Bull Of the day: Larsen and Toubro

Larsen and Toubro (L&T) jumped 0.53% or Rs 10.10 to close the day at Rs 1,902.20. It touched a 52-week high of Rs 1,918.70 in the intraday and an intraday low of Rs 1,895.30. It was trading with volumes of 161,409 shares, compared to its 5-day and 30-day average of 262,947 and 234,177 shares.

Why the run-up? The stock climbed up on the expectation of a strong first quarter results, due on 27 July. It is expected to command a very decent premium as compared to the others. In terms of visibilty, it stands out among all other companies in this space.
What expert says? In an interview to CNBC-TV18 Mehraboon Iraniof Centrum Broking said, “I think market according to me is expecting the numbers and the number should possibly live upto expectations but at the end of it, most of the stocks in this particularspace are expensive for the time being besides possibly in L&T.
"People are looking at this stock in a very different way. So L&T if anything is a stock in the capital goods space which I am asking investors to continue to hang on to it possibly wait for the results and see if there is a dip in the overall market which the market on the whole seems to be struggling at these levels over the last three days. So if there is a reaction possibly, look at L&T again as a stock where you should be parking your funds because others including a stock like Voltas, Thermax in terms of valuation for the time being are looking expensive and Siemens has been disappointing for the last three quarters. It is a stock which has been difficult to predict, so not many alternatives, BHEL is also looking a bit expensive. So if anything L&T remains the best bet."

RBI likely to raise rates by 25 bps next week

A majority of economists expect the Reserve Bank of India (RBI) to raise key interest rates by 25 basis points in its quarterly review on July 27 and tighten policy further in coming quarters, a new Reuters poll showed.
While headline inflation has been in double-digits for five months running and economic growth is expected to reach 8.5% this year, tight liquidity and continued uncertainty about global recovery are expected to prevent the Reserve Bank of India (RBI) from tightening policy more aggressively.
The RBI has raised rates three times this year by 25 basis points each, most recently in an unexpected move on July 2.
"My sense is unless we see a strong pick up in domestic demand both for credit, investment and for the economic activity in general, we might see a little bit of a softer approach towards policy tightening than initially thought," said Saugata Bhattacharya, an economist with Axis Bank in Mumbai.
Most economists have not changed their expectations from a Reuters poll on July 5 that the RBI would raise the repo rate, at which it lends to banks, by another 50 basis points to 6% by end of December.
They expect the RBI to raise the reverse repo rate, at which it absorbs excess cash from the banking system, by 50 basis points by end-December.
Tight liquidity since early June has led economists to expect no change in the cash reserve ratio (CRR), the percentage of cash banks must keep in reserve with the RBI by end-December, compared with a 50 basis point rise expected in the July 5 poll.
Of 12 economists in the new survey who were also part of the previous poll, two have lowered their expectations on rate increases for the rest of the year, while three expect the RBI to tighten more aggressively than earlier forecast.
Twelve economists said the RBI's policy tightening in recent quarters was appropriate, while four said the RBI should tighten more aggressively.
Most economists polled expect the repo rate to remain the RBI's operative rate by the end of September, a sign that they expect tight cash conditions to persist. The RBI has allowed cash conditions to remain tight in recent weeks, which helps dampen inflation expectations.
Economists were almost evenly split on whether the repo or reverse repo would be the operative rate by the end of December.
Repo:
Seventeen of 20 economists expect the RBI to raise the repo rate in the July 27 policy review by a quarter-point to 5.75%. By the end of December, 10 economists expect a total of 50 basis points in increases in the repo rate and five expect 75 basis points of increase.

Nokia jumps on talk of CEO Kallasvuo exit

Shares in Nokia jumped on Tuesday after the Wall Street Journal reported the world's top cellphone maker has sent out headhunters to find a replacement for Chief Executive Olli-Pekka Kallasvuo.
Kallasvuo, who turned 57 a week ago, has spent more than half of his life at Nokia and struggled to keep up with nimbler rivals Apple Inc and Google Inc.
Kallasvuo, called just "OPK" in the company, may be ousted as early as the end of July, the newspaper cited a person familiar with the matter as saying. The firm has been rocked by two profit warnings and management shakeup this year alone.
"There is a spark of hope that changes are coming, not only personnel changes, but also strategic changes," said Sami Sarkamies, an analyst at Nordea in Helsinki.
"If true this is a good move. My feeling is that OPK has lost the confidence of investors and a change would be the best thing for Nokia," Gartner analyst Nick Jones said in a note.
Shares rose 4.2% to 7.05 euros by 1143 GMT while the Stoxx 600 European technology index eased 0.4 percent.
Nokia declined to comment, citing company policy regarding market rumours.
Analysts say Nokia has been slow to innovate amid an explosion of feature-rich multimedia gadgets like the Apple iPhone and devices based on Google's Android operating system.
Kallasvuo, a former company lawyer and chief financial officer who married a veteran Nokia attorney, has come under attack from shareholders this year as the stock price tanked. Shares in Nokia have wallowed at levels last seen in 1998.
"Kallasvuo is a bad communicator in a world where his competitors are Steve Jobs, Eric Schmidt and Steve Ballmer," said John Strand, founder and chief executive of telecoms consultancy Strand Consult.
"He is good at selling phones, but bad at selling the Nokia story," Strand said.
The Wall Street Journal said Nokia had approached two US technology executives who had turned down the offer.
"Finding a US CEO willing to move to Finland is going to be tough. Nokia hasn't traditionally paid massive compensation packages required for taking such punishment," said Tero Kuittinen, analyst at MKM Partners.
"It's not obvious why Nokia would implement the elaborate reorganisation move of May just ahead of changing the CEO -- the timing here looks a bit odd," Kuittinen added.
The May reshuffle of Nokia's top management team took effect only from the start of July.
Nokia has rarely picked outsiders to run the group. The highest position a non-Finn has ever reached in the company is CFO -- the post held for years by Rick Simonson, who was highly respected on Wall Street.
Nokia Chairman and former CEO Jorma Ollila said at the company's annual general meeting in May the board backed management strategy to push into Internet services at a time when some investors said Kallasvuo should go.
TOUGH 2010 AFTER TOUGH 2009
Nokia will be one of the few to miss profit growth in 2010, the year of economic recovery, and software problems continue to haunt its smartphone lineup.
Kallasvuo's total pay leapt 32% in 2009, a tough year for shareholders when the company's share price slid 20%.
Nokia's revenues fell 19% last year, while operating profit dropped 76%. The value of the company's brand -- one of its key assets -- dropped 58% in just one year, according to a global study by Millward Brown.
Analysts say Nokia's market share position could weaken further in coming months.
Nokia warned last month its second-quarter sales and profits at its key phones unit would come in weaker than expected -- its second profit warning in less than two months.
Nokia is expected to post a 27% fall in second-quarter underlying earnings per share when its reports on Thursday, July 22.
Texas Instruments said overnight that weaker-than-expected orders from one mobile phone customer, identified as Nokia by some analysts, caused second-quarter revenue to miss Wall Street forecasts.

Goldman Sachs reports lower Q2 earnings

Goldman Sachs Group Inc posted lower second-quarter earnings, hurt by its settlement of US Securities and Exchange Commission fraud charges and the UK tax on bank executive bonuses.
Goldman, which resolved a major headache last week by paying USD 550 million to settle the SEC case, said earnings applicable to common shareholders fell to USD 453 million, or 78 cents a share.
A year earlier, the bank reported earnings to common shareholders of USD 2.7 billion, or USD 4.93 a share.
Weakness in its trading and investment banking divisions also weighed on earnings.
The fraud charges stemmed from Goldman's marketing and packaging of the Abacus collateralized debt obligation. The bank agreed to settle the case last Thursday.
Goldman said earnings were impacted by a USD 600 million expense related to the UK tax.
Goldman shares were down 2.1% to USD 142.55 in premarket trade. U.S. stock index futures extended declines after the Goldman results.

