FORTUNE 500 - FIRMS IN INDIA

Corporate News

NEW YORK: Mukesh Ambani-led Reliance Industries has emerged as the top Indian private company on the latest Fortune 500 Global list, where the country's presence has grown to seven firms with a debut by Tata Steel.

The list, released by the US business magazine Fortune today, includes two private (RIL and Tata Steel) and five public sector companies from India, topped by Indian Oil Corp (IOC), and including BPCL, HPCL, ONGC and SBI.

IOC is the top-ranked Indian company among both private and public sectors at 116th position in the worldwide list, topped by US retail giant Wal-Mart. Besides making its debut at 315th position, Ratan Tata-led Tata Steel has also been named as the company with highest revenue growth of over 353 per cent over the past year.

Tata Steel recorded 17th fastest growth in profit among all the companies globally, Fortune said. RIL, which has been ranked at 30th in terms of revenue growth, has jumped 63 places to grab the 206th rank. SBI has been ranked at 21st place in terms of revenue growth.

RIL is ranked second after IOC among all the Indian companies and is followed by Bharat Petroleum (287), Hindustan Petroleum (290), ONGC(335) and State Bank of India (380). SBI is the seventh biggest climber among all the global companies, while RIL and BPCL have been ranked at 23rd and 50th in terms of gains from the previous year rankings.

Other companies figuring among the ten largest worldwide include Chevron (6th), ING Group (7th), Total (8th), General Motors (9th) and ConocoPhillips (10th). The US continues to have the largest presence with 153 companies, even as the number is down from 169 in the last year. China has 29 companies on the list. Besides seven Indian companies, a number of firms run by Indian-origin people have also made to the list.

These include Nagpur-born Vikram Pandit-led Citigroup at the 17th position, billionaire steel tycoon Lakshmi Mittal- promoted ArcelorMittal (39th) and Indra Nooyi-led PepsiCo (184th). Vodafone, whose Indian-origin CEO Arun Sarin is retiring this month, has been ranked 85th. Citigroup has been ranked third among the banks, while SBI is at 54th position.

PepsiCo is at third position in the food consumer products ranking. Besides, ArcelorMittal is ranked at the top in metals sector, while Tata Steel is at the 8th position. Amongst the petroleum refining companies across the world, IOC has been ranked at 18th, RIL at 23rd, BPCL at 28th and HPCL at 29th out of 39 companies from the sector present on the list. ONGC has been ranked at the 7th in the mining and crude oil production space. RIL has also been ranked at 46th in terms of return on assets.

source:- Economic Times

Gud Buying Opportunity: HOV Services

While researching some companies, I came across a very good company (HOV Services) as a good Buying Opportunity.

Below are my few research till now on the company.

Company Name : HOV Services

Listed : BSE & NSE Both

CMP 103-104

Market Cap : Rs. 130 Crore

Now My view is, company has got a Profit of Rs. 82 Crore with minority interest and EPS is 43.47

This makes HOV Services trade at a PE of Less than 3.

Individual Share holders below 1 Lacs are holding only 7% shares of the Company. Rest is with HNIs, Promoters, MFs, FIIs & Others.

Coming to the Management, I find the Pretty capable and with a great vision. I will go into deep research and insights of the same.

Now VERY IMPORTANT POINT.

Subject:

HOV Services - Outcome of Board Meeting

Announcement:

HOV Services Ltd has informed BSE that the Board of Directors of the Company at its meeting held on June 05, 2008, inter alia, has considered and approved the following: - A Material Transaction Proposal where in the Company has received an offer of approximately $ 202 million to purchase 100% of its wholly owned subsidiary HOV Services, LLC and its Hong Kong subsidiary from a Company controlled by some of Company's promoters and shareholders. On a fully diluted basis including ADR's if any, the shareholders will have the right to receive approximately $ 91 million in cash - the Company's shareholders will have the right to receive either cash of approximately Rs 170 or one share in the buyer for each share held as of the record date; the existing debt will be assumed under the terms of this offer. All shareholders as of the record date will continue to own their current shares after receipt of cash or shares in the buyer. The Company's independent directors believe this to be in the best interest of the shareholders and have recommended that the Company seek independent legal and financial advice. Upon satisfactory statutory or regulatory approvals, as required by law and subject to positive recommendation by the Company's independent advisors to Company's board of directors, the transaction will then be submitted for approval to the shareholders.

So Rs. 170 is just the value of a 100% subsidiary. What about OTHERS BUSINESS...! !!!!

