Weekly News11th Oct 2010 - 16th Oct 2010

Banking Sector Set For Better Show  

RIL gained 73% between March 2009 and September 2010 while the Sensex jumped 146% during the same period. However, it offered much better returns in the last one decade, appreciating 600% against a 275% rise in the index.

Automobile, banking and IT stocks have been outperformers while cyclical like metals and cement remained volatile on a long term basis. Leading banks SBI and ICICI Bank have offered returns of 13 and 15 times, respectively, over the past 10 years.

SBI outpaced the market on a consistent basis on the back of sustained performance, recording 16% CAGR in top line and 19% in bottom line during the period. Bhel, HDFC and HDFC Bank are among the few other top gainers of the decade.

The banking sector will witness steady growth in the next 2-5 years as interest rates are peaking out, which will help improve margins in future.

Overseas investors have been investing aggressively in large caps with their total inflows touching a record $20 billion in the current calendar year so far, compared to $17.9 billion in 2007.While they are expected to remain bullish on India due to strong growth prospects of the economy, part of their future inflows will find its way to attractively valued companies with high growth potential, according to brokers.

11TH OCTOBER 2010

Beijing To Cut Current A/C Surplus To 4%  China plans to cut its current account surplus and proceed with foreign-

exchange reform to help rebalance the global economy. China aims to reduce the surplus below 4% of its gross domestic product

in the next 3-5 years, from 11% in 2007 and 5.8% in 2009. This would be the smallest surplus in its current account, the broadest

measure of trade in goods and services, since 2004. China is under pressure from the Western nations to allow the Yuan to rise

at a faster pace to help reduce its trade surplus with the U.S.to Europe. China is committed to be a more flexible exchange regime. But the

approach is probably a gradual one. Yi said China has received undeserved criticism for its currency policy, saying Beijing has allowed the Yuan to appreciate more than 20% in the past five years.

Global finance chiefs at the IMF meeting this week warned a race to weaker exchange rates in countries from China to Brazil and Japan risks hurting the world economy. Yi said it was the monetary policies from major developed world that helped fuel the global tension.  

11TH OCTOBER 2010

Lava Mobiles In Deal With National Geographic  Handset maker Lava on Monday announced a three-year deal

with television broadcaster National Geographic for loading content onto its mobile phones.

As part of the deal, all Lava handsets will come preloaded with National Geographic Channel content and applications, Lava said in a statement.

This will help users access wallpapers and ringtones of National Geographic Channel in Lava handsets as well as access other NGC content, it added."Getting associated with one of the most respectable media houses is our one more move towards bringing more value to Lava users.

Making NAT GEO knowledge rich content available on the go perfectly fits in our Endeavour to empowering the people of India through consumer insight driven innovations, "Sunil Riana product marketing Head, LAVA International said.PTI

12TH OCTOBER 2010

Godrej Trying To Make A Strong South-connect  Keen in strongly connecting with consumers in the South through

enhanced brand resonance, Godrej, is all set to roll out a reality game show in three southern languages starting this October.

Based on the success of its highly popular show in Hindi, Godrej Jeeto Jiyo Khelo, which was aired from July to September last year, the company now plans to roll out a television game show in a similar format for audiences in Karnataka, Tamil Nadu and Andhra Pradesh, said Ashutosh Tiwari, VP, Strategic Marketing, Godrej.

With the the south roughly estimated to contribute to 40 per cent of its total business, the company was hoping to see a 10 to 12 per cent increase in brand resonance following the airing of the shows and also an increase in actual behavior purchase, he said."We have some brands which have a strong presence in the south, "he said citing brands like Good Knight in Tamil Nadu, Jet in Andhra Pradesh, Appliances and Furniture's in Karnataka."Control is almost like a legendary brand, "he said.PTI 

12TH OCTOBER 2010

Avon Shares Jump On Talk Of L'Oreal Bid  French cosmetics company L'Oreal may be preparing a cash

bid for Avon Products, a British newspaper reported, sending Avon shares up more than 9% in premarket trading Tuesday.

