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Coal India had a successful initial public offering, with its stock price rising over 32% on the first day of trading. However, some analysts predict the gains may be difficult to sustain as speculators who borrowed money to invest may look to sell for a profit. Retail investors and others may look to buy dips in the stock price for long term investment in the company given its near monopoly in the Indian coal market. The US is expected to push for greater access to the Indian market during President Obama's visit, including further foreign direct investment reforms in retail and financial services to allow US companies to better access the consumer market in India.
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- 1. NEWS FILE http://economictimes.indiatimes.com/markets/stocks/stocks-in-news/Coal-India-may-find-it-tough-to- hold-on-to-gains/articleshow/6870233.cms 4 NOV, 2010,12.04PM IST,ET BUREAU & AGENCIES Coal India may find it tough to hold on to gains NEW DELHI: The world's largest coal producer today listed on the bourses with a handsome premium and zoomed over 32 per cent, over its IPO issue price of Rs 245 per share, to hit a high of Rs 324.75 in the first hour of trade on the Bombay Stock Exchange. The total m-cap of Coal India was at Rs 2,03,860 crore in the first hour of session. Partha S. Bhattacharyya, Chairman & MD, Coal India Limited says, "Many records have been broken and many peaks have been scaled. For the officials intensely involved in the process, the feeling largely resembles to that of a mother who has just given birth to a child. Indeed it is a moment of birth in the capital market that brings in huge responsibility on the management to rear the newborn baby into a strong and mature turnout by living upto the expectations of the investing community consistently." The very success of Coal India's initial public offering (IPO) may weigh on it. Many say that gains may trigger a sell-off among speculators who borrowed money for bids, capping gains. Gopal Ritolia, Research Analyst, IIFL says, "One year target price is Rs 345 on this stock, so at current levels, the stock looks fairly priced to us." "I would look at selling on the listing day if the price goes above Rs 280," says Sandeep Jain who got shares in the high net worth individual category. Coal India's Rs 15,200-crore IPO, the biggest in the nation, was subscribed 15 times the offer taking total bids to $54 billion. Prasad Baji, Senior VP, Edelweiss says, "Technically Coal India's valuation is running not just as a coal company but since its model is different, it is selling in India where there is an assured offtake and its pricing will never see a price tag, therefore, it is not typically a commodity play as compared to other coal companies. Investors included Janus Capital, Fidelity, Franklin Templeton and Capital International. Domestic investors included State Bank of India , ICICI Bank and Life Insurance Corp. Maximum subscription was in the high net worth category with subscription of around 25 times. Amit Aggrawal, a financial services executive who borrowed Rs 9 crore to bid for Coal India shares, says that he would take some profits off the table at Rs 320 a share. "I may hold back some shares and sell them at a later stage," says Mr Aggrawal. About 195 mutual funds, 48 financial institutions and banks, six venture capital funds, 44 insurance companies, 484 foreign funds and 1935 corporate bodies own the stock, making it the company with the fifth largest shareholder base. There are 15.17 lakh retail investors holding up to shares worth Rs 1 lakh and 444 individuals above it.
