Satyam calls off Maytas deal

HYDERABAD: Even as Satyam's deal to buy Maytas had to be hastily annulled in the wee hours of Wednesday morning as the company lost 52% on its ADR listed on the New York Stock Exchange (NYSE), a credibility crisis has begun to grip India's fouth largest IT company. "How can we trust the management of this company and its board of directors after it tried to enter into a deal that prime facie would benefit only the promoters who just own 8% of Satyam ? We have to examine whether the management needs to be changed," cried analysts in a reflection of the deep anguish caused by the now stymied move.

"We have decided not to move ahead with the acquisition in deference to the investment community's views," said Satyam in a SMS sent out at 3-45 am on Wednesday clearly shaken by the reaction on the US bourse of its move anounced barely 10 hours ago.

But this was clearly not enough to save the company: Satyam's stock tanked on the Indian bourses by 30%, even after the company announced its decision to go back on the deal. "The deal was seen as Satyam buying into companies owned by its family members. Cash from a company where the Raju family owns 8% was being transferred to a company where they hold more than 35%. This is what investors are resenting. Its become a corporate governance question. Whether the company can be trusted in future to take a proper decision is the moot issue," pointed out another analyst. Satyam's scrip closed at Rs 158.05 which is a 52 week low.

"58% of Satyam is owned by FIIs and they had no inkling that such a deal was in the works. There were questions about the future of Satyam after acquiring these companies when it doesn't have any experience in these businesses. It makes more sense to deploy your funds in related businesses or pay your investors," said Sourav Mahajan, analyst with Karvy.

Moreover, what irked investors was as to how Satyam decided to pay Rs 6,500 crore ($1.3 billion), just for Maytas Properties' assets, a land bank of 6,800 acres valued at almost Rs 1 crore per acre. "It is not easy to value real estate in this falling market. So there are questions on the valuation of the acquisition," said Monotosh Sinha, executive director of Centrum Capital.

Later in the day as the company started a firefighting exercise Satyam's chief financial officer (CFO), Srinivasa Vadlamani told TOI: "We never anticipated this reaction. We underestimated it. We thought we could manage it." He also indicated that the deal had been on the table for the last few months claiming that for starters many other companies were looked at for being acquired. But the choice fell on Maytas Properties because it was zero debt unlike other companies that were in the consideration zone.

"As for Maytas, it had cash on its books. So, it was a judgement call and sometimes some judgements do not turn out to be good," Ram Mynampati, president of Satyam and a board member tried to impress.

Source: http://timesofindia.indiatimes.com/

Oil steady at $40 after 4-year low on demand gloom

SINGAPORE: Oil steadied around $40 a barrel on Thursday, near its lowest in more than four years, as further evidence of slowing demand trumped OPEC's biggest ever production cut.

US light crude for January delivery, which expires on Friday, fell 2 cents to $40.04 a barrel by 0128 GMT, after falling to $39.19 earlier in the session, the lowest since July 2004. London Brent crude for February rose 2 cents to $45.55.

The Organization of the Petroleum Exporting Countries, eager to build a floor under dipping prices, announced on Wednesday it would cut 2.2 million barrels daily of output starting Jan. 1, slightly more than expected. It comes on the heels of 2 million barrels a day (bpd) of cuts since September, but instead of boosting oil prices, it deepened the gloom over demand.

With top forecasters predicting the first decline in world energy use since 1983, OPEC's move may not be enough to halt oil's almost three-quarters dive since its July all-time peak above $147. "Countries other than the Saudis are going to have difficulty to comply with this cut.

Those oil producing countries, if they want to survive, they have to produce, even at $40 oil," said Tetsu Emori, fund manager at Astmax Co Ltd in Japan. "Prices have to head lower, now that we are through $40. As long as demand continues to weaken, prices will weaken too." A prolonged period of cheap prices could slow new investment, crimping supply, a stark turnaround just months after worries that high prices were eating into demand.

Traders also took their cue from U.S. crude oil and refined fuel stocks
, which rose last week as imports of oil products increased, while domestic refiners curbed output rates in the light of soft demand. Commercial crude oil stocks in the United States were up 500,000 barrels to 321.2 million, the Energy Information Administration said.