Will keep you updating about it.

Please, note that please do your own research and then BUY or SELL it. I don’t hold any responsibility for the same.

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Six Reasons to Invest in India

Six Reasons to Invest in India

India is one of the hottest economies on the planet and holds tremendous profit potential for investors. No doubt in my mind.

Why? India 's economy is growing at a 9% rate, TEN times faster than the U.S. and only a couple of percentage points behind China .

And the Indian economy is not merely outgrowing the U.S. by leaps and bounds; it's also at the very epicenter of the booming natural resource markets.

There's too much happening there to cover everything in one column, but today I'll give you my top six reasons why investing in India may well prove to be a highly lucrative proposition.

For starters, consider the following ...

Reason #1: India has the fastest-growing population in the world, expanding at the rate of some 16 million per year. At that rate, India 's population will exceed 1.4 billion people and be larger than China 's by 2030.

What's more, per-capita income in India has risen steadily over the past five years, from $285 to around $550 today. That's still less than half China 's per-capita income of $1,162, but incomes are growing faster in India , at plus 8% year in and year out.

Longer-term, some studies suggest that India 's per-capita income can eventually reach six times that of China . Imagine 1.4 billion people in India who on average earn six times more than their industrious neighbors in China !

Indian Railway's trains and stations will undergo a major overhaul as part of India 's $500 billion infrastructure improvement.

Reason #2: Government investment in the country's infrastructure is soaring — jumping 9.9% from 2007. And the country needs it. Auto sales are zipping along at a 17% growth rate ... airline passenger traffic is expected to more than triple over the next five years from 14 million per annum to around 50 million.

All told, India 's government plans on spending $90 billion on industrial-related projects over the next three years including ...

• High-speed rail freight lines.

• Power plants to supply an additional 4,000 megawatts.

• Three new sea ports.

• Six new airports.

• 12 new industrial clusters, and more.

Over the next four years, by 2012, the government plans on spending a total of $500 billion to build out and improve India 's infrastructure!

Reason #3: Manufacturing now accounts for almost 30% of India 's economy. When most analysts and investors think of India , they think of agriculture, textiles, and usually its famed information technology service industry, which handles the outsourcing for hundreds of U.S.-based computer hardware and software manufacturers and telecoms.

But in fact, the single largest employer in India is the manufacturing sector, which employs more than 100 million people, more than 25% of the total employed in India , and which is growing at a very healthy 8.8% clip.

Indeed ...

Reason #4: Corporate earnings in India are growing at an astounding 35% annual rate. The 30 largest companies in the Mumbai Sensex index increased their earnings at an incredible 35% in their first quarter of this year, blowing away estimates. Revenues jumped 20%.

Of 800 publicly-traded companies, average earnings growth is a blistering 17%.

At the top, three companies doubled their earnings over the same period last year — Ambuja Cement, and telecom giants Bharti Airtel and Reliance Communications.

Manufacturing biggies such as Tata Steel and pharmaceutical company Ranbaxy Labs are also seeing their earnings explode higher. Tata Steel is expected to report a 12% increase for the quarter when it announces earnings on June 30. And Ranbaxy Labs recently reported a 19% increase.

Reason #5: Private equity investors are now putting more money in India than in China . Nearly $20 billion in private equity poured into India in 2007, a 156% jump versus '06, and 34% more than went into China in '07.

Infrastructure investments account for the lion's shares of the private equity flows into India , followed by the telecom sector, banking and financial services, and real estate.

India's Tata Moters recently launched the world's cheapest nano-car. Dubbed the "People's Car," it will sell for approximately $2,500.

Reason #6: The ballooning Indian middle class — 330 million and growing — is spending their newly-earned money, ramping up retail sales growth that should average 13% or more for the next several years.

Indian demand for telecommunications, autos, housing, financial services, jewelry — you name it, is exploding higher.

And of course, no discussion of Asia would be complete without highlighting the fact that ...

Natural Resources Also Benefit
From The Rise of India

India has some essential natural resources, but not enough to keep pace with rapidly escalating demand driven by its vigorous economic growth.

For instance ...

• India's steel industry expects growth of about 8% a year as demand nearly doubles from the current level of 36 million tons of steel per year to 65 million tons by 2012. That means huge consumption of iron ore.

• India's copper consumption stands at about 2.5% of world consumption and even less than China 's per capita consumption. But India has already had to rely on copper imports to meet demand.