- 2. It is not only the wealthy traders who flip on listing, some of the institutional investors also have done so with recent listings, increasing the pressure. A Citigroup entity sold 22.2 million shares of Indosolar, a Goldman fund sold 3.4 million shares of Orient Green, Merrill in Microsec Financial and Morgan Stanley in Prestige Estates Projects, regulatory filings show. But none forecast a dip below the issue price, as the company remains a near monopoly with the 80% market share and potential to raise prices due to persistent shortage of the fuel. "We have a target of Rs 325 per share," said Motilal Oswal Securities in a recent note. "Given the 'utility' model in 'commodity' business, coupled with the characteristics of sellers' market, we believe that CIL will largely have a linear earnings trajectory and impressive return on equity.'' The positive outlook for earnings in the next few quarter may also lure some investors who did not get their desired quantity. There would be buyers at every fall. "There are many retail investors who could not get more than 200 shares including myself who will buy if the price falls below Rs 280 for long term investment," says ST Gerela, CEO, Satco Securities. "We expected the share price to go above Rs 300, but that may or may not happen on the first day itself due to the selling pressure." http://www.thehindubusinessline.com/2010/11/05/stories/2010110551091100.htm Business Daily from THE HINDU group of publications Friday, Nov 05, 2010 Open India for American goods and US for Indian investments Visits by key heads of states or international events such as the G-20, seldom pass without big-bang policy announcements by New Delhi. The US President, Mr Barack Obama's visit to India may prove to be no exception. However, if civilian nuclear and Defence issues were key points of contention during previous presidential visits to India, the agenda for Mr Obama visit has been spelt out clearly. With its own economic recovery faltering, the US is looking to India, one of the fastest growing nations today, to provide a lucrative market for ‘Made in America' goods and services. It is also looking to create more jobs back home by pumping up exports to India, or possibly, even by encouraging investments into the US from Indian investors and companies. This is a dramatic role reversal for India, traditionally the seeker of foreign capital for its local ventures. Given the twin objectives of market access and job creation that are likely to dominate this dialogue, what are the key aspects of financial sector reforms that the US is likely to push for during the visit? Let's consider the market access aspect first. India has already made considerable headway in allowing foreign investors to make portfolio investments in its capital market. In recent years, foreign institutional investments into stocks have been incentivised through simplified procedure, expanded definition of who is allowed to invest, a benign tax regime, and even a special ‘quota' for foreign investors in primary offers and company placements. FII funds into debt, too, have been facilitated through manifold expansion in the regulatory cap on such investments. In just three years — from 2007 to 2010 — the ceiling on cumulative FII investments into corporate debt has been hiked over tenfold from $1.5 billion to $20 billion, while the limit on Government securities has been quadrupled to $10 billion.
- 3. Seeking consumer markets With portfolio flows already freed up to a large extent, it is Foreign Direct Investments (FDI) relaxations (along with removal of trade and tariff barriers) that are likely to be high on the US agenda now, as it seeks greater access to the Indian market for its home-grown corporations. Though India has relaxed FDI limits in several sectors over the past three years, it is the infrastructure-related industries that today operate under the most liberal FDI limits, thanks to their voracious appetite for capital. For instance, current FDI regulations permit 100 per cent foreign investments in power generation, construction, engineering, ports, roads and airports. However, foreign participation is still subject to tight curbs when it comes to consumer-reliant sectors such as retail or financial services, which foreign players may see as being even more lucrative. The Government has, so far, been very cautious on foreign ownership of retail chains (owing to its implications for employment), and has instead resorted to half-measures such as 51 per cent FDI in single-brand retailing and 100 per cent FDI in wholesale trade. This effectively prevented large global retail chains such as Wal-Mart, Tesco and Carrefour from commencing full-fledged operations in India, and grabbing a slice of its ever-buoyant consumer spends. The proposal to consider 100 per cent FDI in retail was put on back-burner way back in February 2007. However, this proposal has been revived in the run-up to the Obama visit. Financial services Retailing apart, India's large population of prodigious savers, their huge pool of savings idling in bank deposits and their expanding affluence makes it one of the most attractive markets for financial service companies in insurance, wealth management and retail banking. Yet, foreign players enjoy only limited room for manoeuvre here. Regulations allow wholly foreign-owned mutual funds, but limit foreign investments (under FDI and portfolio investments put together) in private banks to 74 per cent, and that in insurance companies to 26 per cent. Foreign ownership of Indian banks is subject to restrictions pertaining to licensing and a cap on voting rights. Of the three segments, a hike in the FDI limit for insurance, which has been proposed, but not made into law, appears to the most likely. Given the stringent capital requirements for the business and the recent tightening of their cost structure, insurance companies are in urgent need of capital infusion to fund their expansion plans. Higher foreign participation may bring in the required funds. Whether these proposals lead to the inking of a comprehensive Indo-US bilateral investment treaty, which has been debated on and off for several years now, remains to be seen. Outbound capital Along with greater access to Indian consumers, the US is also likely to welcome the rising flow of capital from India into the overseas markets. Facilitating outbound capital flows is one area on which India has certainly made significant headway in recent years. In a measure to allow Indian savers to diversify abroad, domestic mutual funds have been allowed to invest in stocks, mutual funds and exchange traded funds listed overseas, with the overall limit for these investments raised from $1 billion to $7 billion over the past four years. The sum that a resident Indian individual is allowed to remit overseas has been raised from a measly $25,000 a year, to a more generous $200,000 every financial year. Indian companies have been allowed to scale up the size of their overseas investments or buyouts, too. They are now allowed to deploy up to four times their net worth in overseas investments, with companies operating in natural resources such as oil, gas, minerals and ore allowed to venture even beyond these limits. Indian companies have also been allowed to deploy as much as half of their net worth as portfolio investments in listed foreign companies. Individual investors have not warmed up to the idea of parking funds overseas in a big way, given that investments in Indian stocks and bonds have outperformed most other global markets by a long chalk. However, Corporate India, in contrast, has been quite gung-ho about overseas investments; it has taken advantage of the easy domestic liquidity and strong cash flows to snap up assets overseas.
