Ahead of US vote, China vows more flexible yuan

China will increase the flexibility of the yuan and improve the way it manages the exchange rate with reference to a basket of currencies of the country's trading partners, the central bank said on Wednesday.
The statement of intent came ahead of an expected vote by the US House of Representatives on a bill that would let the United States impose duties on goods from countries with undervalued currencies."We will further improve the yuan's exchange rate formation mechanism, let market supply and demand play a key role in its adjustment with reference to a basket of currencies and increase exchange rate flexibility," the central bank said in a summary of the third-quarter meeting of its monetary policy committee.
The People's Bank of China, which keeps a tight grip on the yuan, let the currency rise as high as 6.6825 per dollar on Wednesday.
The yuan has now gained almost 2.2% against the dollar since Beijing scrapped a 23-month-old peg to the dollar on June 19 and said it would let the currency resume a managed float.
Nearly all of the increase has occurred this month, coinciding with mounting US pressure on Beijing to permit a faster rise in a currency that International Monetary Fund economists estimate is 5-27% undervalued.
The yuan has now risen 24% against the dollar since July 2005, but US lawmakers say Chinese exporters still have an unfair currency advantage in global markets.
China retorts that its big trade surplus with United States comes about because Americans save too little and no longer make the goods China sells.
The PBOC's 15-member policy committee, chaired by Governor Zhou Xiaochuan, advises on the level of the yuan and of interest rates, but key decisions are subject to approval by the cabinet.
The central bank reaffirmed its long-standing "appropriately loose" monetary policy stance and said the economy was growing as it expected.
"The overall performance of China's economy is sound, and it continues to head in the expected direction in line with macro economic adjustments," the central bank said.
"But managing inflation expectations and maintaining relatively fast economic growth while adjusting the structure of the economy remains an arduous task," it added.
Beijing has been steadily reeling in breakneck anti-crisis bank lending, curbing property speculation and closing down old, energy-guzzling factories.
However, a survey released on Wednesday showed that overall growth remains robust, supported by fast-rising incomes and capital spending on infrastructure such as roads and railways.
The PBOC said the world economy was on the path of recovery but was labouring under serious structural burdens.

Mahindra Satyam to remain in Rs 90 to Rs 140: Choksey

Mahindra Satyam to remain in Rs 90 to Rs 140, says Deven Choksey, MD, KR Choksey Securities.
Choksey told CNBC-TV18, "In Mahindra Satyam I think few key issues which are required to be seen very clearly. They had a Rs 7000 crore worth of FD, deposits, which they had shown in the last balance sheet when they reported the numbers and thereafter this particular area came into larger amount of question more because of the deposit non existing then. What exactly is going to be the situation on that side? The second issue is about what are the kind of law suits or the unpaid claims, which are going to be revealed in this particular results."He further added, "Also going by some of the interviews of the management in the past and otherwise you find suppose if they end up giving numbers of FY10 between 1.2 billion to 1.3 billon then in such situation taking the lower end of the EBITDA margin for the company they are trading little expensive between 28 times to 38 times. But believing that everything gets clear in this particular period and FY11 is probably starting with a clear balance sheet without taking into account the impact of contingent liability you may probably end up seeing around Rs 8 kind of an earnings per share in FY11 and Rs 9 in FY12 on the estimation of slightly better EBITDA. Then in such situation they are not trading at expensive. So one will have to look at the kind of a disclosure coming out from the company on this front and then take a call. As of now I believe that the stock should assume the range between Rs 90 to Rs 140 given the kind of possibilities on numbers that we are calculating."

Ayodhya verdict: Govt invokes Mahatma for peace

On the eve of the Ayodhya verdict, the Centre on Wednesday said that adequate measures had been taken to ensure that there was no trouble as it once again appealed for maintenance of peace for which it even invoked Mahatma Gandhi.
Observing that India has "moved on" since 1992, Home Minister P Chidambaram said he does not "foresee any problems" as almost all political parties, religious groups and those associated with the Ram Janambhoomi-Babri Masjid title suits have said that they would respect the court verdict."But, as government, we have to take measures. So we have deployed adequate forces," he said.
"The Central government has taken adequate measures and has deployed adequate security forces all over the country in order to assist the state governments to maintain law, order and peace," he said.
He once again appealed to all sections of people of the country to cooperate with the government and "uphold the values that are dear to our country".
In this context, Chidambaram invoked Mahatma Gandhi and cited his favourite bhajan - 'Ishwar Allah Tero Naam, Sabko Sanmati De Bhagwan'.
At the same time, he expressed confidence that there would be no trouble after the judgement.
"I think, India has moved on, young people have moved on. I think, young people have recognised that India story is much more than a dispute over a place where one religious group claims they are entitled to than another religious group," he said.
He contended that "the India story is much bigger a story and young people recognise that that bigger story should not be derailed over dispute over a piece of land."
Pointing out that political parties and religious leaders have appealed for peace, the Home Minister said, "I think, India has moved, especially people who were born after 1992. They have a very different world view."

Lacklustre markets: How to trade in October

It was a lacklustre day for the markets as the Sensex closed below its psychological mark of 20,000. The Sensex was down 148.52 points or 0.74% at 19956.34, and the Nifty was down 38.20 points or 0.63% at 5991.30.
Undoubtedly, September is best month this financial year with about 550 points gain in the Nifty. So what are the trading strategies for October?Deven Choksey, MD, KR Choksey Securities says that it is not easy to repeat the buoyancy of September in the following month. According to Choksey, October should remain largely a month of consolidation. He explains, “Maybe discounting for FY11 and FY12 would happen probably in October-end or mid-November and thereafter you should be seeing once again upside in the market but not in the same manner in which we have seen in September.”
Choksey adds that one would see the band operating between 6150 and 5925 at this point of time. “More importantly at lower levels you would find domestic support coming in because having sold in current month probably they are sitting on cash and that would come for deployment if the market gives opportunity in the month of October on the downside,” he elaborates.
Meanwhile, Prashastha Seth of IIFL Private Wealth says that month of October will be a combination of two factors – company results and the second is how much the liquidity comes in or gets sucked out in the initial public offers (IPOs) especially Coal India.
Seth explains, “You would see a lot of liquidity flowing out of the system especially for the Coal India IPO. So I wouldn’t kind of expect a huge amount of upside from these levels in the month of October. Next month would probably be sluggish. We would probably be here or probably 2%- 3% up but we wouldn’t see the kind of parabolic move that we have seen in September. So should be a much more subdued month than what September has been.”
Choksey is betting high on Tata Motors in the auto space and ICICI Bank in the banking sector.
Choksey advises to stay away from this oil marketing companies (OMCs) space. “Maybe you may buy expensive at this point of time but that is the call that one needs to take because given the kind of lingering situation on subsidy one cannot get the courage to stay invested in this company with an unclear situation,” Choksey adds.
Though Seth continues to remain underweight on metals, he is betting on Hindalco and Tata Steel in the space. Seth suggests buying ITC on dips

China criticises weak US dollar policy

China said the United States should take action to stabilise the dollar, criticising Washington's expansionary monetary policy for weakening the currency despite its key role in the global financial system.
The comments by a Chinese official at a meeting of the World Trade Organization came as the US House of Representatives was set to pass a bill putting pressure on China to let the yuan rise faster.China's ambassador to the WTO, Sun Zhenyu, told a review of US trade policy that the dollar played a unique role in the international monetary system while US policy had a significant impact globally.
"We are very much concerned about how the US would take practical and responsible measures to prevent the dollar glut and maintain the stability of the currency," Sun said.
China had raised the same question at the last US trade review in 2008 but had not received an answer.
Sun said the dollar had been depreciating for eight years, while the US government had run a growing budget deficit, resulting from an expansionary monetary policy, particularly quantitative easing -- purchases by the US Fed of bonds and other assets to expand its balance sheet -- since the crisis.

China's currency is undervalued: Obama

President Barack Obama said on Wednesday that China's currency is undervalued and contributes to the US trade imbalance with Beijing, as US lawmakers looked poised to pass a measure threatening punitive tariffs on Chinese goods.
"The reason that I'm pushing China about their currency is because their currency is undervalued," Obama said in a backyard visit with an Iowa family.Obama, responding to a question, acknowledged that many Americans believe Beijing was managing the yuan to keep its value artificially low to make Chinese exports cheaper while US products sold in China were then more expensive.
"It's a contributing factor to our trade imbalance," Obama said.
The House of Representatives later on Wednesday was expected to approve, with bipartisan support, a bill to treat China's exchange rate as a subsidy, opening the door to additional duties on Chinese goods entering the United States, some of which are already subject to special levies.
But the measure must gain Senate approval and be signed into law by Obama.
The White House has not taken a position on the bill, except to say it wanted to be sure it did not violate World Trade Organisation rules.
The House move, little more than a month before US congressional elections, is certain to further roil relations with Beijing, which resents the criticism and says it is its decision alone how fast to proceed with currency reforms.
The Obama administration has stepped up pressure on Beijing over its currency, mindful of the need to show that the president and fellow Democrats are serious about anything that jeopardizes US jobs in an election season when high unemployment and an anemic economy are voters' top concerns.

EU unveils deficit sanctions as unions protest

The European Commission proposed steep compulsory deposits and fines on Wednesday for euro zone countries that breach EU budget rules, as trade unions staged strikes and protests against austerity measures.
In a sign of the new "get tough" policy on fiscal deficits, euro zone sources said finance ministers of the single currency area would grill Portugal on its 2011 budget plans on Thursday and press for more radical measures to address market concerns.Spain's first general strike for eight years disrupted public transport and some factories but seemed unlikely to make Socialist Prime Minister Jose Luis Rodriguez Zapatero back down on wage cuts, spending curbs, pension and labour market reforms.
The European Trade Union Confederation said at least 100,000 joined a pan-European anti-austerity march in Brussels. Police put the crowd at 56,000 and said 218 people were detained for minor offences. Up to 5,000 demonstrators marched in Warsaw but other rallies appeared smaller.
Analysts said the protests were too small and disparate to sway debt-laden governments from cutting public deficits.
Under pressure from investors who fear another Greek-style meltdown, Ireland was preparing to announce a massive bill for rescuing stricken Anglo Irish Bank, while government and opposition leaders in Portugal wrangled over spending cuts or tax hikes to narrow that country's yawning deficit.
European Commission President Jose Manuel Barroso said the political impasse in his native Portugal was serious and the government had to stick to its fiscal targets.
"Portugal has to show responsibility," he said, adding that markets believed the government was "shilly-shallying".