As India 's emerging middle class rises, copper will meet much the same fate as it has in China . Huge demand that can push copper prices to the moon.

• Coal dominates India 's energy supply, providing more than half of its power. India 's coal consumption is expected to increase 20% in just the next two years.

• India's per-capita consumption of aluminum is less than one kilogram per year. India 's aluminum consumption can be expected to climb sharply, perhaps even more than copper.

• And then there's oil demand. Oil provides about 30% of India 's total energy consumption, and the country's net oil imports already run at more than 1.4 million barrels a day.

Oil consumption in India is expected to rise sharply, effectively DOUBLING over the next two years to 2.8 million barrels a day.

Everyone talks about the China factor when it comes to oil prices. But once Indian demand starts to really press on oil, watch what happens to the price of black gold. And Indian companies are on the leading edge of providing and distributing oil throughout the country. Ditto for natural gas.

My view: India, like China , is one heck of an economy to bet on going forward. Not only for its growth potential, but also because of its impact on the natural resource markets.

And I believe now is a great time to consider taking a stake in India , or adding to existing positions.

The timing couldn't be better considering that Indian stocks, like Chinese shares, pulled back earlier this year to what I consider bargain basement levels.

The Sensex, which jumped 47% last year to a high of 20,375, is now trading at about the 16,000 level. Take a look at my chart of the index, and the clear support levels and bottoming formation I've highlighted for you.

So here are three ways to capitalize on India 's boom:

The Morgan Stanley India Investment Fund (IIF). A closed-end fund with an objective of long-term capital appreciation, and holdings that run the gamut from energy to agriculture, to mining, pharmaceuticals, telecommunications, building materials and more.

This is a no-load fund, and its overall fees run about 1.4% per annum, less than the sector's 1.9% average.

The India Fund (IFN), another closed-end fund that is diversified across various industry sectors, and that seeks long-term capital appreciation. Total fees about 1.64%.

The WisdomTree India Earnings Fund (EPI), a great new Exchange Traded Fund that tracks the performance of 150 of India 's top companies.

Cyclic Theory of Share Market

CYCLIC THEORY OF SHARE MARKET. Don?t expect a quick recovery? That?s the conclusion from our ?8-year? equity cycle model. The equity cycle is a lead indicator that digs into past data and throws a likely trend. To support our model?s conclusion are weakening fundamental and economic factors, which supplement the fact that a quick recovery in the Indian equity market is a far dream. Having depicted a crash in 2008 post Sensex peaking at around 22k levels, the model now shows some pain before consolidation. Both these events might occur over the next couple of years suggesting a long wait for bulls. For a small retail investor though, it?s a boon. Such investors can now get the opportunity to accumulate at regular intervals for the next boom in the Indian equity market. History: The 8th Year Itch phenomenon . The equity market was in strong hands in dec 2007and in the midst of a terrific Bull Run. There was reasoning for every irrational behaviour. No wonder a model that showcased a sharp correction was completely ignored. Also, there were just three cycles before 2008 (for which data was computed) and data was marked by home grown scams. That could have put off some investors. What was however ignored was the fact that these three 40% plus corrections occurred over 28 years (though, Sensex was officially launched in 1986, it has a base of 1978/79 and is back computed). These data points appeared strong enough to base a theory and confidence sparked from the fact that trend lines were replicated every eighth year, though the band inched higher every cycle. So, in all probability, the correction had to happen. The 40% Plus Corrections 1984 ? Riots, Assassination, Bhopal Gas Tragedy, Economic Crisis 1992 ? Harshad Mehta Scam 2000 ? Ketan Parekh Scam/Dot com bubble bust 2008 ? Sub prime meltdown And then, one fine day in January 2008, it all came raining down. Sensex tanked and within a few trading sessions lost over 25%. Since then a lot has changed, fundamentals have deteriorated and economic events worsened. The Sensex is struggling to regain lost glory. If the cycle is to be believed, the recovery may not happen as yet. There?s still some pain left. The First Hit Year Sensex High Sensex Low Decline Time 1984 410 242 -41% 1992 4467 2476 -45% 8 months 2000 5934 3590 -40% 8 months 2008 20873 14809 -30% 3 months Note: Sensex Level on closing basis. Decline may be higher if calculations are based on intra-day high/low of Sensex Recovery from the Lowest Point during the Correction Cycle Year High Lowest point Decline Time to Lowest Point Recovery to Old Top 1984 410 NA NA NA 1992 4467 2084 -53% 12 months 27 months 2000 5934 2617 -56% 19 months 46 months 2008 20873 14809 -30% Note: Sensex Level on closing basis. Decline may be higher if calculations are based on intra-day high/low of Sensex As evident from above, the corrections in every cycle were steep and fast. This was followed by a long cooling period, which could be 15-25 months. Once the base is built, the benchmark index swiftly moved up to achieve the earlier top that takes 27-46 months. At these levels, bouts of profit booking occurred from investors who believed a healthy correction was needed for markets to smoothly sail ahead. The Current Phase The 2008 cycle, in all probabilities, is the latest cycle. The benchmark index has corrected 30% odd and has witnessed some bounce back. If the cycle is to be believed, we may see some more pain in the offing ? 10% or more. The bounce back lacks strength.