- 4. A study by Thomson One Banker and E&Y shows that Indian companies sewed up 180 outbound deals worth a cumulative $8.2 billion with US counterparts over the last four years (leading up to this October). The recent Reliance buyouts of Atlas Energy and Marcellus Shale, Tata Chemicals' acquisition of soda ash maker General Chemicals in 2008, are evidence that large Indian companies in the natural resources space are keen to augment their resources base overseas. The capital that Indian companies can spare for such investments may not be very large in the context of the American economy or even its corporations. However, India's status as one of the fastest growing investors in the US, and its ability to create jobs there, may still prove an important bargaining chip as the two countries sit down to negotiations during Obama's visit. http://economictimes.indiatimes.com/news/economy/foreign-trade/Nigeria-willing-to-raise-oil-exports- to-India-Deora/articleshow/6868432.cms 4 NOV, 2010,01.08AM IST,ET BUREAU Nigeria willing to raise oil exports to India: Deora NEW DELHI: Nigeria, Africa’s largest crude oil and gas producer, is expected to increase its oil exports to India besides supplying liquefied natural gas (LNG), a senior oil ministry official said. “ Nigeria is our friend and willing to help us in meeting our growing energy requirements,” Oil Minister Murli Deora said at Petrotech-2010 after a meeting with Nigerian President’s special adviser Emmanuel O Egbogah. At the bilateral meeting, Mr Deora discussed the possibility of state- run Gail India and Petronet LNG picking up a stake in the $8-billion LNG project at Brass in the Niger delta. “We expressed interest in sourcing LNG (on long-term contract) from Nigeria and discussed possibility of Gail and Petronet joining in a LNG project,” oil secretary S Sundareshan told reporters on the sidelines of Petrotech-2010, an international oil and gas event held in New Delhi. State-run Nigeria National Petroleum Corp has a 49% stake in Brass project. French energy major Total, Eni of Italy and ConocoPhillips hold 17% stake each. India also wants Nigeria to export additional crude oil to India, Mr Sundareshan said. “Mr Emanuel responded positively and said that the Indian side should send a formal proposal for government-to-government agreement in this regard,” he said. The bilateral meet took place on Wednesday, two days after Prime Minister Manmohan Singh highlighted huge energy demand-supply gap in India at the inaugural session of the conference. India’s energy demand would increase by over 40% in the next 10 years but supply from its ageing oil-fields was expected to increase around 12%, he had said. Expressing concerns over the demand-supply mismatch, finance minister Pranab Mukherjee said the focus of India’s energy policies and bilateral agreements should be on meeting this gap. India wants to increase its crude oil import from Nigeria, which plans to raise its production to 4 million barrels per day from 2.7 million barrels per day by 2012. India imports around 13 MMT crude oil from Nigeria annually. According to the US Energy Information Administration January estimates, Nigeria had 185 trillion cubic feet (tcf) of proven natural gas reserves. The country had exported 500 billion cubic feet (bcf) LNG in 2009. Out of which, the US sourced 13.3 bcf or 3% of its LNG needs from Nigeria. Main customers of Nigerian LNG were Europe (66%), Asia (15%) and Mexico (16%).