On TRAC? Vallabh Bhansali

A committee set up by the Securities Exchange Board of India on the takeover code has rewritten the rules for mergers and acquisitions in India. It has proposed hiking the trigger for open offer to 25% from the current 15% and also recommended a raise in the statutory open offer size to 100% equity.
Commenting on the same, Vallabh Bhanshali of Enam said there is need for a holistic view on the 100% open offer proposal. "The current takeover norms are skewed in favour of foreigners. We need a better level playing field for retail investors."

On how will acquirers finance such 100% open offers, he quipped that acquirers will find a way out.
According to him, there is a threat to promoters with less than 25% stake being unseated. "Only 6% of listed companies have 15-25% promoter stake."
He feels the takeover code is good for secondary market demand and sees private equity companies hiking stake from under 15% at present.
Commenting on the road ahead for markets, Bhanshali said there is some anxiety on the street regarding monsoon and earnings. He feels stock-specific buying may continue and that the current bout of consolidation may make the markets healthier.
Below is a verbatim transcript of Vallabh Bhansali’s interview with CNBC-TV18. Also watch the accompanying video.
Q: This 100% open offer, how do you think people will read it, as a deterrent to going out and doing deals or do you think it will end up substantially changing the way instruments are used to finance any kind of takeover and leveraged buyouts etc might eventually become as possible in India as they are in the West?
A: I think the country has been evolving; the whole securities scenario has been evolving and we must look at 100% not in isolation but in the total credit of the recommendations made. I think it’s a dramatic change for the way promoters control the company, the way the minority shareholders come in and though nothing is visible today the takeovers will be financed. It is inevitable that the financing world will respond to this. But to put this in perspective there is something interesting that we found when we analyse the takeovers for the last four years. The offers that were more than 20% in size were only 15% of all the offers made and on the funding front to just put the challenge in perspective the average size of offers made by foreigners was 480 crore compared to the size of offer made by Indian companies which was a measly 40 crore. So in terms of the level playing field at this point of time one would think that this has got highly skewed in favour of the foreigners.

Monsoon covers entire country, deficiency down to 10%: Met

Monsoon, crucial for a rebound in farm output after last year's drought, has rapidly advanced to cover the entire country, boosting crop sowing and likely tempering food price inflation.
Confirming the same BP Yadav, Director of the Meteorology Department said as the monsoon covers the entire county including western Rajasthan, the deficiency has come down to 10% from 16% in June-end. “26 out of 36 areas have seen normal or higher rains. It’s only 10 areas that have seen deficiencies,” he says.Further, Yadav expects good rainfall in North India as well as in Jharkhand and Chhattisgarh over the next two days.
Here is a verbatim transcript of the exclusive interview with BP Yadav on CNBC-TV18. Also watch the accompanying video.
Q: Have the rains in the first week of July been according to your expectations? Can you just update us on progress, particularly in the northern half of the country?
A: You know that there has been a very good rainfall, which has occurred for the last three days over the North West India. Last two days there has been monsoon coverage over the entire country. It has now covered up to West Rajasthan, which is about ten days earlier than the normal.
As far as rainfall is concerned, most parts of Punjab, Haryana, Rajasthan, West Uttar Pradesh, Himachal Pradesh, Uttarakhand are getting wet by the rainfall, and some places are getting very heavy rain.
If we go by figure, there is a considerable improvement as those were at the end of June. Deficiency was about 16% by the end of June, but now by the end of July 5, this deficiency has come down to about 10%.
North West India deficiency from 27% has come down to 5%. Central India, there has been improvement and also East India. Particular last four days have been very good, as far as monsoon advance is concerned as well as monsoon rainfall is concerned.

Greek 'haircut' of 16-17% in stress test: Sources

The stress tests for European banks will include a "haircut" of 16% to 17% on Greek sovereign bonds, two banking sources told Reuters on Wednesday.
The presumed markdown applied to French sovereign bonds will be 0.7%, one of the sources, both of which are based in Germany, added.
"German sovereign bonds will not be stressed," both sources confirmed.

IMAX to install 5 digital theatres in Philippines

Big-screen movie company IMAX Corp signed a deal with Philippine mall operator SM Prime Holdings Corp to install five digital IMAX theatres in the country.
The three theatres expected to be installed in 2011 and two in 2012 take the total number of IMAX system deals announced year-to-date to 89, compared with 35 in 2009.The IMAX theatres serve as a great source of incremental revenue for our business, and we're seeing a growing demand for the IMAX brand as more big Hollywood movies are released in the format," SM Prime's President Hans Sy said in a statement.
The movie operator also said its IMAX DMR (digital re-mastering technology) gross box office worldwide sales rose about 37% in the second quarter to about USD 115 million, compared with a year ago.
Imax shares were up 4% at C$13.43 Wednesday morning on the Toronto Stock Exchange.

Hindustan Media IPO gets strong investor response

Subscription for newspaper publisher Hindustan Media Ventures Ltd's (HMVL) initial public offering ended on a high note on Wednesday as investors bet on growth prospects of the regional player.
The publisher of the third biggest Hindi daily in India received 73.8 million bids, mostly towards the lower end of the price band, and the offering was subscribed 5.34 times, data from the stock exchanges showed.HMVL, a part of HT Media is looking to raise about Rs 270 crore through the IPO. The price band was set at Rs 162-175 a share.
Subscription for HMVL's IPO -- the third media listing this year after Hathway Cable & Datacom and DB Corp -- opened on Monday but gained momentum only on the last day.
The portion of the offering allotted to institutions was covered 4.36 times, but the response from retail investors remained muted.
"We believe HMVL is one of the better players in the Indian regional print media and is likely to deliver a better growth in the coming years," brokerage Sharekhan said in a note earlier this week.
"However, the increasing competition from the large players like Jagran Prakashan and DB Corp could be a key risk to the profitability of the company," it added.
Last week, HMVL raised about Rs 46.1 crore from anchor investors, selling 2.8 million shares at Rs 166 apiece.
The biggest investors were Reliance Capital and Birla Sun Life, who bought 843,360 shares each. Birla Sun Life bought the shares through five of its entities.
Edelweiss Capital and Kotak Mahindra Capital are book running lead managers for the issue.
Shares of HT Media, which now owns about 98.85% of HMVL, closed up 2.41% at Rs 152.75 in a weak Mumbai market.

How will markets behave during earnings season?

The benchmark Nifty retreated nearly all its Tuesday's gains and closed below 5250 level, dragged by oil & gas, financial, metal, auto, realty and select infrastructure companies' shares. This pull down was mainly led by negative global cues.
The 30-share BSE Sensex closed at 17,471.03, down 143.45 points or 0.81% and the 50-share NSE Nifty fell 47.95 points or 0.91% to settle at 5,241.10. However, the Nifty July futures ended at 6 points premium.How will the market reverse through earnings season?
Amit Dalal, Executive Director, Tata Investment Corporation Ltd said that the market is going to remain dull. According to him, even the earning season will not give the kind of kicker that we normally expect it. He reasoned that this is mainly because it has been now almost three quarters where we have been seeing a very high growth and good numbers and the base had become quite high.
“So the expectations from earnings and valuation expansion that one would want will perhaps not be there from almost all sectors across,” Dalal added.
Agreeing to him, Ajay Parmar, Head - Institutional Equities, Emkay Global Financial Services Ltd said that the first quarter is a leaner one. Parmar added that it will be very crucial because we are going to see some changes in the last quarter strength that is the raw material increase is likely to be seen. “The EBITDA margins are likely to be little under pressure so this quarter will be very crucial for the trend of the market. People have been factoring this on a conservative level almost growth of 12-15%,” Parmar explained.
Elaborated Sudarshan Sukhani, Technical Trends that the market could go up but it doesn’t look as if there is enough momentum for it to go up however it might even surprise us.
What is the strategy to cope up?
Parmar advised that it is best to be more stock specific. He recommended some companies from the pharma, auto and agri inputs companies like fertilisers, seeds pesticide. In the pharma sector, Torrent, Cadila, Rallies, Coromandel International are the best pick, he said. Bajaj Auto, Hero Honda and Mahindra & Mahindra are the top picks in the auto sector, he added. “Some of the banking stocks which I believe are available or the PSU stocks which are available at reasonable good price to book value ratios,” he added further.