You would see that once the correction started, the Sensex has made lower tops and lower bottoms. These are signs of weakness in the equity market. Weakness in the current equity market is evident ? oil issues, MTM losses, inflation concerns, fiscal deficits, and US subprime concerns among others. There is no escaping to this fact. The market knows all these and seems to have been factored such events. FIIs have already pumped out $5.6bn out of India and are reducing India Inc. ownership. The other element one could consider is the US Presidential cycle. According to the theory, the US equity market bottoms out 1.8 years into the Presidential term. And recently we have seen that Indian equity market is not decoupled with the US market. The Future India?s long term infra led growth story stays. However, we need to go through the current pain in order to witness the new Bull Run. As of now, Sensex EPS is expected to slow down. A 10-15% range would take Sensex EPS to Rs 950 valuing the market at 17 times FY09 earnings. Looking at the current market conditions, it appears expensive. All said, expect the unexpected. The equity market is a strange creature. It has a tendency to follow different paths under similar circumstances. But, one of the things investors would have learnt from the past is that emerging markets is difficult to emerge from post a fall down. So, don?t expect a quick recovery.

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Important Investment Concepts To Understand

Fundamentals

Economic indicators are valuable and reliable reports assembled by the government, universities, and private-sector businesses. They measure the economic health of the overall economy. Most are monthly reports but some are weekly. Generally, the market as a whole and traders in particular listen very carefully to economic results to determine whether they are "net buyers" or "net sellers" for the day. Whenever a report is released, you need to be aware of the time and the information given. It can dramatically change price direction, depending on how the market interprets it.

There are many different indicators. Below are some of the most common ones used by traders. You must understand that not all indicators are equally important. You must learn about all of them, observe reactions to them, and then form an opinion on which ones help you in your specific style of trading. And to make it even more interesting, their importance changes with time and market perception.

Consumer Price Index (CPI)
The Consumer Price Index is a measurement of the cost of living as determined by the U.S. Bureau of Labor Statistics. The CPI is a widely followed inflation indicator. It compares relative price changes over time for a fixed basket of goods and services used by consumers. The CPI has the potential to overstate inflation because it does not adjust for the substitution of goods and the rapidly changing prices of new technology. Release schedule: monthly, around the 13th at 8:30 a.m. EST.

Producer Price Index (PPI)
The Producer Price Index measures the average change over time of wholesale prices received by domestic producers for their output. This index has several components: commodity, industry sector, and stage of processing. The U.S. Bureau of Labor Statistics produces the PPI. Release schedule: monthly, around the 11th at 8:30 a.m. EST.

Gross Domestic Product (GDP)
The Gross Domestic Product provides the total value of goods and services produced within the borders of the United States. Real GDP is the most comprehensive measure of U.S. economic activity. The change in output is measured in real

terms (inflation has been removed). The U.S. Department of Commerce, Bureau of Economic Analysis releases this information. Release schedule: quarterly, during the third or fourth week of the month following the previous quarter at 8:30 a.m. EST.

M2 Money Supply
This is a measure of the United States' supply of money, including M1 (currency in circulation, demand deposits, non-blank traveller's checks, and other checking deposits) plus money market funds, savings accounts, overnight euro dollars, and time deposits under $100,000. The Board of Governors of the Federal Research System provides this information. Release schedule: weekly and monthly.

Employment Reports
The employment reports are the most timely and broad indicators of economic activity. They provide results for two separate sectors. A household survey generates an unemployment rate and a business survey determines non-farm payrolls, average work week, and average hourly earnings figures. The U.S. Department of Labor, Bureau of Labor Statistics provides these reports. Release schedule: first Friday of the month at 8:30 a.m. EST.