- 5. Nigeria is the largest crude oil producer in Africa. Nigerian crude oil is light and sweet and commands a premium in the international market due to its quality. http://timesofindia.indiatimes.com/city/surat/Car-sales-record-new-high-in- Oct/articleshow/6867789.cms Car sales record new high in Oct Melvyn Thomas , TNN, Nov 3, 2010, 10.57pm IST SURAT: The diamond city has witnessed the highest ever sale of passenger cars in October this year. Driven by booming diamond and textile industry and an increase in the consumer spending ahead of Diwali festival, the city's automobile dealers have posted their best ever monthly sales of over 5,000 units, beating the last year's sales. According to the figures gathered from 18 automobile dealers in the city, the sale of passenger cars in the month of October grew more than 90 per cent to cross 5,000 units compared to 2,400 units in the same month previous year. "Passenger car sales in October have been the best and the highest ever attained in a month. Last year, we had sold 482 units in October month, this year we have sold about 1,000 units," said Jaapan Dave, general manager of Kiran Motors limited, the authorised dealer of Maruti Suzuki. According to Dave, the boom in the passenger car sales is fuelled by the increased consumer spending, easy availability of finance and the introduction of new models. Out of the total car sales in the city, the market leader Maruti Suzuki has sold more than 2,000 units in October month. The sale registered by high-end car makers such as Volkswagen, Mercedes, Skoda and Honda in the month was also impressive. Mercedes sold eight cars, while Volkswagen sold 75, Skota 65, Honda 96 and Ford sold 200 cars. A senior sales executive of Navjivan Autosquare, an authorised dealer of Volkswagen, said, "There was a phenomenal increase in the sale of Volkswagen cars in October, as we sold about 75 cars." With the addition of the 5,000 cars sold in this month alone, the total number of passenger cars in the city is now pegged at 1.70 lakh. "October was the best performing month for the regional transport office. While we earned revenue worth Rs.67 lakh from the auction of the registration numbers, we have also earned a huge amount of money by registering a high number of cars and two-wheelers," said J N Vaghela, regional transport officer. http://english.cri.cn/6909/2010/11/01/2321s602252.htm First Chinese-made Fire Trucks to be Delivered in Early 2011
- 6. 2010-11-01 14:20:54 Xinhua Web Editor: Zheng Zhi Chinese automaker China First Automobile Works Group (FAW) is poised to begin delivering China's first indigenously-developed and -manufactured fire truck. The company, based in Changchun City in northeast China's Jilin Province, will deliver 106 fire engines to five provinces by the end of Feb. 2011, a FAW official said Monday. FAW and the Department of Public Security of Jilin jointly developed the high-end fire truck, said Zhao Fangkuan, CPC secretary of FAW. In recent years, Chinese fire brigades have purchased over 1,500 fire trucks annually, either importing them or buying modified ordinary trucks. "FAW fire truck parts, including the chassis, are specially designed for the fire-fighting mission, and they are much cheaper than imported fire engines," said Zhao. FAW expects to expand its annual fire engine production capacity to 1,000 units by 2012. http://sify.com/news/china-makes-its-first-indigenous-fire-trucks-news-international-klbnuchajhg.html China makes its first indigenous fire trucks 2010-11-01 13:20:00 Beijing, Nov 1 (IANS) China has built its first ever indigenous fire trucks and will release these to the provinces early next year. The country had earlier either imported or modified ordinary trucks into fire engines. Chinese automaker China First Automobile Works Group (CFAWG), based in Changchun city in Jilin province will deliver 106 indigenously-developed fire engines to five provinces by the end of February 2011, Xinhua reported Monday. The automaker and the department of public security of Jilin jointly developed the fire truck, said an official named Zhao Fangkuan. Chinese fire brigades earlier purchased over 1,500 fire trucks annually, either importing them or modifying ordinary trucks. http://autonews.gasgoo.com/china-news/suzuki-changhe-in-talks-for-new-strategic-partner- 101025.shtml Suzuki, Changhe in talks for new strategic partnership By Amanda Zheng From Gasgoo.comOctober 25, 2010 Shanghai October 25 (Gasgoo.com) Jiangxi Changhe Automobile, a Chinese automaker that China Changan Automobile Group acquired from Aviation Industry Corp of China (AVIC) last year, is getting prepared for a new strategic partnership with its Japanese partner Suzuki Motor, its General Manger Li Li said in an interview with Beijing Times recently.