Monsoon boosts most crops, flood risk emerges

Monsoon rains in key grain-producing states in northern India have brightened the outlook for rice and cotton although heavy showers have flooded some pockets, officials said on Wednesday.
Rainfall in Punjab and Haryana was four to five times the average level in the past two days, making up for the dry spell in June and reducing India's monsoon shortfall since June 1 to 11% from 16% a week ago, data from the weather office showed.India's June-September monsoon rains, the main source of water for 60% of India's farms, began on a shaky note last month, delaying soybean sowing in central India and rice planting in the north, but rain-bearing winds advanced rapidly this month, ruling out significant damage to crops.
"Paddy sowing going on full swing in Punjab and Haryana," Vijay Sethia, president of All India Rice Exporters Association.
He said the government's target to produce 100 million tonnes of rice in 2010/11 would be achieved.
In central India, the main soybean region, planting has accelerated after rains revived this month.
"I expect 80% to 90% sowing to be over by next week," said A.S. Chandel, a soybean expert.
Surender Paul, director at the regional office of the India Meteorological Department, said heavy rains would continue in the northern region for another 24 hours, and decrease after that.

US jobless claims rise, stoke recovery worries

New claims for state unemployment aid unexpectedly rose last week, heightening fears the US economic recovery is stalling.
Initial claims for state unemployment benefits increased 13,000 to a seasonally adjusted 472,000, the Labor Department said on Thursday.
Analysts polled by Reuters had expected claims to slip to 452,000 from the previously reported 457,000, which was revised slightly up to 459,000 in Thursday's report.
While layoffs have slowed sharply from early last year, businesses remain skeptical of the strength of the recovery and are holding back on hiring, keeping claims for unemployment benefits at uncomfortably lofty levels.
High unemployment is a sore point for President Barack Obama, whose approval ratings have plummeted.
The economy's failure to create sufficient employment to absorb the more than 8 million Americans who lost their jobs during the recession could hurt the Democratic Party in the November mid-term elections.
"It's looking more and more like the job market is treading water. Layoffs are down from 2009, but hiring hasn't really picked up and this is disappointing," said Stephen Bronars, a senior economist at Welch Consulting in Washingtion.
"There is a lot of uncertainty on the hiring side that's causing things to remain sluggish. In order for the recovery to give people confidence it needs to cut across different sectors of the economy."
US stock index futures extended losses on the data, while Treasury debt prices added to gains. The U.S. dollar fell versus the yen.
The claims data has no implications for the June employment report due on Friday as it falls outside the survey period.

EU 'weeks away' from deal on financial supervision

The European Union may need weeks to agree sweeping reforms of how banks and markets are supervised but the bloc is not lagging the United States in regulatory reform, a top EU official said on Thursday.
Representatives of member states and the European Parliament failed on Thursday to unblock talks stalled over how much power to give three new pan-EU authorities to supervise banks, insurers and markets.The EU has pledged that its new framework would be up and running next January, a deadline that is now looking difficult.
"It's a very important issue and I am hopeful we will be able to reach agreement in the next few weeks," EU Internal Market Commissioner, Michel Barnier, told a news conference.
The Commission acts as a broker to reach a deal on the draft law it authored but parliament is pushing for a far tougher version than member states.
Britain fears the new bodies will hold too much sway over day-to-day supervision of its financial centre, the EU's largest.
Barnier said further talks were scheduled for Monday.
"It will be very difficult to reach a deal but not impossible. The talks will go on over the summer," he told Reuters.
The Commission has proposed a compromise that narrows the powers of the new authorities.

Growth worries undermine world stocks, commodities

World stocks fell to three-week lows on Thursday and commodity prices sagged after data showing China's rapid growth was losing steam added to worries about the strength of the global economic recovery.
Wall Street looked set to track Asian and European peers lower with US stock index futures all in the red.
Investors, however, took heart at the outcome of the European Central Bank's offering of six-day loans, which saw banks borrow 111.2 billion euros (USD 136.1 billion), a figure that analysts said did not set off alarm bells.
Investors were worried that European banks are too reliant on ECB funds, especially with the expiry of 442 billion euros of one-year loans on Thursday.
"There's a bit of relief in the market that some of the worries about funding concerns in Europe may be overdone," said Nick Stamenkovic, strategist at RIA Capital Markets.
Also helping to lighten the mood was Spain's successful sale of 3.5 billion euros of bonds despite Moody's warning late on Wednesday that it may cut the country's Aaa credit ratings.
MSCI's all-country world stock index shed 0.4%, having earlier fallen as much as 0.9% to fresh three-week lows. In the first half of 2010, it dropped some 10%.
The FTSEurofirst 300 index of top European shares and the euro zone's blue-chip index, Euro STOXX 50 were both down about 0.9%.
Bank stocks pared losses after the ECB tender result with the STOXX Europe 600 banking index down 1.1%, having earlier fallen more than 2%.
Earlier, Japan's Nikkei average slid 2% to a seven-month closing low.

Cargo carrier Arrow Air bankrupt, to liquidate

Arrow Air Inc, a Miami-based cargo carrier, has filed for bankruptcy protection and plans to liquidate after failing to find a buyer.
The 60-year-old company, which operated as Arrow Cargo and once had more than 3,500 customers, halted operations on Tuesday and filed a Chapter 11 petition on Wednesday in the US bankruptcy court in Miami.
Arrow had emerged from a prior bankruptcy in June 2004. An affiliate of MatlinPatterson LP, a New York-based private equity firm specializing in distressed debt, owns a 95% equity stake, court records show.
According to its bankruptcy petition, Arrow has between USD 10 million and USD 50 million of assets, and between USD 100 million and USD 500 million of liabilities. Its parent Arrow Air Holdings Inc also sought court protection.
In a court filing, Arrow said rising jet fuel prices outpaced its ability to boost prices for customers. This resulted in "significant recurring operating losses" and a large operating deficit.
Arrow said it filed for court protection after "protracted negotiations" failed to result in a sale of the company.
It said an "orderly liquidation" will result in better returns for creditors.
Arrow said it fired all but 132 of its 540 employees after ending service.
The case is In re: Arrow Air Inc, US Bankruptcy Court, Southern District of Florida, No. 10-28831.

Airbus, Boeing spar again as appeal looms

Airbus and Boeing clashed over aid for the next generation of European passenger jets on Thursday, while details emerged on the battleground for possibly lengthy appeals following a major trade ruling on aircraft subsidies.
Both sides claimed victory on their favourite points in a 1,000-page ruling handed down on Wednesday by the World Trade Organisation, which ordered European countries to withdraw prohibited subsidies to Airbus for its A380 superjumbo
The WTO also criticised weaker subsidies for other models of Airbus aircraft, but rejected several US negotiating points.
The United States says the ruling showed European Union states must refrain from offering more development loans, which are at the heart of the dispute, for the future mid-sized Airbus A350.
Boeing also said Airbus should pay back roughly USD 4 billion in past A380 loans or restructure them to make them commercial.
Airbus rejected both points, saying the panel had neither said how the subsidies should be remedied nor had it tarred the European funding system as a whole, only the specifics of use.
"Boeing's wishful thinking to the contrary, the A350 is untouched by the WTO's findings. Together with the four governments, we are moving forward at full speed," Airbus head of communications Rainer Ohler said.
Boeing said a legal principle had been set.
"Continuing with plans to provide USD 4-5 billion dollars of taxpayer's money to Airbus for the A350 on anything other than market terms would be not only unacceptable but prohibited by the WTO ruling," spokesman Charlie Miller said.
"It really is time Airbus stood on its own two feet. It is a mature company, the biggest producer of commercial aircraft in the world with a cash pile of almost 9 billion euros. It is perfectly capable of financing aircraft development using its own cash and commercial loans."