Institute of Supply Management (ISM)
The Institute of Supply Management provides the results of a national survey of purchasing managers that includes data on items such as new orders, production, employment, inventories, prices, import orders, and delivery times. A reading above 50 percent indicates expansion and below 50 percent, contraction. This particular report now contains two sections. The first reports on goods and raw materials and the second reports on the purchases of services. Release schedule: first business day of the month for the prior month at 10:00 a.m. EST.


The following measurement tools will help you evaluate a company and determine the value of its stock.

Price-Earnings Ratio

The price-earnings ratio is the most popular measure. It consists of finding a company in which the price-earnings (P/E) ratio is low when compared to similar companies. To find the price-earnings ratio, divide the stock's current price by its earnings per share:

Price-earnings Ratio = Current Stock Prices/Earnings per Share

Therefore, if a stock is selling for $35 now and its earnings last year were $7.00 per share, the P/E ratio would be 5 ($35 Ö $7.00 = 5). This means that for every $1.00 the stock earns, investors are currently willing to pay $5.00. However, investors also pay for future earnings. If the same $35 stock is expected to earn $9.00 per share next year, then the P/E ratio would be 3.89 ($35 Ö $9.00 = 3.89).

The idea is to find stocks with a significantly lower P/E ratio than other stocks in their sector. The P/E ratio cannot always be calculated if the company suffers a loss or breaks even, as there would be no earnings to compute. Expectations of popular stocks can be so high that they may sell for prices way above the market value.

Cash Flow

Cash flow is an important measure of a business for investors because it is a way of determining a company's ability to pay dividends and more. Generally, cash flow is defined as the net income of a business plus depreciation and the value of other non-cash assets.

Companies must have cash to keep going. They need money to pay for all the goods and services they use, as well as making capital improvements and paying operating costs (wages, raw materials, gas for company cars, electricity, etc.). Companies with a high-level debt have to pay a significant amount in interest to service that debt. If an opportunity suddenly appears, perhaps to buy a strategically located piece of land or another firm that would help the business, cash-poor companies may not have the money to make the deal.

Most important, perhaps, is that during hard times, a company with a cash cushion is likely to have a higher probability of making it through. Companies that have enough cash to survive the down periods are in a good position to make clearheaded judgments and keep their enterprise afloat.

Price-Earnings- to-Growth Ratio

The price-earning- to-growth (PEG) ratio is used to determine a stock's value while taking into account earnings growth. The calculation is as follows:

PEG Ratio = Price/Earnings Ratio
Annual EPS Growth

PEG is a widely used indicator of a stock's potential value. Many consider it to be a stock's potential value. It is favoured over the price-earnings ratio because it also accounts for growth.

Keep in mind that the numbers used are projections so they can be less accurate. Also, there are many variations when using earnings from different time-periods (for example, one year versus five years). Be sure you know the exact definition your source is using.

Beta

Beta is a measure of a stock's relative price volatility to the S&P 500. For example, a beta of 1 indicates that for every one-point move in the S&P 500, the stock would move 1.0. A beta of 1.5 indicates that a one-point move in the S&P 500 would move your stock 1.5.

Book-to-Bill Ratio

The book-to-bill ratio describes the technology industry's demand to supply, or the number of orders on a firm's "book" compared to the number of orders filled.

This ratio measures whether the company has more orders than it can deliver (greater than 1), the same number of orders that it can deliver (equals 1), or fewer orders than it can deliver (below 1). This monthly figure is used frequently for companies in the technology and chip (semiconductor) sector.

Price-to-Book Ratio

The price-to-book ratio is used to compare a stock's market value to its book value. It is calculated by dividing the current closing price of the stock by the latest quarter's book value. (Book value is simply assets minus liabilities) .

A lower price-to-book ratio could mean that the stock is undervalued. It could also mean that something is fundamentally wrong with the company. As with most ratios, however, be aware that it varies considerably by industry.

This ratio also gives some idea of whether you are paying too much for the stock, when the amount that would remain if the company went bankrupt immediately is considered. This is also known as the price-equity ratio.