The Daily Mail said L'Oreal was getting ready to make a cash offer of $44 a share for the US cosmetics and perfume company.

The report cited no sources. Such an offer would represent a premium of 32.7% over Avon's Monday closing price of $33.16 and would value Avon at $18.8 billion.

Avon shares were up $3.04 to $36.20 in premarket trading. Representatives of Avon did not immediately respond to requests for comment on the newspaper report. L'Oreal declined to comment. In July, Avon reported a higher second quarter profit as beauty care sales increased.

13TH OCTOBER 2010

Pfizer To Acquire King Pharma For $3.6 Bn ,Expand Range Of Pain Drugs  Pfizer agreed to pay $3.6 billion in cash to buy King

Pharmaceuticals, expanding its range of pain treatments to include tamper-resistant medicines.

Pfizer, the worlds largest drug maker, will pay $14.25 a share, a premium of 40% over Kings closing share price on Monday, the New York-based company said on Tuesday in a statement.

The purchase will close by the first quarter of 2011.The deal would be Pfizer's biggest since its $68 billion purchase of Wyeth last year.

King gives Pfizer access to the Flector pain patch and morphine pill Embeda.

Pfizer has said it is looking to expand its pain products beyond the arthritis treatment Celebrex and nerve pain remedy Lyrica.

13TH OCTOBER 2010

Liquidity Begins To Dry Up As RBI Seen Planning Forex Intervention  Banks Had To Borrow 77,935 Cr To Meet Their Cash Reserve Ratio Requirement. LIQUIDITY has once again turned scarce in the inter-bank money market, forcing

RBI to play the role of lender. On Tuesday, banks borrowed as much as 77,935 crore to meet their cash reserve ratio requirement.

RBI needs to keep liquidity in a tight leash because once it starts buying dollars, it will release a flood of rupees in the inter-bank market.

Surplus cash has been slowly draining out of the money markets over the past couple of weeks. In the last week of September, the borrowings touched a record high of 89,925 crore on back of advance tax outflows. This month, treasurers do not expect a liquidity surplus.

A senior official from IndusInd Bank treasury says: Borrowings may come down as the week progresses. Borrowings might linger around 40,000-70,000 crore in the next two weeks.

But a surplus situation is unlikely in this month. We have G-sec auctions to 44,000 crore this month. And to add to this, the Coal India IPO would sap out around 18,000 crore from the system, and since this money would be going to the government coffers, we will have to wait till it returns to the system, by way of government spending.

 

14TH OCTOBER 2010

Santa Comes To India South Korean car maker Hyundai Motor has

launched its global bestseller Santa Fe SUV at an introductory price of 20.95 lakh (2WD) and 22.95 lakh (4WD) (ex-showroom ) New Delhi.

The Santa Fe will be available with 2.2-litre CRDi engine

It would be available in six-speed manual transmission, with an option of 2WD and 4WD.

Santa Fe would be pitted against Honda CRV, GM Captiva and Toyota Fortuner.

15TH OCTOBER 2010

ICICI May Impose 6-month Ban On Departing Execs From Joining Rivals ICICI Bank, India's second- largest lender, is considering barring

senior executives who depart for competitors from starting their new jobs within six months of leaving, said a person with knowledge of the matter.

ICICI, led by CEO Chandra Kochhar,is bracing for more competition for talent as India's central bank prepares to issue new bank licenses for the first time in more than seven years.

ICICI currently has a provision that bars employees from decamping for competing financial institutions within six months without the banks permission, though that rule has never been implemented.

The provision was introduced for employees who joined the firm after 2000.Senior bankers who leave ICICI are barred from luring other workers for the first year, the person said.

ICICI will give senior executives who depart the option of paying the bank an unspecified amount of money to avoid having to serve the gardening leave.

The rate of employee turnover among junior staff has almost doubled this year to about 15%.ICICIs board will review the plan to introduce gardening leave at a meeting later this month, according to the person.

15TH OCTOBER 2010