Europe gets first glimpse of solar, windfarm plans

Wind turbine farms are set to expand rapidly across Europe's coastal waters, throwing up challenges and opportunities for industry, according to a Reuters analysis of a leaked draft of EU energy strategies.
A picture of the European Union's renewable energy landscape for 2020 is emerging for the first time as the bloc's 27 member states scramble to meet a deadline for setting their "National Renewable Energy Action Plans".The documents were due to be delivered to the European Commission by midnight on Wednesday, although most missed the deadline and none of the plans has yet been made public.
But a number of draft plans seen by Reuters point to massive growth in the onshore wind-farm capacity -- 30% in Germany, 130% in Ireland, 230 percent in Italy and 74% in Spain.
Offshore wind is also expected to soar, from virtually zero today to around 10,000 Megawatts in Germany, 2,300 MW in Ireland, 1,000 MW in Italy and 3,000 MW in Spain.
That is likely to pose a massive challenge for the wind industry's support services.
"For offshore wind we will need significant investments in infrastructure, such as grids, harbours and vessels that can accommodate and transport machines the size of offshore wind turbines across the sea," said Justin Wilkes, policy director at the European Wind Energy Association.
The plans give a detailed picture of European governments' vision, but much hangs on how effectively they are executed. The availability of finance, subsidies and support services will play a big role, as will planning and political stability.

Moody's downgrades five Spanish regions

Moody's has downgraded five Spanish regions; outlooks negative.
Moody's cuts Castilla y-Leon, Extremadura, Madrid and Murcia by one notch to Aa2, Castilla-La-Mancha by one notch to Aa3. It expects a lasting impairment of the Spanish regions' financial performances.
Moody'says review for downgrade on Spain's sovereign rating reflects fragility of country's medium-term recovery prospects.

Baidu eyes small gains on Google in China

Google Inc's partial exit from China would bring rival Web search engine Baidu Inc only small gains, while Baidu sees more growth for itself and huge Web search market growth in China, the company's chief financial officer said on Thursday.
The impact of the Google's partial exit is minimal on Baidu's business as both firms already share common clients, Jennifer Li told Reuters in a telephone interview.Baidu's shares have rocketed 76% since Google said in January that it might pull out of China because of censorship concerns and a hacking episode that it said originated in the country.
Analysts have said that Baidu stands to gain the most from the spat, and could take up to half of Google China's search revenue.
Baidu expects rapid Internet adoption in China and its new search keyword bidding system to spur its growth in coming quarters, Li said.
"There are a lot of positive forces working for us," Li said.
Google shares have fallen around 25% since then, while the Nasdaq is down 8%.

Goldman says demand for AIG money was for clients

Goldman Sachs demanded billions of dollars in collateral from AIG to protect its customers, the Wall Street bank said on Thursday, defending itself against accusations that it contributed to the insurer's woes while padding its own profits.
But an American International Group official questioned Goldman's lack of flexibility in the 2007-2008 dispute over credit default insurance products linked to baskets of loans that included subprime mortgages.
Elias Habayeb said in testimony prepared for a US panel exploring the origins of the financial crisis that AIG's counterparties would not cooperate during negotiations.
Not even the threat of bankruptcy by AIG or its financial products unit would extract discounts, he said.
"Unfortunately AIG had little negotiating leverage," said Habayeb, who was chief financial officer of the firm's financial services division and has just returned to the company.
Habayeb is scheduled to appear alongside other former and current executives from AIG and Goldman, as the Financial Crisis Inquiry Commission continues its two-day-long hearing about the role of derivatives in the financial crisis.
Goldman Sachs has been dogged by criticism that it received a backdoor government bailout when taxpayer funds were funneled into an insolvent AIG, starting in September 2008, to help pay off counterparties like Goldman.
By March 2009, Goldman had received USD 12.9 billion of the USD 93 billion in money paid to AIG counterparties.
Ultimately, taxpayers pledged USD 182 billion in assistance to help AIG.
Goldman Chief Financial Officer David Viniar said in his prepared testimony that the firm's demands were for its customers, not Goldman itself.
He said Goldman's exposure to AIG was designed to help its customers manage their own risks.
"Our net risk was consistent with our role as a market intermediary rather than a proprietary market participant," Viniar said.
Goldman's defence of its client focus comes as the firm is facing civil fraud charges from the US Securities and Exchange Commission. The case filed in April alleges that Goldman misled investors in marketing

Key political risks to watch in Asia

Asia has strongly outperformed the rest of the world and is on track for robust growth, but its success depends heavily on China's buoyant economy and this is where the most significant political risks to the region lie.
Below is a summary of the key political risks in Asia.
Can Wahington and Beijing avoid a dust up?
In an increasingly bipolar world, among the greatest risks is that a row between Washington and Beijing spirals into serious grief for global markets. While the superpowers have worked to cool recent tensions, there is plenty of potential for problems.
The biggest bone of contention remains the yuan . After intense international pressure, China freed the currency in June from its 23-month peg. But enthusiasm in Washington soon faded when it became clear appreciation would be gradual and modest.
President Barack Obama faces mounting pressure from lawmakers and domestic industry to take a tougher line with China and this will only intensify ahead of congressional elections in November.
The worst-case scenario is a dispute that escalates into a protectionist trade war, with a chilling impact on global growth.
What to watch:
-- The US Treasury put off a decision in April on formally branding China a currency manipulator but a review is due soon, and another report is scheduled for October 15, shortly before the elections. There are also growing calls in the United States for trade sanctions. If Obama feels compelled to take a tough line, Sino-US relations could sharply deteriorate.
-- Disagreements over dealing with the nuclear ambitions of Iran and North Korea could be another flashpoint.

Monsoon rains submerge hundreds of villages in Assam

Incessant monsoon rains have triggered major flooding in northeastern India, submerging hundreds of villages and forcing thousands of people to abandon their homes in search of higher ground, say officials and aid workers.
The heavy rains in the tea and oil-rich state of Assam have forced burgeoning rivers, including the mighty Brahmaputra, to burst their banks affecting 865,000 people in about 1,500 inundated villages.
Aid workers say 11 of Assam's 27 districts have been severely affected, including Kokrajhar, Lakhimpur, Baksa and Bongaigaon, and poor farming communities have been the worst-hit.
The fast-flowing waters have also eroded banks and dykes and swelling rivers are threatening to inundate other parts of the state, including parts of Dibrugarh, Assam's second largest city.
"People have been moving with whatever possessions they can take to safer areas. Most are currently in make-shift shelters with little help," said Mrinal Gohain, ActionAid's manager for India's northeast region.
"These communities, who rely on rice cultivation for their survival, will see 60 to 80 percent crop damage as a result of the irregular monsoon that we have had this year," he said, adding that Assam's pre-monsoon showers were 80 percent higher than normal this year.
Weather officials are forecasting more rainfall in the coming days.
Government officials say water purification tablets, medicines and food are being distributed in some areas, but there are currently no plans to open relief camps until an on-going survey of the affected areas has been completed.
"So far, all the rivers in the state are observing a rising trend," said Prithvi Majhi, Assam's minister for water resources. "We have instructed private owners of country boats to cooperate with district authorities in the distribution of relief materials."
Aid agencies are also preparing to respond and said they plan to start aid distributions - including tarpaulins, medicines and clean drinking water - by next week.
Flood-prone
India usually experiences monsoon rains from June to September, which are vital for its agriculture.
But in states like mountainous Assam, the rains frequently cause landslides and flooding that devastate crops, destroy homes and trigger diseases such as diarrhoea and dysentery.
Experts say decades of mass deforestation have led to soil erosion where sediment is washed downstream from mountainous areas. It ends up in rivers where it builds up on the river bed, raising the level of the water far higher than normal.
Poor management in regulating water levels in dams has also led to huge volumes being released into rivers over a short period with no warning to populations, they add.
Local populations also say corrupt officials have siphoned off funds meant for flood risk reduction projects and resulted in shoddy construction of embankments which are regularly breached.
Last year, nearly 1,000 people were killed by severe flooding in India, while tens of thousands more lost their homes and saw large swathes of their farmland devastated, according to the International Federation of the Red Cross and Red Crescent Societies.