Inflation : No Trade Off With Growth

Invest YOU MUST

Inflation: No trade- off with growth

Inflation has reared its ugly head once again. From a low of 3.07% for the week ended October 13, 2007, wholesale price inflation (WPI) in India accelerated to a high of 7.41% for the week ended March 29, 2008, led primarily by high food prices. It moderated slightly to 7.14% for the week ended April 05, 2008. The rise has been particularly sharp over the last 4 months with inflation rising by 430 bps since the week ended Nov 24, 2007 when it came at 3.11%. The sharp rise can be attributed to rising food and commodity prices such as food grains, fruits, vegetables, edible oil, iron ore, steel, cement, etc. Whilst the inflation in food prices and commodities has been a global phenomenon, price rise in manufactured products such as steel and cement has partly been a result of higher input prices and partly due to inadequate supply to meet the demands of an economy growing at a robust pace. Rising oil prices have also put indirect upward pressure on prices of other products, even though the government has not hiked domestic fuel prices in tandem with global oil prices. Government had last hiked petrol and diesel prices by a meager Rs. 2 and Re. 1 per litre respectively, in mid-February this year, though the average price of India's crude basket rose from $65.54/bbl in April 07 to $92.37/bbl in Feb 08. Since then, the price of India's crude oil basket has risen further and presently rules at 102.15/bbl in April, 2008. POST MORTEM - What is the cause of the recent spike in inflation? After peaking in Mar 07, inflation went down steadily till Oct 07 due to the statistical impact of a higher base. After stagnating for almost a month, it started moving up sharply since end Nov 07, led by sharp hikes in the prices of certain commodities. The table given on the next page shows the major constituents that contributed chiefly to the spike in WPI inflation since Nov 24, 2007 to Apr 05, 2008. Contrary to popular belief, primary food articles and cement did not play a major role in the recent spike in inflation. Rather, non-food articles (oil seeds), Minerals (metallic minerals), Coal, Minerals (Crude Oil), Food products (common salt, edible oils & oil cakes), Chemicals (both organic & inorganic) and basic metals & alloys (Iron & Steel and their products and alloys) were the chief contributories to it. Metals, right from primary metallic minerals to finished steel and steel products to other ferro alloys, have given the biggest thrust to inflation. Food and Non-food Articles Primary articles comprise of food articles, non-food articles and minerals. Even though prices of food grains, vegetables and fruits have gone up the world over, they remained relatively muted in India over the period in question i.e. from Nov 24, 2007 to April 05, 2008. Prices of non-food articles such as oil seeds have been on a tear, rising 13.7% in the 4 month period. The reasons behind the spurt in global food grain prices have been the recent droughts in Australia, hailstorms in China, cold weather in Europe, etc. But the main cause is the diversion of arable land from producing food grains to bio-fuel producing crops such as corn, sugarcane, etc. The relentless surge in crude oil prices (crude oil prices rose from $66/bbl at the end of March 07 to $116/bbl at present, a rise of approx. 76% in the last 12 months) has forced countries to look for alternative sources of energy. Since, bio-fuels can be used in place of crude oil with relative ease, a number of countries dedicated huge tracts of arable land to crops such as corn and sugarcane. This led to a shortage of food grains and skyrocketing food prices in many parts of the world. Record breaking crude oil prices kept the demand for bio-fuels strong, pushing up the prices of corn, sugarcane, etc. despite increased production. In fact, prices of wheat, rice and soya bean almost doubled over the last 12 months, rising 102%, 139% and 81% respectively. Graph B shows that agricultural production in India has lagged behind the real economy and per capita income in terms of growth, over the last 7 years. Robust economic growth and the consequent rise in per capita income also brought about a change in consumption patterns as well as the overall consumption levels. However, with agricultural output failing to keep pace with the demand, there was a shortage of food grains which manifested itself in the form of high prices being faced today. Metals Minerals and particularly metallic minerals have been the biggest driving force behind the recent rise in inflation. Robust global economic growth over the last 4-5 years has increased the demand for industrial commodities leading to a massive bull run in their prices. In fact, the CRB Index has risen by 36.4% since April 2007, a rise which was accentuated by a steep fall in the US dollar since the US sub-prime crisis broke out in July 2007. Growth has been particularly strong in emerging economies such as India and China which have seen an explosive rise in demand for metals, oil, etc. to sustain the high levels of growth and to build the requisite infrastructure. This led to a rise in prices of metals, both ferrous and non-ferrous, across the globe. Prices of metals and metallic minerals rose in India too, on the back of rising import costs. Iron and Steel have seen the most spectacular rise amongst all and the vociferous demand for steel both at home and from abroad (China) has led to a rise in prices of metallic minerals such as iron ore, too. Rising demand for energy and fast depleting reserves have also led to a surge in coal prices recently. Coal prices have risen globally, partly due to increased demand and partly due to floods in the coal mining regions of Australia and hailstorms and consequent transportation bottlenecks during the winter in China. In fact, coal prices are likely to double over the next 12 months or so. Impact - The dark side of inflation While a low and steady rate of demand-fuelled inflation is healthy for an economy, being a sign of strong domestic consumption and propelling manufacturing growth, an overdose of it might cause irreparable damage to growth and stability in the economy. Rising prices are bad news for consumers and might force them to cut down discretionary expenditure. High inflation adversely impacts a country's economy as it reduces the purchasing power of people