US House passes bill aimed at Chinese yuan

The US House of Representatives passed legislation on Wednesday aimed at putting pressure on China to let its currency rise faster, fanning the flames of a long-running dispute over trade and jobs.
The bill, passed 348-79 with heavy support from Democrats but Republicans more divided, treats China's exchange rate as a subsidy. That would open the door to extra duties on Chinese goods entering the United States, some of which are already subject to special levies.The measure could play well in the US congressional election on November 2, with voters worried about their jobs and a sluggish economy. But it must win Senate approval and be signed into law by President Barack Obama -- by no means a sure bet.
The Obama administration has not taken a stance on the bill and may hope just the threat spurs more movement from China.
Before the House vote, China's central bank reaffirmed its pledge to increase the flexibility of the yuan and improve the way it manages the exchange rate.
US lawmakers have long brandished the sword of trade retaliation for what they see as China's policy of undervaluing the yuan to give its exports an unfair advantage. But they have never sent the president any legislation to sign into law.
"We have a major problem and action is necessary," said Sander Levin, the Democratic chairman of the House Ways and Means Committee.
Obama and Chinese Premier Wen Jiabao talked about China's currency and huge trade surplus with the United States on the sidelines of the UN General Assembly last week.
"The reason that I'm pushing China about their currency is because their currency is undervalued," Obama said on Wednesday. "That's not the main reason for our trade imbalance but it's a contributing factor."
Despite the yuan's modest gains against the dollar since Beijing allowed more movement in June, International Monetary Fund economists estimate the yuan is 5-27% undervalued.

Portugal proposes austerity moves after EU pressure

Portugal's minority Socialist government proposed on Wednesday austerity measures, including a 5% cut in civil servants' wages, after the European Union piled pressure on Lisbon to cut its budget deficit.
Prime Minister Jose Socrates needs opposition support to get the budget approved and he also needs to reassure the EU that Portugal can meet its budget goals and avert the danger of a sovereign debt crisis."There was no alternative," he said at a media conference.
European governments say they have been forced to make spending cuts but workers feel they are being punished for problems not of their making. Tens of thousands of people protested across Europe on Wednesday against cutbacks that unions say will slow economic recovery and punish the poor.
"Portugal cannot fail in meeting its international obligations," Socrates said following a five-hour extraordinary cabinet meeting.
Finance Minister Fernando Teixeira dos Santos said many of the measures, including a freeze on public investment, would be imposed in 2010 to guarantee this year's deficit goal is met.
Another key step was to raise value-tax to 23% from 21% from 2011, he said. Dos Santos also announced that the government is in talks with Portugal Telecom to transfer the company's pension fund to the state.
Investors have dumped Portuguese assets this week, sending yields on Portugal's 10-year bonds to 6.5%, near where Greek yields were in March just before its financial crisis began in earnest, and taking bond spreads to euro highs.
EU sees serious situation
The decision by the government came after European Commission chief Jose Manuel Barroso, himself a former Portuguese prime minister, urged Lisbon to take action to ensure budget goals are met.
"We feel that the situation is serious," Barroso told a news conference in Brussels. "Portugal has to show responsibility," he said, adding that financial markets believed the government was "shilly-shallying".
Sources told Reuters that finance ministers from the euro zone bloc would press Portugal at a meeting on Thursday to take further radical steps to ease market concerns over its finances.
Credit default swaps, the cost of insuring debt against default, hit a record 465 basis points, meaning it now costs 465,000 euros to insure 10 million euros of the country's debt.
Portugal's budget came into sharp focus after the main opposition party, the centre-right Social Democrats, said they would not commit to backing the 2011 budget in parliament, urging the government to focus on cutting spending before raising taxes.

Fed officials disagree on more easing

US Federal Reserve officials on Wednesday disagreed on what should prompt more support for the economy and what impact more asset purchases could have.
Boston Federal Reserve Bank President Eric Rosengren, speaking in New York, said the Fed should act "vigorously" to support a slowing economy after the US central bank last week opened the door to the possibility of further asset purchases."I'd want to see some progress on both our inflation and unemployment objectives," to be convinced no further monetary easing will be needed, Rosengren told Reuters in an interview after his speech.
Philadelphia Federal Reserve Bank President Charles Plosser, for his part, said he would only support more asset purchases if expectations of deflation emerge.
A third official, Minneapolis Fed President Narayana Kocherlakota, suggested he would only be a reluctant backer of further asset purchases, saying further purchases of US government bonds may do little to speed up a slower-than-expected recovery.
The Fed, which has already cut overnight interest rates close to zero and snapped up USD 1.7 trillion in longer-term debt to drive other borrowing costs lower, said last week that it was prepared to provide the economy more stimulus if needed.
Dollar driven down
Many analysts expect the central bank to launch a further round of asset buying at its next meeting on November 2-3.
Expectations for further quantitative easing have driven the US dollar to eight-month lows against major currencies. The currencies in emerging economies have risen as investors seek higher returns elsewhere.
"Current economic conditions -- an unemployment rate near 10%, sluggish growth, and undesirably low inflation -- together constitute a serious economic problem," Rosengren said.
If the Fed does pull the trigger on new asset purchases, it is not yet clear how much it would need to buy to affect rates, he said in the interview. Some analysts have suggested the Fed would need to buy USD 1 trillion to have an impact.
"I don't think purchases have to be as large as some market participants think," Rosengren said, after giving a speech in New York titled "How should monetary policy respond to a slow recovery?"
Rosengren said his answer to the question posed by his speech was "vigorously, creatively, thoughtfully, and persistently, as long as we have options at our disposal. And we do have options."

Lehman art auction beats estimates at $2.6 million

A sign from the bankrupt Lehman Brothers group fetched over USD 66,000 at a London auction on Wednesday, more than 15 times its estimate, as collectors and souvenir hunters fought for mementos of a corporate collapse.
A metal plaque commemorating the opening of the failed bank's Canary Wharf offices in the city in 2004 raised over USD 45,000, also many times pre sale expectations of between USD 1,500 and USD 2,500.Overall the auction raised 1.6 million pounds (USD 2.6 million), comfortably more than forecast.
Top lot on the night was 'Atomists: Jump over' by Gabriel Orozco, which realized around USD 157,000. "Madonna" by Gary Hume realized USD 116,000 and "L'embarquement de La Normandie au Havre" by Theophile Poilpot fetched USD 106,000.
"The prices achieved in today's auction demonstrate just how much interest there is in anything related to the collapse of Lehman Brothers two years ago," said Barry Gilbertson, partner at PwC responsible for releasing value from Lehman's assets.
"The chance to own a piece of history does not come up very often. The administrators were confident that, by holding their nerve for two years and waiting for the art markets to recover, they would be able to realise the optimum return for the creditors."
Christie's said interest in the Lehman sale was unusually high, with 1,100 registered bidders including 330 via the internet, a company record for a European auction.
At the weekend Christie's rival Sotheby's sold Lehman art worth USD 12.3 million, a drop in the ocean of the billions owed from the financial group's 2008 bankruptcy, the biggest in US history.

BP planning management reshuffle in days

BP's incoming Chief Executive Bob Dudley will announce a management shakeup in the company's core exploration and production unit, following the Gulf of Mexico oil spill, Sky television said on Wednesday.
Reuters previously reported that company insiders expected a shakeup that would cost the head of Exploration and Production (E&P), Andy Inglis, and chief operating officer for E&P in the United States, Doug Suttles, their jobs.Sky said a statement announcing changes, including Inglis's removal was likely in the next few days, citing unnamed sources.
BP declined to comment.

Mkts to maintain current levels in Oct: Purushottam

Inching towards the close of what by all means can be denoted as a terrific September, market veterans continue to be divergent in their views. While some believe that the September party will spill over to October, others say it’s time to take profits.
Market analyst Sangeeta Purushottam feels as long as liquidity continues, the markets will maintain these levels or maybe even head higher. “However, as we get into October, we will have a few initial public offerings (IPOs) coming which are likely to take in some element of liquidity. This doesn’t seem to be a bit worring though.”All in all, it looks like we should be able to broadly maintain these levels, according to her.
Below is a verbatim transcript of Sangeeta Purshottam’s interview with CNBC-TV18’s Udayan Mukherjee and Sonia Shenoy. Also watch the accompanying video.
Q: What's your sense? Is the September party going to spill over to October or would you rather be taking profits here?
A: If you look at what's happened in the month of September, we have had this huge wall of liquidity come in. That’s the premise that continues to rise up on which the market really rests on, the good fundamentals not withstanding. That’s a slightly difficult call. As long as that liquidity continues we could see the markets really maintaining those levels or even heading a little higher but that’s something which is a little hard to predict.
As we get into October we will have a few IPO’s coming which are likely to take in some element of liquidity. On the whole I don’t think that’s really a negative that if the quality of the IPO is good it attracts investments but there is something on the demand side of the money as well.
All in all it looks like we should be able to broadly maintain these levels. Any huge negative surprises can be an outside issue but its liquidity which really holds the key.
Q: We have seen this market get slightly more expensive as the days go by. If anything, some of the key sectors like banks have started to become absurdly expensive at this point. How much of a concern would that be to you? Would you try to book out of sectors like these?
A: For people who have got in earlier, it does make sense to book some profits because valuations are not really supportive of short or medium-term returns, should anything happen to the flow of liquidity. Over the long-term you will get reasonable returns but if you get in at high valuations you always run the risk that you may have to live with some losses in the near term should the markets correct.
From a prudence point of view it would make sense to take some profits off the table but given the kind of flows that we have seen even that becomes a slightly difficult call. So I would say take some profits and hold on to the others.
Q: And would the others include the likes of the ones that have been underperforming off late? We are seeing so much by way of sectoral churning. One day it’s something like an FMCG, the next day it’s capital goods and power. Do you suggest holding on to spaces like these?
A: Capital goods and power to me makes a little more sense than FMCG because we have had a huge run there. FMCG stocks are looking a little expensive. Also there could be issues on the cost side. Logically, however, the capital goods sector really needs to pickup if you are getting out of the consumption cycle into the investment cycle. There is more of a fundamental theme there to peg on than in FMCG which has already had a good run.
Q: Broadly would you agree with the premise which a lot of people are basing investments on now that its time to checkout of the outperformers and hunt for value in some of the relative underperformers likes cement, metals and telecom. Those are the names which have been attracting some interest?
A: There is some element of safety in that play and markets tend to surprise us. If you are a large institutional investor, it’s better to get into some sectors a little earlier even if things aren’t looking that good. So if you base it purely on that premise, yes it makes sense. If you look for triggers other than that or earnings growth I think that is still some time away in some of these sectors.
Q: How do you think the market will read the Mahindra Satyam FY10 numbers today whichever way it swings? How would you approach that event?
A: I think you need to wait and see what is there. There is some level of expectation that this event will be reasonably positive given the amount of time which has elapsed, the kind of people who have been working on that company. But I think it is just best to stay and wait for it to happen.