China may use export taxes to cull own industries

China, which helped its heavy industry survive the financial crisis by lowering barriers to exports, is now considering hitting the same exports with a tax to discourage rampant production that uses too much energy.
Fan Jianping, a top government analyst, said China is likely to impose export taxes on steel and base metals and their products in the next five years and classify them as industries serving domestic consumption. The goal would be to limit production capacity and to cut energy use and carbon emissions.
"Before 2015, the policy would be implemented," Fan, chief economist and director general of the Economic Forecasting Department of the State Information Center think tank, told a lead and zinc trade summit in Chengdu in Sichuan province.
That would be a U-turn in China's treatment of its swollen steel sector, by far the world's biggest, and its inefficient aluminium producers, who struggle to match leading firms such as Rio Tinto on production costs.
Those sectors got a huge leg-up in the first half of 2009 as the government encouraged steel consumption and directly bought base metals such as aluminium, as well as granting value-added tax rebates on exports.
Last week the government said it would cut and scrap some rebates on exports of steel and most base metals and semi-finished products made from those metals from July 15, lessening state help for the first time since the financial crisis triggered China's huge stimulus plan 18 months ago.
Fan said the government believed the rebate cuts would cause little pain since the companies involved had made huge profits in the first five months of the year, and the cuts, which signalled a tougher stance on phasing out outdated production facilities, would continue.
The government has repeatedly vowed to crack down on overcapacity, threatening to withdraw loans, outlawing expansion and advocating a wave of consolidation that will leave only a few big players in each industry.

Global carmakers see H2 trouble; June sales mixed

Global carmakers are braced for a slide in second half sales as scrappage schemes are phased out and cautious consumers pull back from big-ticket buys in the face of economic uncertainty.
Scrappage schemes have finished already or are winding down in Europe, and carmakers and analysts fear economic worries and tax measures -- like Spain's VAT hike -- could hurt an industry taking tentative steps out of a deep and damaging downturn.
Last month the World Bank said a double-dip recession could not be ruled out in some countries if investors lose faith in efforts in Europe and elsewhere to tackle rising debt levels.
In France, June car sales edged 1.2% lower year-on-year, according to data released on Thursday. While France's scrappage scheme is still in place, from July 1, carmakers will get 500 euros, down from 700 euros, to trade in their old vehicles.
That decline meant French six-month sales were up 5.4% on the year.
Some carmakers fared better than others, however, with Europe's second-largest carmaker, PSA Peugeot Citroen, posting a 5.6% decrease in June sales, while Renault group sales edged 1% lower.
Sales of light commercial vehicles, which were not boosted by scrappage incentives, rose 14.9% in June, and showed a 10.9% increase in the first six months, from a very low base, as businesses that had put off renewing their fleets in the depths of the crisis bought new vans.
IHS Global Insight analyst Carlos Da Silva said the relatively gentle decline in French car sales in June would be unlikely to last.
"I think until the end of the year we'll see much steeper declines ... We are anticipating double-digit drops, although not for every month, and a very bad last quarter because mechanically we are comparing a very strong end of the year last year," he said.
Worries over government reforms to reduce deficits and the economic situation in the euro zone would add to the effect of the end of scrappage incentives, Da Silva said.
"Incentives and (manufacturer) discounts cannot last forever ... on top of that all the information on Greece, Portugal, here in France the pension reform is not giving them very good signs for the future. Maybe now we'll see a lot of people coming back to saving what they can to see what happens next year."
In Spain, car sales rose 25.6 percent year-on-year in June, the last month affected by the scrappage scheme, although the growth slowed from May's 44.6 percent and carmakers' association ANFAC warned the rise would not last.
"In H2 we expect the trend to worsen, with falls of over 30% due to the economic situation, the contraction of domestic demand, credit tightening, high unemployment, a 2 point rise in VAT and the end of the Plan 2000E (goverment subsidies for car buyers)," ANFAC said in a statement.
Elsewhere in Europe, Italian car sales data is due for release at 1600 GMT.
US CAUTION
US car sales due out later on Thursday are expected to show the pace of recovery slowing, and spark fears the recovery is stalling, analysts said.
General Motors North America President Mark Reuss told analysts on Wednesday that "it's still a very delicate recovery".
In Japan, home to Toyota Motor Corp, Mitsubishi Motors Corp and Nissan Motor Co Ltd, overall auto sales rose 17.4% year-on-year in June.
Sales excluding 660cc mini-vehicles were up 20.6%, although an industry official said the jump was off a low base, and remained lower than 2008 levels, before the crisis hit.
He also warned that the outlook for demand was shaky for autumn and beyond, after the government's scrappage incentives expire at the end of September.
"It's very difficult to get a read on what sales will do in October and beyond," Michiro Saito, an official at the Japan Automobile Dealers Association said.
"We know demand will fall, but by how much and for how long are a big question mark," he said.
Elsewhere in Asia, South Korea's Hyundai
Motor Co saw an 11% increase in overall sales in June, selling 312,388 vehicles at home and abroad, while Kia Motors Corp saw a 24 percent increase.

MRPL to shut 160,000 bpd crude unit in Aug-Sep

India's Mangalore Refinery and Petrochemicals Ltd (MRPL) will shut down its 160,000 barrels per day (bpd) crude unit during August-September for 25 days, its Managing Director UK Basu said on Thursday.
"Our naphtha and kerosene production will fall and a little bit of diesel (production) will also be affected due to the shut down of the crude unit," Basu told reporters.
MRPL, a subsidiary of state-run explorer Oil and Natural Gas Corp, runs a 236,400-bpd coastal refinery in the southern Indian Karnataka state.
The firm, which has government approval to set up about 500 fuel stations, is looking at more retail stations. MRPL runs two retail outlets and a third one is being built.
"We are reviewing our plans to set up more retail outlets," Basu said.
The company had put a two-year hold on its expansion plans due to revenue loss on fuel sales, Basu said, adding, the period got over last month

Japan retail flocks to emerging market funds

Japan's ultra-low interest rates and concerns about its ageing society are prompting retail investors to take more exposure in foreign products, especially in emerging markets, to secure wealth post retirement.
One symbolic area is Japan's USD 685 billion investment trust fund, or "toushin", market where Japanese retail investors, have been net buyers for more than a year despite the euro-zone debt crisis and market turmoil since the failure of Lehman Brothers in 2008.
Speakers at the Reuters Japan Investment Summit said money held by retail investors is heading overseas, especially to emerging countries, as the Japanese economy struggles while prospects of emerging economies are bright.
Asset managers such as Nomura Asset Management, Japan's top fund manager, have been offering a wide range of mutual funds, such as foreign junk bond funds and thematic funds, to Japanese individuals, who hold USD 15 trillion in personal assets still largely parked in low-yielding deposits.
"Japanese retail investors are seeing emerging markets as an important area of growth so they want to take more exposure," said Kazutoshi Inano, chairman of Nomura Asset.
Japan's low interest rates, an ageing population and concerns over the country's social security system are a common theme for Japanese individuals, underscoring the importance of thinking about raising higher returns through investments.
"I don't expect this trend will slow down. Japanese investors will shift into investments. This trend will continue much longer," said Inano, who is also the chairman of the Investment Trusts Association of Japan.
Other companies are trying to improve their services to attract more investors.
Daiwa Securities Group, Japan's second-largest brokerage house, said it will strengthen its efforts to lure retail investors with Asian-linked financial products.
Daiwa will increase the workforce in its research so that the brokerage could provide more information about Asia to investors.
"It's almost impossible now to subscribe Japanese equities-only toushin. Most of toushins launched last year were Asian ones and Brazilian ones. This trend is already in place," said Takashi Hibino, a deputy president of Daiwa Securities.
"We want to expand our Asia-focus strategy to retail side by strengthening our research so that we could increase support to retail investors," Hibino said.