and can lead to social and political unrest particularly in developing economies like India and China. The recent spike in inflation becomes all the more dangerous as it is being led by a sharp rise in prices of primary articles, both food and non-food. People in emerging economies such as India, China, etc., particularly those in the lower income strata, spend more than 50% of their incomes on food. With rising food prices, their disposable incomes are likely to fall, forcing them to cut down their discretionary spending. This might lead to an overall decline in consumption of manufactured products, thus hurting economic growth. The poor, particularly those near to or below the poverty line, are affected more as they spend almost 80-90% of their incomes on food. This might force the government to adopt harsher measures such as sharp interest rate hikes, to bring down inflation even at the cost of sacrificing growth, in order to prevent an electoral backlash. Measures to counter inflation Monetary measures There are no short cuts to control the current spike in inflation. Raising interest rates, tightening money supply, etc. beyond a certain point, are bound to affect growth. Remember, inflation generally remains high for 3-6 months and starts moderating after that as fresh supplies hit the market and fresh capacities come on-stream. One simply cannot afford to let growth be affected in the whole process, as growth is hard to come by and once it slows, can take a long time and an enormous effort to bounce back. The recent hike in inflation has been due to supply side constraints both on the agricultural and manufacturing side. An environment conducive to facilitate investment in capacities needs to be created and availability of easy finance is the key to it. High interest rates and monetary tightening can lead to a fall in interest in investment due to high cost of funds and falling demand for goods. Moreover, demand for food is not price elastic. People will have food, no matter how much costlier it gets. Rather they will cut down on discretionary expenditure thereby affecting the fortunes of other industries. Fiscal measures Though fiscal measures are better than monetary tightening measures, they are unlikely to have a lasting impact on inflation, particularly in a scenario when prices are rising across the globe. In the long run, some of the drastic fiscal steps/policies might adversely impact a sector and cause irreparable damage to its fortunes in the medium term. This might affect growth in the long run. Fiscal measures are best used in small and quick doses for a limited period of time as they can be easily reversed. Hence, measures such as cut in import duties, hike in export duties, etc. can be very effective in certain cases. However, the present dilemma is that global prices of most of the commodities are even higher than their prevailing domestic prices and hence imports are not likely to help much. The need of the hour is long term, goal oriented steps from the government to improve infrastructure, both agricultural and industrial. The present shortage of food is a result of years of neglect of agricultural infrastructure, massive underinvestment and lack of proper land reforms along with use of obsolete technology. Focused investment is needed in sectors such as road infrastructure, irrigation, agricultural equipments and agri-implements such as high quality seeds, fertilizers and pesticides to improve the lot of agriculture. Graph C, shows a decline in the production of oilseeds since 2005-06 which has led to the present run-up in prices. The production of pulses had similarly fallen during the period 2002-03 to 2004-05 and the lost ground was not regained till 2006-07, thus leading to high prices even now. A close scrutiny of sugarcane production shows that it had fallen in 2002-03 and 2003-04, leading to a bull run in sugar prices. Agri-commodities are inherently cyclical in nature. Hence, it is likely that the production of oil seeds and pulses goes up in the near future, latest by 2008-09, if not in 2007-08. This should increase supply and hence soften prices going ahead. Last, but not the least, there should be a serious clampdown on black marketers and hoarders as was done recently in Delhi. A fast, efficient and effective public distribution system is also an important step in improving the food situation in India. As regards metals, crude oil and coal, there is not much that can be done other than ramping up domestic production capacities and securing the raw materials by entering into strategic tie-ups or owning the raw material resources located abroad. Moreover, it is clear that a bubble is being formed in commodities. This bubble is likely to burst soon as slowing global growth slackens the demand for commodities going ahead. A ban on futures trading in agri-products is definitely not going to help as there is no statistical evidence of it leading to a rise in prices. Trading in Exchange futures of food grains in India has been stopped since the last year. However, that did not preventprices from rising over the last few months! Investment Strategies in the current inflationary environment Despite all the arguments against it, monetary tightening and interest rate hikes are bound to take place as this is the easiest way of expressing one's frustration against inflation. Hence one would do well to stay away from interest rate sensitive sectors such as banks, real estate, automobiles and consumer durables till the time inflation expectations moderate. Also, sectors such as edible oils, iron ore, coal, steel, cement, etc. are in the limelight for the recent surge in prices. They might be subjected to harsh regulatory measures and increased government intervention which can adversely affect their medium term prospects. Investors would do well to stay from such sectors too. The other strategies are as follows: 1. Avoid long term debt. 2. Invest in call and money markets through liquid funds. Fixed Maturity Plans are also attractive as short term rates are expected to rise following the recent hike in bank CRR by RBI. 3. Avoid commodity stocks particularly metal stocks. 4. Invest in sectors that are less capital intensive and have huge cash surplus or cash flows for e.g. IT, FMCG, etc. Invest in sectors that are price in-elastic such as pharmaceuticals, healthcare, etc. (The author is Senior Manager - Research, BCCIR.)

