rupees to The Blackstone Group. • (+VE) 3i INFOTECH’s board has approved restructuring of the company's debt. • (-VE) REGULATORY : The SEBI has barred PG ELECTROPLAST, BROOKS LABORATORIES, RDB RASAYANS, TAKSHEEL SOLUTIONS, TIJARIA POLYPIPES, ONELIFE CAPITAL ADVISORS and BHARATIYA GLOBAL INFOMEDIA from raising further capital in any manner due to irregularities in their IPOs. Yesterday, the US markets closed in the Red on the back of news that ECB balance sheet expanded by 239 billion, this news spooked market as fears of debt crisis resurfaced in EU. ...

BRIC Decade Ends as Growth Peaked: Goldman  .... But we shot ourselves on the foot, with faulty policies coming from the FMO and the RBI. We were chugging on well and were gifted a wonderful economy from the NDA, but due to mismanagement by the present FM and the past FM, we crash landed and invited a virtual disaster. The last FM was even worst: He siphoned off Rs.60, 000 Cr from the exchequer, in the form of "Farm Loan Waiver "...... In the past decade, mutual funds poured almost $70 billion into Brazil, Russia, India and China, stocks more than quadrupled gains in the Standard & Poor’s 500 Index and the economies grew four times faster than America’s. Now Goldman Sachs Group Inc. (GS), which coined the term BRIC, says the best is over for the largest emerging markets. BRIC funds recorded $15 billion of outflows this year as the MSCI BRIC Index sank 24 percent, EPFR Global data show. The gauge, which beat the S&P 500 by 390 percentage points from November 2001 th...

~: Winning Strokes: Think Different :~ The time has come to disclose the name of the mysterious stock, which was mentioned last week, as a PROFIT SHARING SCRIP to some chosen investors (or per call Rs.25, 000. Minimum Investment: Rs.2 lakhs). The name of the scrip was disclosed to some of the chosen members, who fell within the above mentioned category. It is Prajay Engineers Syndicate Ltd (BSE Code: 531746), which was recommended to them at Rs.2.7. It has already given more than 35% return, on a minimum investment of Rs.2 lakhs. So, for Rs.25, 000 spent  on the scrip, these angel investors have already gained over Rs.65, 000 (Net profit> Rs.40, 000 till date). This is the new service I have started in this month. Those who are interested, can deposit the seed money and wait for sometime to get such sure shot recommendations on some scrips. Prajay Engineers Ltd closed at Rs.3.96 up more than 46% after it was recommended. For more on this service, you can send me a mail (email ar...

~: SEL Manufacturing Company Ltd's expansion plans are on track :~ Ludhiana-based integrated textile conglomerate, SEL Manufacturing Company Ltd., has achieved a turnover of Rs. 1,071.67 crores for the half-year ended September 30, 2011, against Rs. 812.79 crores in the corresponding period last year, an increase of 31.85 per cent. Earnings before depreciation, interest and tax increased from Rs. 137.18 crores in the first half of 2010-11 to Rs. 182.45 crores during the half-year ended September 30, 2011, recording an increase of 33 per cent. Profit after tax during the half-year ended September 30 stood at Rs. 39.06 crores (Rs. 52.79 crores). While increase in EBIDTA is attributable to operational efficiencies, the company is going through a lot of expansion and the full contribution thereof is yet to be captured in its financial results. The Indian economy has been witnessing increasing interest rates. Yarn prices had an uncertain and declining trend. Further, the uncertainty i...

~: How the textile sector is set to gain from Rupee Depreciation :~ A rising rupee doesn’t sink all the ships. Companies that traditionally earn in dollars while spending in rupees—such as textile exporters and the IT sector—are relatively better off. After, some solution of both the US and European Crisis, these two sectors would be the real gainers in the coming days, if the rupee continues to slide..  Now, most companies with substantial foreign earnings have been protecting themselves from the volatility of the past few years by hedging their exposures. Consequently, while they didn’t end up losing anything, they might have given away large part of potential gains from the depreciation of the rupee in the last couple of months. However, since the currency analysts are not bullish on INR in the short term and hence these textile and IT companies are set to make huge gains from this differential in the coming months. Until 2003, software companies were raking in big money as th...

 ~: The Indian Textile Sector and Rupee Devaluation :~ India Textile Industry is one of the leading textile industries in the world. Though was predominantly unorganized industry even a few years back, but the scenario started changing after the economic liberalization of Indian economy in 1991. The opening up of economy gave the much-needed thrust to the Indian textile industry, which has now successfully become one of the largest in the world. India textile industry largely depends upon the textile manufacturing and export. It also plays a major role in the economy of the country. India earns about 27% of its total foreign exchange through textile exports. Further, the textile industry of India also contributes nearly 14% of the total industrial production of the country. It also contributes around 3% to the GDP of the country. India textile industry is also the largest in the country in terms of employment generation. It not only generates jobs in its own industr...