Allianz plans to boost PIMCO with new hires

Allianz Global Investors, the funds arm of German insurer Allianz, plans to add about 100 staff this year, with bond manager PIMCO the biggest beneficiary as investor appetite for fixed income products continues.
AGI Chief Executive Joachim Faber said the head count had increased across the entire group by 100 people last year and he expected to repeat that this year.


"The PIMCO business is growing very strongly so it has had the most people added," said Faber in an interview on the sideline of the annual Fund Forum in Monaco.
He said the growth was not due to the firm's push into equity products but rather related to the continued high demand for fixed income and PIMCO's development of unconstrained and absolute return type products.
Investors have shunned equity products to a certain extent this year despite the stock market rally as the outlook for the economic recovery remains uncertain.
Instead, they have flocked to fixed income investments, prompting asset managers to up staff in areas of credit suddenly in demand, such as high yield, and to enhance their specialist expertise in emerging market debt.
PIMCO runs the USD 228 billion Total Return Fund, the world's biggest bond fund. At the end of March, it had a total USD 1.070 trillion under management.
Faber said in 2009 the group as a whole had net inflows of some 90 billion euros and was seeing similar flows this year. AGI had total assets under management of about 1.2 trillion euros at the end of 2009.
AGI is targeting new assets in Asia and is awaiting regulatory approval to distribute funds in India through its joint venture with the financial services arm of the Indian Bajaj Group.
Faber told Reuters in March he had hoped the joint venture would be up and running by the end of the year but said on Thursday the company was still waiting for approval.
"It is quite unpredictable so it is difficult to say when we will launch now -- it could well be 2011," he said.
He said the venture planned to sell Indian equity and bond funds.
The Indian market has proved vexing for asset managers operating there as the regulator, SEBI, surprised the industry last year by abolishing front-end fees to cut costs for investors and discourage aggressive selling.
Because the unit-linked insurance product market has been unaffected by these changes, many distributors have switched to selling these commission-bearing products instead.
"This unresolved situation is giving us a lot to think about because it looks like the measures introduced for the mutual fund market won't be adopted for unit-linked products," said Faber.

Chalco drops $2.4bn Australian bauxite plan

China's Chalco, the world's second-largest aluminium producer, has pulled out of a A$3bn (USD 2.4bn) deal to develop a bauxite refinery in Australia, blaming a drop in aluminium prices and difficult global conditions.
Chalco, the Hong Kong-listed subsidiary of Aluminium Corporation of China, won a permit to mine the high quality Aurukun bauxite deposits in northern Queensland on the condition it build a processing plant.


However, Chalco had been seeking to revoke this commitment given the fall in aluminium prices and the higher-than-expected cost of building a refinery in such a remote location.
When the decision was made to go ahead with the Aurukun project two years ago, world prices for aluminium were at USD 3,000 a tonne, compared to below USD 2,000 today.
This would have been Chalco's first investment in Australia - its parent's offer to inject USD 19.5bn into Rio Tinto last year was turned down, which put a strain on Sino-Australian relations for a while. Chalco's decision to shelve the bauxite deal followed lengthy talks with the Queensland state government, ahead of the June 30 deadline for the final agreement.
Deteriorating conditions for aluminium meant Chalco was not prepared to build a processing plant and the Queensland state government reaffirmed that there would not be a mine without a refinery.
In awarding mining licences, the state government's emphasis has been on adding value to create more jobs and investment as it is mindful of the past tendency for miners to export minerals from Queensland to be processed into more expensive metals offshore.
While the original deal is dead, both sides on Thursday affirmed their strong common interest to develop the Aurukun bauxite deposit given its strategic importance.
Andrew Fraser, Queensland state treasurer, said: "What we want to see is the resource developed, the mine take place, jobs for the Indigenous community. And so we need to start again, given that that agreement has now changed."
He added: "They've [Chalco] has put a lot of investment into the work so far and so we want to see if we can reach a new agreement that meets all of those objectives that the Government had in the first instance."
Xiong Weiping, Chalco chairman, said: "We look forward to discussing new development and investment options for Chalco with respect to the Aurukun resources, as we continue to seek opportunities to invest in the resources sector in Australia and Queensland."

BP oil spill cleanup work hampered by hurricane

Hurricane Alex slowed oil clean-up and containment efforts in the Gulf of Mexico, with any permanent fix to BP Plc's ruptured deep-sea oil well still several weeks away.
The hurricane made landfall over northeastern Mexico late on Wednesday, its high winds and the rough seas delaying the British energy giant's plans to expand the volume of oil it is siphoning from the leaking well.
Alex is forecast to dissipate over Mexico in the next day or two.
The bad weather also threatened to push more oil-polluted water onto the shoreline of the US Gulf Coast and forced the halting of skimming, spraying of dispersant chemicals and controlled burns of oil on the ocean surface, officials said.
The worst oil spill in US history is in its 73rd day. It has caused an environmental and economic disaster along the US Gulf Coast, hurting fishing and tourism industries, soiling shorelines and killing wildlife.
President Barack Obama was scheduled to meet with senior US officials on Thursday to review the spill situation and oil containment plans, the US Coast Guard said.
Interior Secretary Ken Salazar said on Wednesday one of two relief wells being drilled by BP in a bid to stop the leak from the ruptured well will take several weeks to reach the spewing oil pipe. The relief wells are intended to intersect and then plug the leak.
BP kept oil-capture and relief well drilling operations going at the leak site through the bad weather.
BP's market capitalization has shrunk by about USD 100 billion and its shares have lost more than half their value since the spill began on April 20 but are showing signs of stabilizing.
After rising for a third straight day in New York trading on Wednesday, the shares were up about 0.2% at 319.5 pence in London on Thursday.
Alex, a Category 2 hurricane when it reached land, unleashed maximum sustained winds near 105 miles (169 km) per hour, uprooting trees and toppling flimsy houses. It hit the coast of Tamaulipas state in northeastern Mexico, about 100 miles (160 km) south of Brownsville, Texas, the US National Hurricane Center said.
In Washington, the Senate Environment and Public Works Committee voted on Wednesday to eliminate limits on liability that oil companies would face for oil spill damages.
The measure, which would apply retroactively to the BP spill, must be passed by the full Senate and the House of Representatives before going to President Barack Obama to sign into law. Oil companies currently have a USD 75 million cap for compensating local communities for economic losses and cleaning up environmental damage.
BP already has agreed to set up an independently administered fund of USD 20 billion to compensate victims.
The Interior Department said on Wednesday it was postponing until later this year planned public hearings on a proposal from Obama -- made before the BP spill began -- to expand offshore oil drilling.

FY11 current account gap seen at USD 35.1 bn: Citi

Citigroup said it sees India's 2010/11 current account deficit at USD 35.1 billion, or 2.2% of GDP, from an earlier estimate of USD 25.5 billion.
"Given the underlying growth story, we expect capital flows led by FDI (foreign direct investment) to remain healthy at USD 57.3 billion and be more than sufficient to finance the current account deficit," Citigroup economists Rohini Malkani and Anushka Shah wrote.
India's current account deficit further widened due to increasing merchandise trade deficit and well as lower earnings through invisibles in the Jan-March quarter, central bank data showed.
Citigroup said it expects the rupee to appreciate at a steady pace to 43.5 per dollar levels by March 2011.