It also said oil demand in the world's top consumer was expected to grow by only 1 million bpd, or 0.2 per cent, over the next two decades, as higher vehicle fuel standards and increased use of renewable fuels stifle petroleum consumption. Americans are likely to travel less for the Christmas holiday period for the first time since 2002, travel and auto group AAA said.

U.S. shares fell on Wednesday, prompting Japan's Nikkei to inch lower as well on Thursday, as investors wondered what tools were left to tackle the year-long recession after the Federal Reserve on Tuesday cut rates to their lowest on record. The cut has sent the U.S. dollar tumbling against major currencies, hitting the weakest in more than 13 years against the yen on Wednesday.

Source: http://timesofindia.indiatimes.com/Business/Oil_steady_at_40_after_4-year_low/articleshow/3855269.cms

Markets open flat amid mixed global cues

MUMBAI: Stock opened on a flat note on Thursday amid mixed overseas cues. Satyam Computer, which had been badly pounded in Wednesday’s trade, rebounded sharply.

National Stock Exchange’s benchmark Nifty was up 9 points to 2963.40. Bombay Stock Exchange’s 30-share Sensex rose 64.71 points to 9780 from Wednesday’s close.

US stocks fell on Wednesday as the government's effort to stave off a deep recession raised worries about mounting public debts and blunted optimism stemming from the Fed's rate cut.

The Dow Jones Industrial Average fell 100.59 points, or 1.13 per cent, at 8,823.55, the Standard & Poor's 500 Index slipped 8.85 points, or 0.97 per cent, at 904.33 and the Nasdaq Composite Index dropped 10.58 points, or 0.67 per cent, at 1,579.31.

On the hand, Asian stocks rose to a six-week high, on speculation the region’s central banks will reduce interest rates to revive economic growth. The Nikkei moved up 0.5 per cent, Topix climbed 0.31 higher, Straits Times rose 0.37 per cent but Hang Seng fell 0.52 per cent.

Meanwhile, oil prices dropped to their lowest in more than four years on Wednesday after OPEC announced a record supply cut that dealers said may fail to fully offset slumping world energy demand. US crude oil prices fell $3.54 to settle at $40.06 a barrel after dipping below $40 for first time since July 2004.

Source: http://timesofindia.indiatimes.com/Business/Markets_open_flat_amid_mixed_cues/articleshow/3855556.cms

November excise collections fall 15%

Date : Dec-17-2008 09:35 The excise collection for the month of November dropped 15 per cent to Rs 8,556 crore from a month earlier, indicating a further slowdown in the economy. The customs collections for November saw a lower decline at Rs 8,931 crore, down 0.8 per cent from a month earlier. In whole, excise and customs collections for November were down 8.3 per cent from previous month.

FDI has declined, says Kamal Nath

Date : Dec-17-2008 12:12 The Foreign Direct Investment (FDI) in the country has turned down by 26 per cent in October this year as a result of the global economic slowdown. The FDI inflows during April-September 2008 showed an increasing trend each month in comparison to the same period in the previous year, Union Commerce Minister Kamal Nath informed the Lok Sabha in a written reply on Dec 16. However, the trend changed in October when it fell by 26 per cent, he said, adding that it would be difficult to assess whether the ongoing projects in India would be affected. Quoting various studies by international agencies and analysis, he cautioned that FDI flows to developing nations would generally decline.

Under the liberalized economic environment, investment decisions are based on the macro-economic policy framework, investment climate in the host country, investment policies of the trans-national corporation and other commercial considerations, he said. The Minister, however, said the government had put in place a liberal and investor-friendly policy on FDI under which investment up to 100 per cent was permitted on the automatic route in most sectors/activities. A slew of initiatives to encourage demand had been taken and this would enable India to continue as an attractive investment destination, Mr. Nath said.

Fortis MF ceases its Flexible Short Term Plan-Series D

Date : Dec-17-2008 Fortis Mutual Fund has wound up Fortis Flexible Short Term Plan-Series D (including plans/options there under) effective from 12 December 2008. The fund house will stop to carry any business activities in respect of the scheme. It has also ceased to issue units in the plan and has also ceased to create or cancel units in the plan. Fortis Flexible Short Term Plan-Series D was launched in June 2007 with an investment objective to generate steady returns through investments made in a basket of fixed income securities, with a provision to offer liquidity at periodic interval.