Slowdown in Real Estate

Slowdown in the real estate market notwithstanding, land deals in India are thriving. According to a recent study, the total value of such deals, in the first three months of 2008, have touched around Rs 23,000 crore, while another Rs 10,000-crore worth deals are in the pipeline.

A study by top brokerage JP Morgan shows that Delhi-based developer BPTP's Rs 5,000- crore land deal in Noida was the largest deal in the January-March period, while the Mumbai Metropolitan Region Development Authority's land auctions in Bandra Kurla Complex had fetched around Rs 4,000 crore.

The deals in the pipeline include the Indian Railways' 50 acres worth Rs 10,000 crore that is scheduled to be auctioned later. Also, a Rs 115-crore deal between the Balaji group and Prestige group is likely to be completed soon.

In Mumbai, a Rs 250-crore deal by Hindustan Composites is in the final stage, in which developers such as DLF, Kalpataru and K Raheja Corp are the lead bidders. The JP Morgan report comes at a time when it is expected that a tightening in global liquidity and a slowdown in the economy, could put the brakes on the real estate sector which witnessed a sharp rising growth in the past two years.

As a reflection of this slowdown, developers' plans including malls, complexes and residential projects are all being kept under wraps. Property prices and rentals have been falling which was also seen in the loss of investor interest and an erosion in the market capitalization of large listed players such as DLF and Unitech. The slowdown is also aided by the fall in stock markets as there is now a lack of capital among investors to invest in real estate projects.

Industry officials said that given the limited avenues of fund raising, a number of developers raised funds through instruments such as primary equity offerings and through foreign currency convertible bonds.

All leading developers have also scaled up their development plans as well as made fresh land reserve acquisitions. "The fundamentals of Indian real estate are very strong. More and more global funds are entering India," said real estate consultancy Jones Lang LaSalle Meghraj chairman and country head Anuj Puri.

Heart Attacks And Drinking Warm Water....

Heart Attacks And Drinking Warm Water This is a very good article. Not only about the warm water after your meal, but about Heart Attacks . The Chinese and Japanese drink hot tea with their meals, not cold water, maybe it is time we adopt their drinking habit while eating. For those who like to drink cold water, this article is applicable to you. It is nice to have a cup of cold drink after a meal. However, the cold water will solidify the oily stuff that you have just consumed. It will slow down the digestion. Once this 'sludge' reacts with the acid, it will break down and be absorbed by the intestine faster than the solid food. It will line the intestine. Very soon, this will turn into fats and lead to cancer. It is best to drink hot soup or warm water after a meal. C ommon Symptoms Of Heart Attack... A serious note about heart attacks - You should know that not every heart attack symptom is going to be the left arm hurting . Be aware of intense pain in the jaw line . You may never have the first chest pain during the course of a heart attack. Nausea and intense sweating are also common symptoms. 60% of people who have a heart attack while they are asleep do not wake up. Pain in the jaw can wake you from a sound sleep. Let's be careful and be aware. The more we know, the better chance we could survive. A cardiologist says if everyone who reads this message sends it to 10 people, you can be sure that we'll save at least one life. Read this & Send to a friend. It could save a life. So, please be a true friend and send this article to all your friends you care about.

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Bill Gate's 11 Rules Of Life

NRI Share Trading In Indian Capital Market: Bill Gate's 11 Rules Of Life