How does SP Tulsian read the ADAG AGM?

The Anil Dhirubhai Ambani Group stocks are in focus today with three group companies Reliance Power, Reliance Capital and Reliance Communications all holding their AGMs. While massive fundraising is planned for Reliance Power, Ambani said reliance communications has concluded the phase of massive investment. He added that increasing cash flows, and possible minority stake sales would help the company deleverage its balance sheet.
On Reliance Capital, Ambani said, "Reliance Life was the first Indian insurance company to announce its plan for a potential listing in 2009. The insurance regulators IRDA is currently at an advanced stage of finalizing the guidelines for the listing of life insurance companies. Reliance Capital will leverage this unmatched domain expertise of our group to offer customized financing solutions to vendors, suppliers and contractors with a targeted return on equity of up to 20%. We aim to create in a phased manner an asset based of over Rs 50,000 crore in the next 3-5 years."In an interview with CNBC-TV18's Executive Editor Shereen Bhan, SP Tulsian of sptulsian.com gave more perspective on ADAG's mega ambitions.
Below is a verbatim transcript. Also watch the accompanying video.
Q: It’s been a marathon session for Anil Ambani but he is used to marathons but let me pick up on individual companies and the plans that they have outlined. Let’s start with Reliance Power because that is AGM number one. The largest fund raising plan in the history of corporate India, Rs 50,000 crore of course they haven’t outlined how they are going to go about this fund raising plan and over what period of time they hope to add about 7000 megawatts every year. What do you make of what he had to say as far as Reliance Power is concerned?
A: I don’t take these announcements too seriously because if you go by the announcement it says that by 2015 they aim to their capacity to 25000 megawatt. If you look at the RHP, when the company went public 30 months back, they had crystallized a plan for 7000 megawatt, which means they are talking of an additional 18000 megawatt.
If I take Rs 4.5 crore as the cost for each megawatt, apart from that the feedstock ownership which they intend to acquire for coal and all sorts of things, this 18000 is estimated to cost about Rs 100,000 crore.
I don’t know on what basis he is referring to Rs 50,000 crore because the debt to equity ratio is 70:30. So if I take Rs 100,000 crore as investment for the additional 18,000 megawatt that means Rs 70,000 crore debt and Rs 30,000 crore equity.
If you go by the present market cap of Rs 35,000 crore or maybe Rs 39,000 crore for R Power, I don’t know what kind of dilution we are talking about because since it went public, since it has seemed like an over capitalized company because the kind of equity they have issued to the promoter of Rs 2,000 crore at par has been giving them a lot of pain.
If you look at the networth of the company as of today of about Rs 14,000 crore, of that Rs 11,000 crore-Rs 11,500 has been contributed by the public, and Rs 1,000 crore-Rs 1,500 crore by cash flows or by profit having earned by the company in the last three years.
So honestly you are talking of capacity addition on one hand. But on the other hand there is no financial plan or the financial closure or the financial structuring of the same given. I don’t think these targets are realistic. When you talk of capacity addition or power generation capacity of about 1000 megawatt with Reliance Power that too having acquired 450 megawatt from Reliance Infra in the past, these kind of capacity additions with the time targets can't really be taken as realistic.
Q: You don’t think that the outlines has been particularly realistic that’s your take as afar as Reliance Power is concerned. Lets move to AGM number two and that was Reliance Capital. A bonus issue which of course details have not been announced. The share holders will have to wait another year but then also talking about a Reliance Bank, also talking about a possible IPO as far as the insurance business is concerned. Of course off-repeated things, what did you make of Reliance Capitals plans?
A: In Reliance Capital you have values in the form of the general insurance, life insurance, prospects of going into bank, managing the largest mutual fund and then having NBFC. But the problem when you talk to the shareholder is they say that we have not seen any increase in the valuations of the share or the market capitalization of the company in the last six months in spite of value accretion having seen in all other NBFCs.
To give an example Reliance Capital has a market cap of Rs 20,000 crore but Vis-à-vis Bajaj Finserv and Bajaj Holding, they have a market cap of Rs 18000 crore. Shriram Transport Finance is an NBFC and has a market cap of Rs 18000 crore, SKS Micro Finance a company which recently went public has a market cap of Rs 10,000 crore.
So when you are sitting on all these hidden assets which can get unlocked over period of time, may be in next couple of years, looking to the plans and all that. I don’t think that the investors are really happy so may be some carrots has to be given, that okay may be in the next year when we will be having the Silver Jubilee the bonus share will be given by the company.
It has always been very unfortunate that the management seems to have been running more towards increasing the market capitalization by someway or the other without having the backup fundamentals supporting for that kind of valuation.
So definitely Reliance Capital looks undervalued with a market cap of Rs 20000 crore but ultimately that’s not rewarding the shareholders.
Q: Let's talk about the third AGM and that’s Reliance communication with a debt of nearly Rs 33000 crore sitting on Reliance Communications book. Anil Ambani assuring investors that Reliance Communications will be a debt free company over the next three years. They are talking about unlocking value in the tower arm, of course they have been talking about a strategic sale in Reliance communication itself?
A: On the company becoming debt free in the next three years I won’t give much credence. In fact if you see the statement given by Anil Ambani in the AGM, he has said that the company has made an investment of Rs 60,000 crore in the last five years.
If you look at the enterprise value of the company as of today, they have a market cap of Rs 35,000 crore, debt of Rs 33,000 crore. That adds to Rs 68,000 crore. If the company has made an investment of Rs 60,000 crore in the last five years, does it mean that the company has a valuation of just Rs 8000 crore, having infrastructures created prior to that.
On the tower sale or the 26% stake sale that news has been there in the public domain for last two to three months. No progress has been made on that front. In fact the deal having in principally concluded with GTL Infra also failed. May be people are talking that they may fetch a better valuation but ultimately the deal needs to get concluded. They must get the deal consummated and only then will you ultimately have some hope of the company heading towards becoming debt free. That's a sword hanging on the company of Rs 33,000 crore debt.
It’s very unfortunate if you compare it with Idea Cellular which has a market cap of Rs 25,000 crore this company is enjoying market cap of Rs 35000 crore. So maybe the problem lies in this company as well that why they are not able to have all these plans implemented which they have been talking for quite some time.
Q: So what’s the call then on the three stocks?
A: Of the three I find value in Reliance Capital. But unless and until you have the plans implemented for Reliance Power I don’t see any value. In Reliance Communication if they implement the plans then probably there is some hope.

Expect rally to continue, use dips to buy: Experts

The equity benchmarks continued consolidation for the second consecutive day and closed on a flat note on Tuesday.
KR Bharat, MD, Advent Advisors says for India in particular and for equity markets in general, the liquidity situation is likely to prevail for some time going forward. “So, I think this party is going to continue.”
He thinks days like today present opportunities for people to get back in.
He further says the earning season is unlikely to throw up any unpleasant surprises. “As long as the strength of liquidity continues, I do not think October is going to be a problem.”
However, Bharat still expects that big correction to come although not in the near future. “I have changed my mind now about the big correction, I am still very sure it’s going to happen, I just think it’s been pushed away into, let’s not say distant future, but certainly not in the near future at all.
Rahul Mohindar, viratechindia.com advices investors to stay long. “I wouldn’t read too much into this fall because we have seen quite a good recovery. We have seen it on fairly decent volumes.”
Mohindar thinks stock specifically there are several ideas even now on the frontlines where one can look at 5% to 10% kind of an appreciation with short terms. “So, clearly maintain the longs on the Nifty; 6,120 odd, the target we have been talking about, is still very much intact. Key support for this market, 5,970 is an important support level for short-term traders. So, those looking at this market with a week or two perspective, that’s a support level to keep in mind, even ahead of that. I think all put together it certainly makes way to stay long.”

India tied image to second-rate games

Sir, James Lamont's observation that the pathetic state of preparation in regard to the Delhi Commonwealth Games reflects on the quality of political leadership is well taken ("Anxious India awaits its lap of dishonour", September 23). What he missed out on, though, is the serious strategic mistake India made by hitching its national esteem to these games.
Let's be clear - these are no Olympics or Fifa World Cup. The world's leading sporting powers do not participate in these games - US, Russia, China, France, Germany, Italy and the whole of Latin America.Even if the allegations of corruption, mismanagement and poor leadership are assumed away, the fact remains that India ended up tying its image to a second-rate sporting event.
That, I think, was a serious mistake as celebration of mediocrity is a reflection of the quality of a nation's ambition.