Market ambitious for direction: Sensex hovering around 9,900 mark

Date : Dec-17-2008 13:36 The US Federal Reserve move to slash its key interest rates to a target rage of zero-0.25%, could not boost the sentiment of regional policymakers to take aggressive actions in order to uplift economic from recession. There is a concern that this recession might lead to a deflationary condition which is worst for upcoming economy. In addition to this, Satyam Computer Services call-off to buy two related companies raised concern.

On the sectoral front, trade is mix. Auto Stocks grew on hopes recent price cut and rate cut would encourage demand for vehicles, which are mainly driven by finance. Further, Banking stocks paved gains on hopes of lower interest rates will boost lending growth. In line with this, Realty stocks declined on reports that recent rate cuts are not enough to drive demand.

The Market breadth, indicating the overall strength of the market, was strong. On BSE, out of 2,444 stocks traded so far, 1,489 shares advanced while 883 shares declined. Nearly 72 shares are unchanged.

At 1.30PM, the BSE Sensex is trading lower by 7.02 points at 9,969.96 and NSE Nifty is down by 6.15 points at 3,035.60.

The BSE Mid Cap is trading higher by 15.51 points at 3,259.73 and Small cap is trading up by 33.15 points at 3,809.80.

Gainers from the BSE Sensex Pack are ICICI Bank higher by (4.38%) at Rs.440.00 along with Infosys Technologies by (4.19%) at Rs.1,169.95, Mahindra & Mahindra by (3.43%) at Rs.310.50, Wipro Ltd by (3.26%) at Rs.24720, Grasim Industries Ltd by (2.50%) at Rs.1,258.30, HDFC Bank by (2.38%) at Rs.1,007.40 and ONGC by (2.28%) at Rs.730.00 among others.

Losers from the BSE Sensex Pack are Satyam Computer Services Ltd by (27.04%) at Rs.165.25 along with RCom by (6.63%) at Rs.218.45, Reliance Energy by (6.46%) at Rs.595.40, ACC by (4.26%) at Rs.512.85, DLF by (2.42%) at Rs.270.45, Reliance Ind by (2.26%) at Rs.1,355.40 and Jaiprakash Associates by (2.23%) at Rs.85.60 among others.

The BSE CD index is higher by 59.40 points or (3.02%) at 2,023.83. Stocks trading higher are Blue Star by (9.50%) at Rs.170.00, along with Videocon Indu by (4.79%) at Rs.131.15 and Titan Ind by (0.55%) at Rs.928.85.

The BSE Oil&Gas index is lower by 79.35 points or (1.21%) at 6,474.84. Stocks trading lower are Gail India down by (5.55%) at Rs.216.30, RNRL by (5.40%) at Rs.54.35, Reliance Ind by (1.79%) at Rs.1,362.00 and RPL by (1.49%) at Rs.89.10.

Satyam Computer Services slumped 27.04% to Rs.165.25 after its American depository receipt fell overnight as investors reacted negatively to its plan to buy two related companies. Later, Satyam called off the deal which it had announced.

Reliance Infrastructure and Reliance Natural Resources fell by 5.40% at Rs.54.35 on BSE on reports the government is seeking details of an alleged misuse of accounts of these two Anil Dhirubhai Ambani Group firms by UBS employees.

Benchmark S&P CNX 500 Fund extends NFO period

Date : Dec-17-2008 Benchmark Mutual Fund has extended the closing date of New Fund Offer (NFO) period of Benchmark S&P CNX 500 Fund till 16 December 2008 in place of 15 December 2008. The new fund offer was opened for subscription on 17 November 2008. Benchmark S&P CNX 500 Fund is an open-ended index scheme aims to generate capital appreciation through equity investments by investing in securities, which are constituents of S&P CNX 500 Index in the same proportion as in the index. For investment less than Rs 2 crore, the scheme charges an exit load of 1.50% if redeemed within 1 year from the date of allotment, 1.00% if redeemed after 1 year but within 2 years from the date of allotment and 0.50% if redeemed after 2 years but within 3 years from the date of allotment. It will not charge any exit if redeemed after 3 years from the date of allotment. For investments of Rs 2 crore and more, the scheme will charge 0.50% of an exit load if redeemed up to 3 months from date of allotment and nil for the redemption made after 3 months from the date of allotment.