Japan fires warning shots at rising yen

Japanese policymakers lashed out at a rising yen on Thursday, warning that the currency's gains due to worries about the global economic recovery and Europe's financial woes could threaten Japan's tepid economic revival.
Bank of Japan board member Yoshihisa Morimoto, in his first press conference after joining the central bank, said he is watching the yen closely because it could hurt profits and sentiment. One of Japan's two deputy finance ministers also said a weak yen is "generally beneficial" to the country's exporters.The BOJ's April-June tankan survey showed on Thursday that big manufacturers turned optimistic for the first time in two years as a rapid recovery in exports has boosted corporate profits.
The outlook is less encouraging because export growth has started slowing and domestic demand could weaken as companies still have excess labour, economists say. The yen could be a worry for Prime Minister Naoto Kan, who is trying to convince voters before an election next week that his Democratic Party can spur growth and repair public finances with higher taxes.
"A stronger yen and weaker euro will affect firms' global competitiveness, profits and sentiment," Morimoto said.
Morimoto, a former executive at Tokyo Electric Power Co, Asia's biggest utility, started work on Thursday, filling the final vacancy on the BOJ's nine-member board.
The yen edged higher on Thursday, with the euro dipping 0.1% to 108.09 yen . The euro fell as low as 107.50 yen earlier, nearing an 8 nad a half year trough of 107.30 yen hit this week.
The dollar was down 0.1% at 88.38 yen after striking a two-month low of 88.08 yen on EBS earlier.

Elcoteq declines comment on impact of Kin rollback

Finnish electronics company Elcoteq would not comment on Thursday on the impact of Microsoft's decision to scrap the sale of its 'Kin' smartphone in Europe this autumn.
"We are investigating the matter," chief financial officer Mikko Puolakka told Reuters. He did not commment on the sales impact of the announcement, or if Elcoteq would have to make a writedown as a result.Elcoteq said in May it would work with Japanese group Sharp on the phone, with the deal expected to add over 150 million euros (USD 183.5 million) to its 2010 sales.
Microsoft said on Wednesday it had canceled plans to sell Kin in Europe this fall. The company added the internal team working on the Kin phones would be combined with the group working on Microsoft's forthcoming Windows Phone 7 software.

Trai's recommendations a big positive: Den Networks

India’s digital distribution platform providers will get a shot in the arm as Telecom Regulatory Authority of India (Trai) has recommended for increasing foreign direct investment (FDI) to 74% from 49%.
Cable and multi-service operator (MSO) have given a thumbs to the recommendation and regard that if approved the move will be a big boast for the industry.


In an interview to CNBC-TV18, Sameer Manchanda, Chairman, Den Networks said that the move is a big positive for the industry. On an optimistic note he said that the company is planning to hit 5 million mark in digital subscribers soon. The company is looking at 10 fold increase from current subscription levels, he added.
Nikhil Vora, MD, IDFC Securities agreed to him that Trai’s recommendation may open up the doors for foreign players to look at India. According to him, some of the listed cable companies are already well capitialised. However, till now there has been less Interest in MSOs as the FDI cap in this industry capped.
N Parameswaran, Principal Advisor to TRAI said that sensitivity of broadcasting sector is due to news and radio. But the real way forward is digitization and it requires money. The TRAI will have to check for approval procedure, he added.
Trai has also recommended the FDI cap on IPTV and Mobile TV to be set at 74%. There is no foreign investment policy on mobile TV at present.
Disclaimer: Web18, which owns Moneycontrol.com and Indiaearnings.com, belongs to the Network 18 Group. IBN18 is a part of the Network18 Group.
Below is a verbatim transcript of the exclusive interview on CNBC-TV18. Also watch the accompanying video.
Q: First on the reversal that you have done in 2008 recommendations of 49% FDI in radio and in news and current affairs or television news channels, why the reversal of the stance to 26%?
Parameswaran: It is to rationalise the radio along with the print media. Infact the sensitivity of the broadcasting sector primarily is because of the news and the radio. The print sector, the FDI is 26%, it was more or less rationalising all the three at same i.e. the FM radio, the news and news broadcast and the print media, all of them had bought at par with 26%. So it was more of a rationalising.

Markets upsides seem restricted in the near-term

Udayan Mukherjee, Managing Editor, CNBC-TV18, said the test for India is whether it can swim against the global tide once again like it did yesterday. "We are doing well but the world is not. That is the cross we have to carry this morning too. Yesterday, if there were hopes that the US markets may bounce back from their dismal session the day before, then that has not happened. The Dow has broken down again and the S&P is conclusively below 1,040."
He feels the upsides in the market are restricted in the near-term.
Q: It is a rough tide?
A: Yes, it’s becoming an us versus them situation. Every morning you are waking up to news from the West. Yesterday, we did remarkably well in swimming against it. I don’t know whether we can do it everyday. The start will be weak but the hope will be that we can shrug off what is going on in the West because the picture is not good out there.
I think there is a technical breakdown that has happened in the West. The good thing is that until now it has not been the hand of liquidity. The last time you saw the US market down 3%, the FII figure stood at Rs 600 crore. So,, the linkage is liquidity and that has not hurt us.
That is why we could rally yesterday. We just need to figure out how long the liquidity will remain stable and how long it does not blink. Even the global problems hold the answer to the correlation between us and the West. But the global picture is worrying and so far we have done very well.

China has no direct comment on Google

China's foreign ministry said on Thursday that it had no comment on Google's decision to end automatic rerouting of Chinese users to its uncensored Hong Kong search portal, in a bid to keep its China operating license.
Foreign Ministry Spokesman Qin Gang referred questions about Google to "relevant agencies", adding only that "Internet operators in China should abide by Chinese laws and regulations."Google said earlier this week users of its Google.cn site would have to click through to its Hong Kong site, rather than being sent there automatically, because Beijing had made clear it was unhappy with the current system and would not renew Google's operating license unless it halted the practice.

M&A toll may be less in this crisis than post-dot.com-OECD

The worst economic downturn since World War Two may have dented international investment less than the bursting of the dot.com bubble in 2003, the Organisation for Economic Co-operation and Development signalled on Wednesday.
After a 53% plunge last year and 21% the year before, investment in international mergers and acquisitions (M&A) looks set to stabilise this year at 2009 levels, the OECD said in a statement on investment trends."If this proves to be the case, international M&A investment will have declined by 64% during the global economic crisis from the peak of USD 1.7 trillion reached in 2007," it said.
"While this decline is significant, the bursting of the dot.com bubble resulted in a 72% decline in international M&A between 2001 and 2003, suggesting that international investment has been more resilient during the current economic crisis."
Government intervention surged in 2009 because of financial rescues and the activities of sovereign wealth funds, accounting for some 20% of total M&A, as opposed to 3% a year in the years before the crisis, which took hold in 2007

Japan business mood best in 2 yrs, outlook murky

Big Japanese manufacturers turned optimistic for the first time in two years in the April-June quarter and forecast a rise in capital spending plans in a sign that a slow economic recovery is taking hold.
The Bank of Japan tankan of more than 11,000 companies also showed optimism among big manufacturers would grow further in the current quarter, although analysts said the report may not have accounted fully for a sharp drop in Japanese stocks between April and June and a rally in the yen to a two-month high against the dollar.
The yen is higher than the level big manufacturers, the main drivers of Japan's exports, have forecast for the current fiscal year to next March and companies hardly see the need to increase hiring, the report showed, suggesting headwinds to the recovery from the global downturn that would require the central bank to keep monetary policy loose.
Most other manufacturers and service-sector firms reported an improvement in sentiment but were still pessimistic.
"Overall, the tankan survey shows better corporate sentiment, especially among big manufacturers, who have raised their outlook, but it still leaves some elements of concern," said Ayako Sera, a market strategist at Sumitomo Trust and Banking in
Tokyo. "The survey does not paint an entirely optimistic view for the economy."