BOJ tankan outlook worsens, points to policy easing

Japanese manufacturers turned more pessimistic about their outlook for the first time in almost two years this quarter in a sign that a strong yen could derail the economic recovery and spur the central bank to ease policy next week.
The Bank of Japan tankan survey for the three months to September showed big firms planned to raise capital spending at slower pace than expected as a recovery in exports slows due to a strong yen and slackening overseas demand.The headline sentiment index improved to 8 from 1 in June, exceeding the median market forecast of 6. But the index is seen sliding to minus 1 in December, showing firms expect conditions to worsen over the next three months and that pessimists outnumber optimists.
This was the first time big manufacturers expected the outlook to worsen since December 2008.
The BOJ has struggled to agree whether it should further relax policy at the October 4 or 5, 2010 meeting, but firms' cautious views and subdued spending plans could tip the balance in favour of those calling for more easing.
Japan's government intervened earlier this month to weaken the yen, and some economists say additional monetary easing is needed to ensure that intervention succeeds in shielding the economy from a strong currency.
"The BOJ was really focused on corporate sentiment and the yen strength is an obvious factor. They'll be under greater pressure to ease from the government ... at the meeting next week," said Naomi Fink, Japan strategist at Bank of Tokyo-Mitsubishi UFJ.

HSBC says no immediate plans to move to Hong Kong

Top executives at HSBC Holdings Plc said there are no plans to move the bank's headquarters from London, as they met for their regular board meeting on Wednesday amid a surprise shake-up in the corporate suite of Europe's largest bank.
"We haven't reached a decision on whether to move the headquarters or not. If we ever come to that decision, that's the point at which we will evaluate," said incoming Chief Executive Stuart Gulliver, in reference to speculation sparked by the bank's decision to move senior management to Hong Kong earlier this year.The move by outgoing CEO Michael Geoghegan and his team to Hong Kong was a smooth transition, reflecting the bank's rising focus on Asia and fuelling a belief the bank would one day shift its home base back to Greater China.
But when Chairman Stephen Green made his surprise announcement this month that he would leave the company earlier than expected, his exit set off a scramble among top executives.
The normally staid bank seized headlines last week as it appointed a new chairman, chief executive and finance director after reports of internal bickering over the new roles.
Geoghegan and board director John Thorton were passed over for the chairman's role. Geoghegan, who media reports said threatened to quit if he did not get the chairman job, has called HSBC's new leadership team "awesome".
"I have had 37 great years with the bank in 11 countries and four continents," Geoghegan told about a dozen reporters who had camped out since early morning at HSBC's headquarters in the heart of Shanghai's financial district, seeking a chance to talk with board members before their meeting.

Credit Suisse prepared for Swiss topup to Basel III

Credit Suisse will be able to stick to its growth and dividend plans under new global and domestic bank regulation the group's chief executive said on Wednesday.
The Swiss bank expects to comply with new bank rules without having to materially change its growth plans or its current capital and dividend policy, Credit Suisse chief executive Brady Dougan told an analyst conference according to prepared slides.The Basel rules on composition and transition of capital structure were in line with the banks' expectations, he said.
"Current discussions indicate that the Swiss regulator is likely to require an additional buffer for systemically relevant banks," he added.

Nintendo cuts DS, Wii sales targets for 2010/11

Nintendo Co Ltd said on Wednesday it would launch a 3D-capable version of its DS handheld game console in Japan on February 26, 2010 and in the United States in March, missing the crucial year-end shopping season.
Nintendo blamed the late arrival of the game console, as well as a strong yen that has trimmed the value of its overseas earnings, for cutting its net income forecast by more than half for the business year ending next March 31, to 90 billion yen (USD 1.07 billion) from 200 billion yen.The company also trimmed its projection for DS sales for the business year, including the 3D model, to 23.5 million units from 30 million, while lowering its estimate for Wii consoles to 17.5 million from 18 million.
For the six months ending on September 30, 2010 the company now expects a 2 billion yen loss.
Shares of Nintendo dropped on the announcement of the DS release and ended trading down 3.7 % at 23,010 yen.
"At first we thought it would be desirable to launch the 3DS within the year, so we made our forecasts on that basis. At this point it is clear that if we launch within the year, we will not be able to supply enough units," Nintendo President Satoru Iwata told an analysts' conference.
Iwata had said at a launch event that the new games machine, which can be used to play 3D games and watch films in 3D without special glasses, will cost 25,000 yen (USD 298) in Japan.
That compares with retail prices of about 12,000 to 16,000 yen for existing DS models in Japan.

US House set to approve bill aimed at China yuan

The US House of Representatives is poised on Wednesday to pass legislation to pressure China to let its yuan currency rise more quickly, fanning the flames of a long-running dispute over trade and jobs.
The House is expected to approve, with bipartisan support, a bill to treat China's exchange rate as a subsidy, opening the door to additional duties on Chinese goods entering the United States, some of which are already subject to special levies.But the measure must gain Senate approval and be signed into law by President Barack Obama - by no means a sure bet.
US lawmakers have long brandished the sword of trade retaliation for what they see as China's deliberate policy of undervaluing the yuan , which they say gives its exports an unfair edge in global markets, but have never sent the president any legislation to be signed into law.
Obama and Chinese Premier Wen Jiabao discussed China's currency and huge trade surplus with the United States during a meeting on the sidelines of the UN General Assembly last week, aides said, but declined to discuss the sensitive issues with reporters after the meeting.
Ahead of the vote, China's central bank reaffirmed its long standing pledge to increase the flexibility of the yuan and improve the way it manages the exchange rate.
"We will further improve the yuan's exchange rate formation mechanism, let market supply and demand play a key role in its adjustment with reference to a basket of currencies and increase exchange rate flexibility," it said in a summary of the third-quarter meeting of its monetary policy committee.
The House move, little more than a month before US congressional elections, is certain to further roil relations with Beijing, which resents the criticism and says it is its decision alone how fast to proceed with currency reforms.
In another brewing trade row, more than 180 US lawmakers urged Obama on Tuesday to fight back against what they called China's 'unfair' tactics to spur development of clean energy technologies within its borders.

WTO urges US to show leadership in Doha talks

The World Trade Organization called on Wednesday on the United States -- criticised by many trade partners for a lack of interest in trade policy -- to show leadership in global commerce.
In a two-yearly review of US trade policy, part of a regular survey of all 153 members, the global trade referee urged the United States to show leadership in the fight against protectionism by opening up further to trade and investment.Many WTO members have blamed the near deadlock over the past two years in the Doha round to open up global trade on a lack of US interest in trade policy, although in recent months some such critics say there are now signs of greater U.S. engagement.
"Pursuing liberalisation ... could ... reaffirm the U.S. leadership role that has been a crucial element in advancing the objectives of the multilateral trading system since its inception," the WTO secretariat said in a report for the review.
More transparent trade and investment regimes would contribute to productivity -- a key ingredient in the stated US objective of doubling exports, the WTO secretariat said.
Export promotion should be complemented by a continued reduction in restrictions on market access and other distortions.
These could involve bringing down outlying peak tariffs for some products, cutting farm support and removing barriers to trade and investment in services -- all proposed by America's trading partners in the last review in 2008, it said.
EMERGING CONTRIBUTION
In its own report for the review, the US government repeated its view that successful negotiations required a bigger contribution from countries such as China, India and Brazil, saying it wanted a deal showing give and take between rich and emerging trading powers while helping developing countries.
A Doha agreement liberalising trade in farm goods, industrial products and services would boost the world economy, support jobs, help poor countries and reinforce confidence in the international trading system, the US report said.

EU recovery broadening, risks remain: EU document

European Union recovery in the second quarter broadened and the outlook for inflation remains moderate, a paper prepared for the bloc's finance ministers said.
Exports lay behind the rebound but risks remained from emerging and sovereign debt markets, said the paper which examined the economy since April this year."This nevertheless again conceals high divergences across member states. Inflation rates in the EU are set to remain moderate," the paper obtained the Reuters said.
Also "some concerns are related to the risk of overheating in emerging markets".
Finance ministers meeting in Brussels on Thursday and Friday will also be told that bank earnings have bounced back but this may not last.
"In the longer-term the sustainability of banks' earnings is not ensured as the previous increase in profits was mainly caused by the reduced impairment on loans and banks' provisioning," it said.
Furthermore, the "present outlook suggests that, for many banks, the conditions for exit from the support measures are not favourable and exits should be carefully assessed."
The paper also recommends that this summer's EU-organised stress tests of banks should be repeated annually.

Google CEO says mobile revs small but growing fast

Google Inc expects mobile searches to generate most of its revenue eventually, but it could take a long time despite growing at a rapid clip, Chief Executive Eric Schmidt said on Tuesday.
Searches made on Android-based smartphones and other mobile devices are growing quickly but will remain immaterial to the company's bottom line for some time to come, he said.Searches on Android phones -made by companies including Motorola Inc, HTC Corp and Samsung Electronics - more than tripled in the first half of 2010, he added.
"Eventually we think mobile will be the majority of the searches and the majority of the revenue, but it's a long time," he told an audience at the TechCrunch Disrupt conference in San Francisco.
For Google, the world's number one Internet search engine, making the transition to mobile phones is key as it seeks to maintain and expand its nearly USD 24 billion online advertising business. Its Android software, offered free to cell phone vendors, has experienced dramatic growth since coming to market two years ago.
More than 200,000 Android phones are sold every day, according to Google.
Highly Lucrative
Since Apple Inc launched its iPhone in 2007, the mobile market has become a prime battleground for technology companies, as consumers increasingly use their phones to send email, listen to music and access social networking services.
Schmidt spoke highly of 4year old microblogging sensation Twitter, which is attempting to mold its more than 145 million user base into a sustainable, revenue-generating business.
Google has struggled to to create a major hit in social networking, where consumers are spending increasing amounts of time on Twitter, Facebook and LinkedIn.
"Twitter should be able to come up with advertising and monetization products that in our opinion are highly lucrative," Schmidt said. "We think they're going to do very, very well."
Some Silicon Valley investors believe Google or rival Apple could acquire privately held Twitter in order to establish a position in social networking.
"Is there a scenario where you think you don't have to buy Twitter in the near future? I don't see it," Dave McClure, cofounder of venture capital firm 500 Startups, said of Google.
"Whatever your math is, you better do it soon, because you're getting killed by Facebook."
Schmidt also said its Youtube online video service receives 2 billion "monetized views" every week and that Google's Chrome browser, which competes against Microsoft Corp's Internet Explorer, boasts more than 70 million users.