- 7. Chongqing Changan Automobile, a subsidiary of China Changan Automobile Group, is also planning to strengthen its cooperation with Suzuki Motor, Li revealed, denying the report that Changhe Suzuki will be merged into Chongqing Changan Automobile. Moreover, Li pointed out that restructuring over the past year and utilizing Changan's procurement platform have helped Changhe achieve cost reductions of 180 million yuan ($27million). When asked whether Changhe Suzuki tie-up will be ended, Li said the companies talked about the integration after joining China Changan Automobile Group, but after discussion, executives on both sides thought the integration conditions are not mature yet, stressing that both joint ventures, namely, Changhe Suzuki and Changan Suzuki, will in fact coexist on the market. Executives from the two sides have improved product planning, and will put aside difference, learn from each other's experience, expand cooperation and enjoy mutual benefits in the future. http://economictimes.indiatimes.com/news/economy/foreign-trade/Gems-and-jewellery-exports- continue-to-glitter/articleshow/6835189.cms 29 OCT, 2010,04.58PM IST,PTI Gems and jewellery exports continue to glitter NEW DELHI: India's gems and jewellery exports grew by 56 per cent to USD 4 billion in September 2010, compared to a year-ago period, thanks to the rising demand from markets like the Middle East and US. The exports stood at $2.6 billion in September 2009, according to the Gems and Jewellery Export Promotion Council (GJEPC) data. "There is a good demand for gems and jewellery items from the Middle East and US markets," GJEPC Chairman Rajiv Jain said. Federation of Indian Export Organisations (FIEO) President A Sakthivel said, gold investment has become more lucrative due to fluctuating stock markets and lower interest rates. The UAE is the major market for India's gems and jewellery exports followed by the US and Europe. Exports of gold jewellery saw a maximum growth of 113 per cent year-on-year followed by non-gold jewellery 72 per cent and cut and polished diamonds 36 per cent, as per the GJEPC data. However, coloured gemstones declined by 25 per cent in the period under review. Besides, there is demand for the Indian products from markets like China and Russia, Jain said. The exports of the precious items during the April- September period increased by about 46 per cent to USD 18.8 billion over the same period last fiscal. http://www.insidetoronto.com/news/local/article/895339--eight-toronto-roads-are-among-the-20- worst-in-ontario-caa Oct 29, 2010 - 8:07 AM Eight Toronto roads are among the 20 worst in Ontario: CAA Portion of Steeles Avenue tops this year's Best Roads list, however Eight Toronto roads are among the 20 worst in the province, according to the Canadian Automobile Association (CAA). The CAA released the results of a six-week campaign Thursday, Oct. 28, which named eight city roadways among the 20 worst in the province.