Google's China operating licence under review

Google's application to renew its operating license in China is being reviewed by the government and the results will be posted soon, Chinese state media reported.
Guxiang, a company that operates Google's websites in China, has submitted its renewal application to the related government departments, promising to abide by Chinese laws, the official Xinhua news agency reported late on Wednesday, citing company documents.
Xinhua reported that China regarded the submission as coming very late.
Google Chief Legal Officer David Drummond wrote on the company's corporate blog on Monday that Google would stop automatically redirecting China users to its uncensored Hong Kong site in order to appease Beijing and secure the renewal of its Internet Content Provider (ICP) license. The license will end in 2012 but had to be renewed by the end of June.
Google unexpectedly warned in January it might quit the country over censorship concerns and after suffering a hacker attack it said came from within China.

What do experts make of Fortis Healthcare's Parkway offer?

Fortis Healthcare has offered to buy Parkway at S$3.80 per share or S$3.21 billion (USD 2.3 billion). Khazana had offered to buy Parkway at S$3.78 per share and is the second largest shareholder.
Fortis had bought 24% stake in Parkway at S$3.56 per share. Trading in Parkway shares have been halted. The last traded price stood at S$3.80 per share.
Singapore-based RHC Healthcare Pte has offered to acquire all the shares of Parkway. RHC is indirectly controlled by Malvinder Mohan Singh and Shivinder Mohan Singh, the promoters of Fortis Healthcare.
Commenting on the same, Sachindra Nath, Group CEO, Religare, said the Singh family and Fortis hold 51% and 49% in the investment company. "It is an all cash deal and the major financing is from the family itself."
Fortis, he said, intends to make Parkway the hub of its Asian operation.
He clarified that Fortis is not in any discussion with an Indian company to partner for Parkway. "Fortis' promoters have denied any stake sale talks." General Insurance Corporation, he added, will participate in the expanded equity base for the Parkway offer.
Rashesh Shah of ICICI Direct feels Fortis would require nearly Rs 11,000 crore for the counter bid. He feels the Parkway deal is looking expensive at this point in time.

Deutsche Eq maintains Sensex target at 22K, bets on autos

In an exclusive interview with CNBC-TV18, Abhay Laijawala, Head of Research, Deutsche Equities India, speaks about the global markets and gives his outlook going forward.
He says, India may continue to outperform. "The platform for corporate earnings is very strong. We are very enthused by the recovery in the GDP (gross domestic product) growth rate. I think this is the reason why we expect India to outperform. We see no reason to change our 22,000 target for the Sensex."
He remains very optimistic on autos. "We believe that the growth in autos is set to continue."
Here is a verbatim transcript of the exclusive interview with Abhay Laijawala on CNBC-TV18. Also watch the accompanying video.
Q: Let us start with commodities, there is a Deutsche report out on that, do you continue to see them underperform like they have these last few weeks and months?
A: At least for the summer period, which is the next two-three months, we expect the down draft in commodities to continue. This would be on account of the sovereign debt fears in Europe, coupled with no change in news flow coming out of China. In addition, you have also recently seen the financial over haul in the US, as a result of which there have been a lot of fears for the exchange traded funds.
To elaborate on that, I think that is not coming out as much as it should in the public discourse on commodities. As a result of these sweeping powers given to the CFTC (Commodity Futures Trading Commission) in the US, there is a perception that should the CFTC decide, they can go ahead and impose position limits on Exchange Traded Futures (ETFs). So to some extent, this is resulting in fears in the flow of investment funds into the commodities. So, all of these reasons are combining to perhaps lead to a relatively muted inflow of the funds into the commodity space.
Q: So then would you say this is more liquidity issue for the commodity universe rather than a demand supply issue and in that it could bounce back?
A: Yes, you are right. Commodities have been more to do with funds than with fundamentals. We have always stated this that even if fundamentals are strong, had there not been this tidal flow of funds into commodities, we perhaps may have never seen commodities reaching highs that we have seen in some of the previous cycles. So to that extent what you say is right.
But the question to now ask is that as a result of these regulatory changes, even when fundamentals strengthen from here when, for example, China related fears have abated will the commodities go back to those highs in as short a time period as before. That is difficult to say at this point in time. But we will see a recovery in commodities, perhaps after the summer, when some of the concerns on Europe have abated and more importantly when we see increasing news flows on China beginning to stabilise. China will and as has been will be the critical driving factor for bringing back interest in commodities.

Ganeshaspeaks: Market prediction for July 01

The lunar eclipse on 26th June, 2010 is taking place in Sagittarius. Hence, those with Moon sign Sagittarius and Gemini are likely to experience stress in the coming one and a half months. But, on worshipping Lord Shiva, the negative results are likely to neutralise.
Crucial, wide fluctuation dates in the month of July: 5, 9, 11 (Solar eclipse will not be visible in India) 12, 20, 21, 22, 23, 24.
Oct 2010 & Dec 2010 seems to be a negative period, as per Ganesha's views. During this period, you may even miss to refer to the monthly chart.
From 9:00 to 9:35, Nifty may hover around the surface.
From 9:35 to 12:35, there is not clear trend at Nifty as it may change like the waves of the ocean. Do not plan your strategy taking into consideration the big jump and dip at Nifty.
From 12:35 to 14:35, keeping stop loss in intraday, take a call.
From 14:35 to 15: 30, Nifty may try to search for a resistant level.

China slows as tightening bites: Stats office

A drop in China's official purchasing managers' index in June reflects the impact of tighter government economic policies and a weakening in the global recovery, the National Bureau of Statistics said on Thursday.
It described the outlook for Chinese as exports as grim because of the debt crisis rattling the euro zone, China's recent abolition of some export tax rebates and the prospect of increased trade friction.
The NBS was commenting on a drop in June's PMI to 52.1 from 53.9 in May, which was announced earlier by the China Federation of Logistics and Purchasing.

Nepal PM quits in hope to end crisis with Maoists

Nepali Prime Minister Madhav Kumar Nepal resigned on Wednesday in a move aimed at resolving a political crisis and saving the peace process more than three years after the end of a decade-long Maoist civil war.
"I have decided to resign with effect from today to clear the way for a political consensus," Nepal said in a televised address.
The country's Maoists insisted on returning to power at the head of a unity government to oversee the preparation of Nepal's first constitution after it turned into a republic two years ago.
The moderate communist Nepal succeeded Maoist leader Prachanda as prime minister in May last year after the former warlord quit in a conflict over the control of the national army.

Obama: Pressing China on currency to make trade fair

US President Barack Obama on Wednesday maintained pressure on China to ensure its currency policy did not give it an unfair export advantage.
"We've got to make sure that countries we're trading with are being fair. I believe in free trade," Obama said at a campaign-style meeting in Racine, Wisconsin.
"For example, if China has a currency that's undervalued, that makes our exports more expensive. It makes their imports cheaper. So we've been putting pressure on them to say, you know what, let's make sure that we're not favoring one side or the other in this trade deal," he said.
China has announced plans to allow its currency to be more flexible, and Obama said at a weekend Group of 20 meeting in Toronto he believed the yuan would rise significantly.
During the summit he also announced a new push on a long-stalled trade deal with South Korea.
The United States argues the yuan is under-valued by up to 40 percent against the dollar, claiming this makes its exports unfairly competitive and effectively poaches American jobs.
Trade is a delicate topic for Obama, whose Democratic Party draws support from organized labor, which complains that trade deals with Mexico and Canada have hurt US workers.
Racine, perched on Lake Michigan and with unemployment above 14%, typifies middle-American communities where employers have been hit by cheap imports and the loss of jobs overseas a fact Obama acknowledged.
"It is absolutely true that a lot of our manufacturing left to go to China and other low-wage countries," Obama said.
Jobs, and a general wariness toward free trade agreements with foreign countries, will be a crucial factor in US mid-term congressional elections on Nov. 2, when anger over still-high US unemployment could erode the power of Obama's Democrats.
The Obama administration must also deliver a semi-annual currency report to the US Congress that could name China a currency manipulator, although the odds of it embarrassing China this way have shrunk since Beijing made the yuan move.
The report, which is the task of US Treasury Secretary Timothy Geithner, was delayed from a mid-April release until after the G20, and could now come at any time.