US CEOs' view of economy darkens: Roundtable

US chief executive officers' view of the economy darkened in the third quarter, with top executives saying they were less willing to hire new workers as they fear sales growth will slow.
The change in mood reported in a Business Roundtable survey on Tuesday bodes poorly for the tepid US economic recovery, which as been held back by stubbornly high unemployment. The news was not entirely grim, though - more CEOs expect to boost their capital spending over the next six months, a trend that reflects both strong corporate balance sheets and a desire to lift productivity."This is and will continue to be somewhat of a long and uneven recovery. We're not seeing a lot of major momentum develop here," said Ivan Seidenberg, CEO of Verizon Communications Inc who also serves as chairman of the Roundtable. "Until we see aggregate demand start to materialize, hiring will continue to be on somewhat of a slower pace."
The Business Roundtable's CEO Economic Outlook Index declined to 86 in September from 94.6 in June, breaking a five-quarter streak of improvement. The reading remained well above the 50 mark, which separates forecasts of growth from expectations of decline. The CEOs' view is still markedly improved from early 2009, when the index stood at a record low of negative 5.
US companies have by and large reported strong profits this year despite soft revenue, as last year's aggressive costcutting actions, including millions of layoffs and cuts to employee benefits, boosted their profit margins.
"They are lean and mean and they have laid off lots of people. They are very efficient and their output is enough to meet demand, so results look good," said Keith Springer, president of Capital Financial Advisory Services in Sacramento, California. "That doesn't help the overall economy because it doesn't help more people get jobs."
Investors will get a more in-depth reading of CEO confidence over the next month, as a slew of U.S. corporate heavyweights including Alcoa Inc JPMorgan Chase and Coand General Electric Co report quarterly results.
Comparisons may grow tougher in the coming quarters as companies step back from some of their most draconian cost-cutting measures. Package-delivery company FedEx Corp, for instance, next year plans to resume matching employees' contributions to their 401(k) retirement plans.
The CEOs' forecast of 2010 economic growth dropped sharply to 1.9 percent from a prediction of 2.7% in June.
Jobs, confidence linked
As was their habit through the recently ended recession, CEOs responded to their lower sales forecasts by becoming more conservative in their hiring plans.
Just 31% of the 125 CEOs surveyed told the Roundtable they expected to add jobs in the United States over the next six months, down from 39%who expected to do so in June. Twenty three percent expected to cut jobs, up from the 17% who reported that in June.
Sixty-six percent said they expect increases in revenue over the next six months, down from 79% in June.
Almost one in ten Americans who want to work are currently without jobs, while some of those who are employed worry that their jobs could be vulnerable if the economy takes another leg down. That has hurt consumer confidence and weighed consumer spending, which accounts for the lion's share of U.S. economic activity
A key report on Tuesday from the Conference Board showed the US consumer confidence in September fell to its lowest level since February. Consumer confidence has tracked CEO confidence reasonably closely over the past few years - it fell to its lowest level in early 2009, a time when 71% of CEOs planned to cut jobs.
Many top US companies are sitting on extra-large cash reserves they amassed during the credit crunch, when some sources of short-term financing that corporate America had come to rely on had dried up.
CEOs' plans to spend more on capital equipment is a sign of confidence, Seidenberg told reporters.
"Business fundamentals at the micro level are reasonably strong," Seidenberg said.
Business Roundtable member companies, who were surveyed between September 1 and 21, collectively employ 12 million people and generate close to USD 6 trillion in annual revenue

Madras HC orders shutdown of Sterlite's copper plant

It is another set back to Vedanta promoter Anil Agarwal. This time the Madras High Court has ordered the immediate closure of Sterlite's copper smelting plant in Tamil Nadu. The closure was ordered on the grounds that the factory violated a number of environmental norms, reports CNBC-TV18’s Swathi Narayanan.
Quashing the environmental clearances given by the Tamil Nadu Pollution Control Board (TNPCB) for the original setting up of the plant as well as subsequent capacity expansion, the court said that the plant had come up within the 25 km of the environmentally fragile zone near the Gulf of Mannar.Delivering its order on writ petitions filed by National Trust for Clean Environment (NTCE), the court also said that the employees are entitled for compensation under Section 25 FFF of Industrial Disputes Act at the rate of 16 days wages for every completed years of service.

Mobile device boom sparks US Net address shortage

The United States could run out of unique Internet addresses to assign to new devices by the end of next year, a telecommunications official said on Tuesday.
Internet Protocol version 4, known as IPv4, provides the dominant architecture for the Internet. It requires devices to have unique identifiers, known as an IP address, but it only has space for 4.3 billion of those addresses.The recent profusion of mobile devices like Research in Motion's BlackBerry and Apple's iPad, and the expansion of Internet services to more homes have quickly depleted available addresses.
An upgrade to the Internet's main communications protocol with more space, called IPv6, is available, but adoption in the United States has lagged behind Europe, China and other countries.
"We now face an exhaustion of IPv4 addresses," Lawrence Strickling, administrator of the US National Telecommunications and Information Administration, said at a meeting of government and industry stakeholders.
"Fortunately, IPv6 will support 340 trillion trillion trillion addresses," Strickling said, and urged businesses to deploy and integrate IPv6 widely.
But the transition may not be easy. It could cost businesses a lot of money, and the new technology might not work well with the technology they use now.
Vivek Kundra, the US chief information officer, issued a directive on Tuesday requiring all US government agencies to upgrade many of their servers and services like e-mail and websites to IPv6 by the end of fiscal 2012.
The memo also ordered them to upgrade internal applications that use Internet servers and make enterprise networks compatible with IPv6 by the end of fiscal 2014.
Representatives from Comcast, Verizon and Google also attended the meeting. They expressed their concerns, but also relayed an urgency to move forward to prevent delays in service for consumers.
An estimated 94.5% of the available IP addresses for IPv4 have already been used, and the remaining 5.5% are expected to be allocated among the Regional Internet Registries by next summer.
"We expect that there will be no addresses available in our registries to give to Internet service providers by the end of 2011," said John Curran, president and chief executive of the American Registry for Internet Numbers, one of five regional registries.

China industry looking up as HSBC PMI hits 5 month high

Chinese manufacturing is regaining some of its usual vigour after slowing in the first half of 2010 as the government reeled in credit and battled to deter speculative property investment.
A rise in HSBC's China Purchasing Managers' Index to a five-month high in September pointed to renewed, though moderate, momentum in the vast industrial sector that is the backbone of China's economy.The index, which is designed to provide an early indication of conditions, rose to 52.9 from 51.9 in August, mainly reflecting stronger gains in output and new business.
A reading above 50 indicates expansion on the month; a figure below 50 denotes contraction.
"Overall, manufacturing industry is recovering well, with domestic demand reviving and inventories falling," said Sun Wencun, an economist with CITIC Securities in Beijing.
The sub-index for new orders rose to 54.4 in September from 52.7 in August and new export orders climbed back into positive territory after three months below the boom-bust line.
"The recovery is sustainable and demand is rebounding very strongly," said Dong Xian'an, chief macro-economist with Industrial Securities in Beijing:
By contrast, the sub-index for inventories of finished goods came in below the neutral mark of 50 for the second month in a row - suggesting that companies might have to ramp up production to meet a rise in orders.

A tale of two games exposes China India gulf

The emerging Asian giants of China and India may be locked in a battle for economic supremacy, but on the sporting front at least, China has sprinted well ahead of its southern rival.
In an illustration of some of their relative strengths and weaknesses in tackling complex infrastructure and policy-making challenges for big events, China's slick preparations for the Asian Games in Guangzhou have contrasted sharply with India's chaotic Commonwealth Games preparations in New Delhi.Some of the problems plaguing India's Games, such as poor governance and shoddy infrastructure, carry poignant lessons as the country strives to prove itself against an aggressive, entrepreneurial and powerful competitor to the north.
While Idia was racing to finish venues, scrub clean an athletes' village and restore battered public confidence in the four-yearly Commonwealth Games, the southern Chinese city of Guangzhou was finishing preparations for the Asian Games, second in size to the Olympics, with 50 days to go.
"We've made comprehensive preparations," said an organiser, Hua Shan, during a tour of the Asian Games Town sprinkled with lakes, apartments for athletes and stadia built in about two years.
"We've seen the reports from India and are confident we'll do much better," she added. "Our government is fully behind this and we've had experience of putting on these big events before."
Over the past nine years, China has hosted at least six major sporting events including the 2008 summer Olympics and two East Asian Games, leading some liberal commentators to dub China's president Hu Jintao a national pride-seeking "sports fanatic".
"Sport is the new arena for asserting China's soft power," said Jean-Pierre Cabestan, a Hong Kong-based political scientist.
Besides China's urban infrastructure and deep budgets to bankroll such spectacles, inter-regional rivalries have also played a role in ensuring smooth and safe implementation.
"(Guangzhou) is clearly the third city in China after Beijing and Shanghai and they want to have their share of the cake and their share of fame, both domestically and on the international stage," added Cabestan, of Hong Kong's Baptist University.

Mah Satyam could see 8-10% move either way on nos

Finally Mahindra Satyam is all set to announce its results for FY09, FY10 today. According to CNBC-TV18’s Udayan Mukherjee there is so much attention fixated on these numbers that people might miss the point that these are numbers for FY10 when things were not so great. “So don’t expect a major thing—some volatility yes because it is a black box situation. But the upside and downside should be in an 8-10% kind of a range,” he adds.
Here is a verbatim transcript of Udayan Mukherjee’s comments on CNBC-TV18. Also see the accompanying video.ver the last couple of quarters from every news point or data point, which is coming out, things seem to have improved for Mahindra Satyam. You don’t know what will be the disclosure. If Mahindra Satyam says, “I want to be completely prudent and do not want to protect my stock from any reaction therefore I will just give you fiscal year 2010 numbers and that is it.” In that case maybe the numbers will not be joyful for the market because they might just come out and say we had 5,000 crore of revenues in fiscal year 2010, we didn’t have great margins because things were difficult and therefore maybe 8-10% kind of an EBITDA margin, which will not please the street too much and maybe the employee situation also would look a little hairy for fiscal year 2010, which will also lend more credence to all the fears of high levels of attrition etc, which probably was the case too in fiscal year 2010.
Now the tricky part is how much of that should you extrapolate to fiscal year 2011? What do you think the current quarter’s run rate is for Mahindra Satyam? Is the fiscal year 2010 number that you are going to see today reflective of what the current year is also? Maybe the answer to that is no. But will the management hint at that saying, “Okay, that is my backward looking number. My current situation is better, both with employees and with topline and certainly with margins. So don’t judge me by the numbers that I am showing you today because these are backward looking numbers for fiscal year 2010.” But it maybe a conservative management which does not help you out with the current quarterly run rate in which case the stock might find it difficult to go up after the FY10 numbers unless there is a surprise and they come out and say, “My EBITDA margin in FY10 was 13-14%,” which the market will take very positively. There is no point debating it because this is a black box. The outcome could turn out either way. So we will all be speculating and your guess is as good as mine and as good as any analyst’s on what the number will turn out to be today for Mahindra Satyam.
But whichever way the number is, unless it is a huge positive surprise, you will then come to step two, which is try and figure out what the current quarterly run rate is and importantly what the merger ratio with Tech Mahindra is going to be because that is the next trigger for the stock in the near-term. Pending all these issues, if you get a positive reaction, maybe it is Rs 10 on Mahindra Satyam. If you get a negative reaction that also might be capped by the realization that maybe these numbers are not the ones to extrapolate. On a bad news, the stock might go to Rs 90 and then you will find support there or somewhere there. On good news, the stock could get back to Rs 110.

Boeing finalizes $5.3 bn F/A 18 multiyear deal

Boeing Co has finalized a USD 5.3 billion four-year agreement with the US Navy to build 124 F/A-18 fighter jets and electronic attack planes, a deal that will generate savings of overUSD 600 million.
The deal, announced on Tuesday by Boeing and the Pentagon, calls for the company to deliver 66 F/A 18 "Super Hornet" fighters and 58 EA 18G airframes designed for electronic attack to the Navy from 2012 through 2015.The Pentagon said the multiyear agreement was on fixed-price terms, with an incentive fee - terms that will limit the government's liability in the event of any cost overruns.
Boeing also won a USD 249 million contract for logistics support for the F/A-18 fighters, which operate worldwide from the decks of 11 Navy aircraft carriers - including ongoing missions in Afghanistan.
Boeing said the agreement would generate more than USD 600 million in savings by allowing Boeing and its suppliers to plan further ahead and buy materials in bulks, making production more efficient than under a single year contract.
The contract is based on a price of about USD 42.7 million per airplane, excluding their engines and other government-furnished equipment.
This is the third multiyear agreement Boeing has signed with the Navy for the F/A-18 fighter program. The company said the first two agreements, which each spanned five years, saved about USD 1.7 billion in total. It said it had delivered every one of the planes on schedule and on budget.
"Procurement of these 124 aircraft through a multiyear contract takes advantage of the full efficiencies of Boeing's production and supplier operations, which will generate more thanUSD 600 million in cost savings for U.S. taxpayers," said Kory Matthews, vice president of Boeing F/A 18 and EA 18 programs.
The Navy said in May that it planned to proceed with a third multiyear agreement after securing a 10% price cut that satisfied top Pentagon leaders.

HP, still missing a CEO, points to solid 2011 results

Hewlett-Packard Co, reassuring investors worried about growth after the surprise departure of ex-CEO Mark Hurd, forecast 2011 results that surpassed Wall Street expectations and propped up its shares.
The world's largest tech company underscored its potential in still-evolving markets for mobile devices such as tablets, storage and networking. But competition in those areas is fierce and getting fiercer.HP forecast 12-14% growth in non-GAAP earnings in fiscal 2011 and revenue growth of 5-7%, helping its shares gain more than 1% in after-hours trade.
But the company has not announced who will take the helm, despite hopes among some investors it would do so at its annual analyst meeting on Tuesday.
Following Hurd's controversial ouster, shareholders have grumbled about HP's spending on acquisitions, and worried about newly aggressive rivals such as International Business Machines Corp (IBM) to Oracle Corp.
Investors got a fresh look at several executives said to be competing for the top job, including PC group head Todd Bradley and enterprise division chief Ann Livermore.
Interim CEO Cathie Lesjak emphasized what she called HP's "extraordinary opportunity" to grow, noting its global reach and an addressable market she pegged at USD 1.6 trillion in 2013.
Lesjak also defended the company's innovation strategy. IBM CEO Sam Palmisano this month blasted HP for having focused too much on shaving costs and not spending enough on research and development to drive growth.
"Innovation has, is, and will continue to be the core of Hewlett-Packard," Lesjak told analysts, noting that the company will increase R&D spending faster than revenue next fiscal year.
TAKE ME TO YOUR LEADER
For fiscal 2011, HP forecast a rise in earnings, excluding items, to USD 5.05 to USD 5.15 a share on revenue of USD 131.5 billion to USD 133.5 billion. Wall Street is targeting earnings of USD 4.99 a share on revenue of USD 131.4 billion, according to Thomson Reuters I/B/E/S.
HP also forecast an operating margin of 11.6-11.8% for fiscal 2011, as the company aims to maintain profitability improvements that began in earnest under Hurd.
For fiscal 2011, HP expects 6 to 8 percent growth in its PC business, 2 to 4 percent growth in services, 3 to 4 percent growth in its printing group, and 7 to 9 percent growth in its storage, servers and networking segment.
HP, which rakes in about as much revenue annually as Microsoft Corp and Apple Inc combined, is on the prowl for a new chief, and is reportedly searching among its own ranks.
Its shares have fallen about 10% since Hurd's departure on August 6. The company trades at just over 9 times forward earnings, a discount to peers such as IBM and Cisco Systems Inc.
Shares of HP closed at USD 41.63 on the New York Stock Exchange and rose 1.3% to USD 42.19 in extended trading.
Investors would like to see someone take the reins at a company credited with helping found Silicon Valley through a combination of technology innovation and pioneering now-commonplace employee-benefit measures through "the HP Way."
But while still a dominant force in PCs, printers, servers and services, HP confronts a changing IT landscape dominated by a number of behemoths slugging it out for a slice of tech spending. New rivals have swelled the ranks of traditional foes such as IBM and Dell.
Hurd overhauled HP by slashing costs and boosting efficiency, but investors are pressing for growth. That is expected to come primarily from HP's enterprise business.
Livermore said HP was expanding sales coverage in the services business, which provides the bulk of the revenue in the enterprise business. In the larger but less profitable PC unit, Bradley said HP is also adding headcount as it aims to muscle in on the fast-growing market for smartphones and tablet devices.
Acquisitions are key to HP's growth, and the company went on a spending spree in the past month. Analysts estimate it has spent more than USD 20 billion on acquisitions over the past two years.
It outlasted Dell in an expensive bidding war for data storage company 3PAR Inc, and also agreed to purchase to security software company ArcSight Inc.
Those acquisitions came on the heels of deals for networking equipment maker 3Com and smartphone maker Palm. Some on Wall Street have wondered how HP plans to digest all of it.

BP Capital Markets sells $3.5 bn debt in 2 parts: IFR

BP Capital Markets sold USD 3.5 billion of debt in two parts on Tuesday, said IFR, a Thomson Reuters service.
The issue is guaranteed by BP Plc.The oil major, whose image has been pummeled by the oil spill in the Gulf of Mexico, has said it would sell USD 30 billion in assets to pay clean-up costs of around USD 30 billion.
But BP spokesman Scott Dean said the bond move didn't directly stem from the Gulf disaster. "This particular bond issue is part of routine management of the group's finances and is not specifically related to the costs of the Gulf of Mexico oil spill," he said.
The sale included USD 2 billion of notes due October 1, 2015, priced to yield 195 basis points over comparable US Treasuries.
The sale also included USD 1.5 billion of notes due October 1, 2020, priced to yield 210 basis points more than Treasuries.
The joint lead managers were Barclays, BNP, Citigroup, Mizuho and RBS.

ECB in exit mode from crisis measures: Policymakers

The European Central Bank is still in the process of phasing out its emergency lending measures, policymakers said on Tuesday, despite a recent extension of the central bank's liquidity lifelines.
ECB Executive Board member Juergen Stark said the ECB had already decided not to renew some of its liquidity support past the end of the year, when the next decision on the supply of funds is due."We are in the process of phasing out the non-standard measures. This week and in the fourth quarter 2010 a number of non standard measures will mature and they will not be renewed," Stark said on the sidelines of a conference hosted by the Turkish central bank in .
"We are in this process and what we will decide for the time after the time of December 31, 2010 is up to a forthcoming meeting."
Bund and interest rate futures fell on his comments as traders bet on higher credit costs, with Stark's hawkish tone mirrored by Luxembourg colleague Yves Mersch.
"We had slightly hawkish comments from the ECB by Stark on the non-standard measures ... he is known as a hawk but it's still significant and is putting pressure on the front end," one bond trader said.
The most actively traded March Euribor futures contract fell as much as 2.5 basis points to 98.900, implying a Euribor rate of 1.1% by the end of March next year.
The three-month Euribor fixed at 0.88% on Tuesday.
The ECB is allowing very long-term loans of up to 12 months to expire and replacing them with shorter-term operations, although liquidity supplies are currently still ample.
The ECB this month renewed its policy of lending banks unlimited funds for up to three months into January 2011, but has made it clear it wants to resume its gradual exit from emergency loans at some point.
Slovakia's Jozef Makuch, one of the ECB's Governing Council members, said he saw no need to tweak the bank's strategy.
"We see no reason to change the exit strategy, and there is no such discussion," Makuch said in Bratislava, and added he did not expect to see any problems in the financial markets when the ECB's 12-months loans expire later this year.

EU to look at penalties for rating agencies: Minister

EU finance ministers will discuss this week how to penalise rating agencies for passing judgement on countries based on "wrong analysis", a senior EU politician said on Tuesday.
Didier Reynders, the finance minister of acting EU president Belgium, said the bloc's economy chiefs would discuss such a regime when they gather this week to examine controls for the agencies, whose downgrades of countries at key moments in Europe's debt crisis have angered some politicians.Building on remarks that he wants a new EU markets watchdog to be able to fine rating agencies, Reynders said: "It must be possible to penalise. If after some weeks or months it is possible to say it (a downgrade) was a wrong signal, what is the responsibility of the rating agency?"
"It is quite difficult to say that there is no responsibility if it is possible to prove it was a wrong analysis, a wrong signal. The penalties is the capacity to impose some responsibility on the rating agencies."
Reynders' comments illustrate growing frustration with the agencies but leave many questions unanswered about how such a penalty scheme would work or whether it would win the backing of European countries and the parliament to be introduced.
It is not clear who would decide that an agency's analysis or a particular rating change was "wrong".
Sharon Bowles, the chairwoman of the influential economic affairs committee in the European Parliament, which must give its blessing to new laws, was critical of the idea. "You cannot penalise rating agencies for getting their predictions wrong," she told Reuters.
The EU's finance ministers are acutely sensitive to the danger of further downgrades, such as one threatened on Tuesday by Standard & Poor's for Ireland as the cost of supporting Anglo Irish Bank rises.
Representatives of the three big agencies : Standard & Poor's, Moody's and Fitch - have been summoned to a meeting of finance ministers this Friday in Brussels to defend the way they take rating decisions.
Some in this group, including Germany's Wolfgang Schaeuble and France's Christine Lagarde, have also found it hard to forgive an S&P decision to demote Greece to junk status, as they struggled to mount a rescue, the cost of which was pushed up by the downgrade.
Policymakers also have a longstanding aim of seeking more "home grown" competition in a sector dominated by the big three mainly US agencies.

JPMorgan to triple Asia private banking assets

JPMorgan Chase & Co plans to triple its private banking assets in Asia over the next five years, a company spokesman confirmed on Tuesday.
Douglas Wurth, JPMorgan's chief executive of international private banking, discussed those plans with Bloomberg in an interview published on Tuesday.JPMorgan's private bank employs 400 people in Asia, and plans to increase that headcount by 40% this year and next, especially in India and China, Wurth told Bloomberg.
The company, which currently generates about 20% of its non US business from Asia, wants to increase that portion to about 50%, Wurth said in the interview. The bank manages more than USD 700 billion of assets globally.
JPMorgan, like many other international private banks, is trying to boost its business in Asia, encouraged by the sharp rebound of economies in a region that is outpacing growth in the United States and Europe. Wurth relocated to Hong Kong from New York earlier this year.

US court orders music download license fee review

The fees paid by Yahoo Inc and RealNetworks Inc for licenses to play music on the Internet should be recalculated, a US appeals court ruled on Tuesday in the first case over music usage involving so-called new media.
Yahoo and RealNetworks had sought separate blanket licenses to publicly play the entire repertory of the not-for-profit American Society of Composers, Authors and Publishers (ASCAP) on some of their websites and services.he 2nd US Circuit Court of Appeals in New York said the analysis by a US district court in determining the fees in 2008 was flawed in two major respects and sent it back for reconsideration.
In a written opinion, a three-judge panel said the district court "did not adequately support the reasonableness" of the method it used to measure the value of the Internet companies' music use or of applying a royalty rate of 2.5% to the companies' music-use revenue.
It instructed the lower court to determine whether there are "more precise or practicable" methods of setting a rate for the use of ASCAP members' music.
The case is not the first time a court has ruled on licensing fees to be paid to ASCAP for users of music, but the first involving "new media" as opposed to "old media" such as broadcast TV and radio.
The Internet companies had appealed the lower court's assessment of fees for licenses.
Sunnyvale, California-based Yahoo said in an emailed statement that the company "looks forward to the establishment of a truly reasonable royalty license rate that properly accounts for music use on its services."
RealNetworks of Seattle, Washington, did not immediately respond to requests for comment.
ASCAP says more than 390,000 composers, songwriters, lyricists and music publishers in the United States exclusively license their music through the organization. It licenses about 45% of all of the musical works played online, according to the court record.
"We anticipate that in the end, the proceeding will result in a fair and favorable license fee to be paid by commercial online services for the valuable intellectual property they use to sustain their businesses," ASCAP said in an emailed statement.
On a separate issue, the appeals court agreed with a lower court's 2007 decision "that a download of a musical work does not constitute a public performance of that work" under copyright law. ASCAP had argued that digital downloads, or copies of music, are also public performances for which the copyright owners must be compensated.
In agreeing with the lower court ruling on that issue, the appeals court cited a section of the Copyright Act stating that to "perform" means to recite, render, play, dance or act it either directly or through a device or process.

US July home prices dip, seen stabilizing: S&P/Case

Single-family home prices dipped in July, and are seen stabilizing near the lows without the homebuyer tax credit that ended in April, Standard & Poor's/Case-Shiller home price indexes showed on Tuesday.
The S&P/Case Shiller composite index of 20 metropolitan areas declined 0.1% in July from June on a seasonally adjusted basis, as expected in a Reuters poll. The dip followed a 0.2% June rise, which was revised down from a 0.3% increase.Unadjusted, the 20-city index gained 0.6% after June's 1% gain. A 0.4% rise was expected.
S&P, which publishes the indexes, also said home prices in the 20 cities index rose 3.2% from July 2009, a slower annual pace than the 4.2% increased in June.
Ten of the cities had annual gains and only Las Vegas set a new low, as the impact of the homebuyer tax credit faded away, S&P said. But the year-over-year growth rates slowed in 16 of the cities and both the 10- and 20-city composite indexes in July from the prior month.
"While we could still see some residual support from the homebuyers' tax credit, which covers purchases closing through September 30th, anyone looking for home prices to return to the lofty 2005-2006 levels might be disappointed," David M. Blitzer, Chairman of the Index Committee at S&P, said in a press release.
"Housing starts, sales and inventory data reported for August do not show signs of a robust market, and foreclosures continue," he said, adding "stable prices seem more likely."
The 20-city index showed home prices remain 27.9% below the peaks set in mid-2006.

Rating agency warnings deepen Irish crisis

Two more credit rating agencies warned Ireland on Tuesday that its debt is at risk of further downgrades, triggering another leap in borrowing costs and heaping pressure on the government to bring forward its budget.
Ireland is battling to convince investors it can afford to shore up its banking sector and cut the biggest budget deficit in the European Union, given its weak economy and growing risks of a political crisis."I cannot pretend that the current rating is totally secure," Chris Pryce, a senior analyst with Fitch, which currently has Ireland at AA- with a stable outlook, told Reuters in an interview.
The government is hoping a final bill for dealing with nationalised lender Anglo Irish Bank, expected later this week, will clear up fears that the cost will vastly exceed a current estimate of 25 billion euros (USD 34 billion).
But Standard & Poor's said on Tuesday its estimate Ireland would have to pour 35 billion euros into Anglo Irish, a figure heavily criticised by local policymakers, looked increasingly realistic and any amount beyond that could trigger rating downgrades.
Coming a day after credit agency peer Moody's slashed its ratings on Anglo Irish's lower-grade debt, S&P's fresh warning sent Irish credit premiums and the cost of insuring Irish debt from default to new highs.
The news also drove the premiums investors demand to hold bonds from other economies on the euro zone periphery to new highs.
The OECD's chief economist told Reuters he did not see Ireland heading towards a Greek-style crisis.
Ireland's rising borrowing costs are unsustainable over the medium term and are putting mounting pressure on Prime Minister Brian Cowen as he heads into a new parliamentary term on Wednesday, with his coalition and deficit-cutting mandate shaky.
Some analysts have said Cowen needs to speed up the budget announcement.
"The costs are rising because of policy inaction on behalf of the incumbent government," said Ciaran O'Hagan, bond strategist with Societe Generale.
"The French budget is being published tomorrow, the Irish budget is being published in December. They are going to give a pre-budget statement in the second half of October, that's a month away."
Cowen, who recently shook off calls to resign after a boozy night out, was blasted by Irish tabloids on Tuesday after US chatshow host Jay Leno ridiculed him as a "drunken moron".
ONE MORE SHOT?
Fitch's Pryce said the government's wafer-thin parliamentary majority, which could fall from four to two, was a worry but Cowen still had time to reassure investors with the final bill for Anglo and tough budget measures.
"Further downgrades may be avoided," he said. "The Irish government has at least one more shot in its bow."
But O'Hagan said the credibility of the Anglo bill was dependent on the outlook for the Irish housing market, where prices are in some cases half their peak and still dropping.
"Even if the government does come out with a number, the only thing that will make it believable is if there is some sort of prospect of stability for the housing market."
The 25 billion euros of aid so far earmarked for Anglo Irish would already push Ireland's 2010 budget deficit to around 25% of gross domestic product, compared with an EU limit of 3% that Dublin aims to reach by 2014.
Dublin has said the budget blow-out is a one-off due to European accounting rules and the impact of the Anglo bill would be minimised by spreading the cost over at least a decade.
But investors remain unconvinced about the plan to wind down Anglo via a split into a "funding bank" and an "asset recovery bank", and the cost of insuring Irish sovereign debt against default hit a record high of 519 basis points.
The premium investors demand to hold 10-year Irish government bonds rather than euro zone benchmark German Bunds widened by five basis points on Tuesday to hit a euro lifetime high at 475 bps before easing back to 468 bps.
On Dublin's main thoroughfare O'Connell Street, recession-weary city residents were equally downbeat.
"It feels a bit doom and gloom again, like things are getting out of control," said Darragh, 23, a recently graduated engineering student who is looking for work.
Ratings agency Moody's downgraded Anglo Irish's unsecured senior debt on Monday, citing a small residual risk the government might not support this debt.
A finance ministry spokesman said on Tuesday Ireland will honour its obligations to senior bondholders.
Analysts expect the government to buy back Anglo's 2.4 billion euros in subordinated bonds at a discount. The paper has been trading at a deep discount in the secondary market.

In letter, economists urge IMF governance reforms

Thirteen US-based and other economists on Tuesday called for a "timely conclusion" to International Monetary Fund reform to make the global lender more representative of all its members.
In an open letter to the IMF's board of governors, the group said the IMF had responded flexibly to help countries during the global financial and economic crisis but was slow to agree on governance reforms.The IMF's board of governors is made up of finance ministers or central bank chiefs from the fund's 197 member countries, which will ultimately sign off on the reforms.
"We urge you to support a comprehensive package that addresses key reforms of IMF governance in order to generate a tangible shift in the representation, inclusiveness and accountability of the institution," the economists said ahead of a gathering of global financial leaders at the IMF and World Bank meetings on Oct. 8-9.
The call comes amid an increasing power struggle within the IMF on how to give emerging powers more influence in the global institution through adjustments to voting shares and board seats.
The IMF has long been dominated by the United States and Europe and its governing structures still reflect the post-World War Two order under which it was created.
Under proposals currently being negotiated by countries to reflect the rapid rise of emerging economic powers, China could leap-frog industrial powers like Germany.
The letter included signatures by Nancy Birdsall, president of the Center for Global Development, economists Colin Bradford, Ralph Bryant and Johannes Linn of the Brookings Institution; Domenico Lombardi of Brookings and president of the Oxford Institute for Economic Policy, John Sewell of the Woodrow Wilson Center, Paola Subacchi of Chatham House, Jo Marie Griesgraber of New Rules for Global Finance, Pamela Gomez of development group Oxfam, and Daniel Bradlow of the University of Pretoria.

Dubai eyes USD 1 billion dual-tranche bond

Dubai looks set to cash in on strong demand for high-yielding emerging market debt with a USD 1 billion dual-tranche Eurobond seen attracting orders for twice that sum on Tuesday.
The indebted emirate will sell a total of USD 1 billion in two tranches of USD 500 million, with yield guidance for the five-year tranche seen at 6.75% and for the 10-year at 7.875%, a source at one of the lead managers said on Tuesday.That is tighter than initial guidance earlier in the day and some fund managers predicted a greater amount would be ultimately sold.
A source at another lead manager said orders for the bond sale exceeded USD 2 billion and pricing is expected on Wednesday.
Analysts said the Gulf Arab emirate's planned dollar bond issue, weeks after its flagship conglomerate clinched a debt restructuring deal, was timed to take advantage of more favourable market conditions than at any time since the Dubai crisis broke.
"Dubai needs the money," said Robert McKinnon, chief investment officer at ASAS Capital. "The Dubai World issue, a black cloud hanging overhead for a long time, is out of the way now. This is probably the best time to go to the market."
One fund manager in London said: "Clearly there is a window for all kinds of debt to be issued. Dubai is on the edge of the demand area between Asia and Europe."
Earlier this week Sri Lanka received a strong reception for its USD 1 billion bond while Morocco is expected to shortly launch a 10-year euro issue and has received orders of 2 billion euros.
Dubai said on Monday it would launch a benchmark dollar bond soon through the government's EMTN (European medium-term-note) programme started in April 2008. The emirate last tapped markets in October 2009, just before the debt crisis.
The emirate has been climbing out of a massive debt hole over the past year, restructuring billions in debt owed by state-linked companies.
Conglomerate Dubai World, whose debt standstill news in November 2009 shook global markets and savaged Dubai's reputation, reached a formal deal this month to restructure USD 24.9 billion in debt.
The emirate, including its state-owned firms, is estimated to have more than USD 100 billion in overall outstanding debt.
EARLY WHISPERS
One fund manager predicted Dubai would end up issuing USD 1.5 billion and terms would tighten further.
While he said the absence of a sovereign credit rating is a hindrance, investors expect any future rating for the emirate to be around the credit rating level of state-owned utility DEWA.
Rated 'BBB-' by Fitch, DEWA earlier this year saw huge demand for its USD 1 billion Eurobond.
"At this kind of yield people are making the judgment that if it's rated, it will be close to DEWA so from that point of view it's a relatively cheap way of owning sovereign paper," he said.
In the wake of the Dubai World debt deal, the emirate needs to keep its momentum going, said AlixPartners director Sebastian Bretschneider.
"Dubai has to continue the work it has embarked on. The restructuring of Dubai World is good but it will be a big risk if people are seen leaning back now."

FINRA joins SEC to probe US trading manipulation

The US Financial Industry Regulatory Authority is analyzing claims that traders are manipulating the trading of stocks worth less than a dollar, the industry watchdog said, joining the Securities and Exchange Commission in investigating the issue.
"We are aware of the concerns and we are analyzing them," FINRA spokeswoman Nancy Condon said on Tuesday. The industry group, however, does not directly regulate the exchange where the problems are said to be centered, so it would not have direct access to the trading data."When activity occurs on other markets that we don't regulate, we generally defer to others who do," Condon said.
Late on Monday, SEC Chairman Mary Schapiro told Reuters that her agency - which has jurisdiction over the issue - was investing the claims, made just last week.
At issue is whether individual traders or trading firms are taking advantage of a pricing scheme at the CBOE Stock Exchange, or CBSX, that could give them far bigger rebates for posting limit orders than the trading fees they pay for sending market orders.
The maker-taker fee system gives rebates to those who add liquidity, and charges those who remove it.
Knight Capital Group Inc, a big stock market maker, late last week cited evidence that traders were using separate brokerage accounts to possibly trade with themselves, earning out-sized rebates in sub-dollar stocks from these so-called wash trades.
Jamil Nazarali, Knight's global head of electronic trading, told reporters last week that the firm brought its concerns to FINRA.

Endo to buy generic drugmaker Qualitest for $1.2 bn

Endo Pharmaceuticals Holdings Inc agreed to buy Qualitest Pharmaceuticals, a privately held generics company, for about USD 1.2 billion as it prepares to fill the expected revenue gap when the patent on its key pain drug expires.
Endo's second acquisition in as many months, Qualitest, owned by private equity firm Apax Partners, will help it cover the fall in revenue from its pain drug Lidoderm that goes off patent in 2015."The valuation is fair especially in the long run as it makes strategic sense, as they have a generic business and will complement the product line," analyst Louise Chen of Collins Stewart said.
Lidoderm, used to treat post-shingles pain, has annual sales of about USD 700 million, Chen said.
Endo shares rose about 12% to a three-year high of USD 34.26 in morning trade on Nasdaq. They have gained about 67% since its deal in May to buy medical device maker HealthTronics Inc.
Endo has been hunting for acquisitions to diversify its portfolio to get away from patented drugs. In August, it agreed to buy Penwest Pharmaceuticals.
Analyst Shibani Malhotra of RBC Capital Markets attributed the jump in shares to the transaction being immediately adding to adjusted earnings per share after close.
Also, the management has been effective in diversifying in the last six-eight months, Malhotra said.
Some of the drug majors have been expanding their generic reach recently. Abbott Laboratories agreed to pay USD 3.72 billion for the branded generics business of Piramal Healthcare in May, while GlaxoSmithKline acquired Argentina's Laboratorios Phoenix for USD 253 million in June.

Venus Remedies eyeing $15-$20 m buy in US

Venus Remedies, a mid-sized drug maker, has earmarked USD 15 - USD 20 million to acquire a manufacturing unit in the US as it plans to foray into the world's leading pharma market, its top official said on Tuesday.
"We plan to manufacture our branded antibiotic products in the US and the acquisition would be concluded possibly by end of 2011 or early 2012," Chairman and Managing Director Pawan Chaudhary told Reuters in a telephonic interview.

Ireland rating at risk on bank cost plan: Fitch

Ireland could face a credit downgrade unless it convinces markets it has a grip on the final cost of dealing with nationalised Anglo Irish Bank, Fitch Ratings said on Tuesday.
"I cannot pretend that the current rating is totally secure but that does not mean that negative action is imminent or inevitable," Fitch senior analyst Chris Pryce told Reuters in a telephone interview.Earlier on Tuesday, another agency Standard & Poor's warned it may cut Ireland's credit rating again due to the rising cost of recapitalising Anglo Irish, pushing Dublin's borrowing costs to fresh peaks.
The government is expected to detail the bill for the aid to Anglo Irish later this week and Fitch's Pryce said that was an opportunity for authorities to build credibility in the market and shore up ratings.
"I think that Ireland has an opportunity to consolidate its position and further downgrades may be avoided," Pryce said. "But it clearly is going to be a close run thing."
That contrasts with comments from Fitch just a month ago when it said Ireland's 'AA-' rating was "robust enough" to cope with Ireland's problems, including Anglo Irish.
On Tuesday Pryce cited December's budget for 2011 and the government's decreasing majority in parliament as further risk factors.
"There are increasing risks but the Irish government may respond in a way which increases confidence," he said. "The Irish government has at least one more shot in its bow."

Japan in delicate bind as it confronts rising China

The sudden bitter feud between Tokyo and Beijing will likely push Japan to mend ties with close ally Washington and reach out to other countries in the region that are also wary of an increasingly aggressive Beijing.
The dispute could also give momentum to debate inside Japan over whether to relax further the constraints of a pacifist constitution on its military to beef up its own defence.Still, Japan's growing dependence on China's dynamism for economic growth means responses must be finely calibrated. China has been Japan's biggest trade partner since 2009, replacing the United States in the top spot.
"China is a very promising market, a very promising growth centre," said Hitoshi Tanaka, a former senior Japanese diplomat.
"China and Japan are enjoying very deep interdependence, so let us create confidence in the region and at the same time, prepare for an unpredictable China. For that, we have to very quietly and deliberately move to create various partnerships in the region," Tanaka said. "It is a balance between the two."
Prime Minister Naoto Kan, already staggering under woes from a weak economy and strong yen to a divided parliament, has come under heavy domestic fire since prosecutors released a Chinese captain being held after his fishing boat collided with Japanese patrol boats near disputed islets.
Even his sudden release has not ended the dispute, as Asia's two biggest economies press their claims of sovereignty over the rocky islets in the East China Sea, home to valuable fishing grounds and potentially vast oil and natural gas fields.
"What this shows is that economic integration alone does not guarantee stability," said Andrew Horvat, director of the Stanford Japan Center in Kyoto.
"This incident ... has proved to the Japanese that they need the US security relationship from a strategic point of view. And they need to take defence seriously, which they have not."
The prosecutors' decision to release the skipper followed mounting worries about an escalating war of words between the two countries and overt pressure from Beijing, including a halt to toplevel diplomatic contacts.
Japan has been investigating reports, denied by China's commerce ministry, that Beijing imposed a ban on exports of rare earth minerals vital to products from electronics to cars.
China has also detained four Japanese nationals on suspicion of violating a law protecting military facilities, although Tokyo said the incident was unrelated to the islands row.