- 8. "For two years running, Toronto streets have dominated CAA's Worst Roads list," Faye Lyons, of CAA South Central Ontario, said in a release. "Toronto's new city council needs to make fixing these roads a priority." In a surprise turnaround, Steeles Avenue between Yonge Street and Markham Road was voted the best road in Ontario. The roadway had the distinction of being the worst for the last two years, though a stretch east of Markham Road is considered the 11th-worst). Ontario residents were encouraged to vote online for the worst - and new this year - best roads in the province during the campaign. http://economictimes.indiatimes.com/Sun, Oct 24, 2010 | 11.41AM IST SENSEX 20165.86 -94.72 NIFTY 6066.05 -35.45 INR-USD 45.48 0.94 GOLD (Rs/10g.) 19457.00 44.00 Currency volatility may hit IT cos' profits in coming quarters NEW DELHI: Currency fluctuations are likely to dent the profit margins of Indian software exporters in the coming quarters, as uncertainties persist in the global economy, say analysts. The country's top three IT players -- Tata Consultancy Services , Infosys Technologies and Wipro -- were affected by foreign exchange volatility in the September quarter this fiscal and their profit margins took a hit. During Q2 FY11, July-September period, the rupee gained over three per cent against the US dollar, to touch about Rs 45. This year, the rupee has strengthened more than five per cent against the greenback. "The appreciation of the rupee against the US dollar is likely to hit the profitability of IT companies in the coming quarters. Many players have raised this concern while coming out with their September quarter numbers," CNI Research CMD Kishore P Ostwal said. Country's top software exporter TCS, which posted a better-than expected 32 per cent growth in the September quarter with a net profit at Rs 2,169 crore, raised concerned over the appreciating rupee. The company recorded Rs 47-crore foreign exchange loss in Q2. It would be a "big headwind" in the next quarter for the company, TCS said. Similarly, the country's third-largest software exporter Wipro incurred forex loss of Rs 41.4 crore during Q2 and raised concerns about the macro-economic environment. Although Infosys did not report a forex loss in Q2, its Chief Financial Officer V Balakrishnan cautioned that the rising rupee would "kill exporters" unless the Reserve Bank of India steps into the market. Balakrishnan said the company was facing uncertainties related to economic situation, currency and labour market. Overall, software exporters saw a significant spurt in Q2 revenues, mainly because of new clients. Some analysts said, however, that currency fluctuations would remain until there is significant recovery in the global economy.
- 9. Against the backdrop of sluggish economic conditions, and availability of cheap money in the US, the dollar has in fact taken a beating in the recent times, said one analyst. He said a stable exchange value for the domestic currency is vital for software exporters, as many of them earn a big chunk of their revenues from the US. http://www.business-standard.com/india/news/adag-plans-rs-75000-cr-investment/412524/ ADAG plans Rs 75,000-cr investment Shashikant Trivedi / Khajuraho October 24, 2010,0:51 IST The Reliance Anil Dhirubhai Ambani Group (ADAG) today said it would scale up its quantum of investment in Madhya Pradesh to Rs 75,000 crore from Rs 50,000 crore over the next five years in sectors like power and cement. “If it is translated in terms of per hour investment, within the last two hours, we have invested Rs 5 crore. This is our commitment. We are investing Rs 60 crore per working day,” Group Chairman and Chief Executive Officer Anil Ambani said while delivering the keynote address at the concluding ceremony of the two-day Khajuraho Global Investors Meet –II here. These investments would create 0.1 million jobs in the state, claimed Ambani. Giving details about the slew of projects the group had chalked out, he said the group’s two power plants in the state would have a combined capacity of 12,000 megawatt (Mw). Reliance Power, an ADAG arm, is developing a 4,000-Mw coal-based ultra mega power projects at Sasan and another plant of similar capacity at Chitrangi in Singrauli district. The group would develop India’s largest private sector mine in the state, with a production capacity of 25 million tonnes of coal per annum. Ambani said they had decided to increase the capacity of their proposed cement plant in Chitrangi to 20 million tonnes from 10 million tonnes. “Considering the large coal fly ash to be generated from these power plants, we will convert limestone and fly ash into high-class cement, and with the support of the state we are ready to double the capacity of our proposed cement plant from 10 million tonnes to 20 million tonnes,” Ambani said. http://sify.com/news/bangladesh-wants-quota-in-indian-cotton-export-news-international- kkwlOichhjb.html Bangladesh wants 'quota' in Indian cotton export 2010-10-22 11:50:00 Dhaka, Oct 22 (IANS) Bangladesh will demand a separate quota in India's export of raw cotton to ensure adequate supply for its garment sector, the prime foreign exchange earner of the country, in view of rising prices. 'We'll demand a separate quota for raw cotton during the bilateral trade talks with India,' the Daily Star newspaper Friday quoted Commerce Minister Faruk Khan as saying.
- 10. Khan is currently in New Delhi leading a 23-member business delegation. The cotton price has reached its all-time high up to $1.19 a pound in the international market this month, which troubles Bangladesh and China -- the two countries that depend on cotton imports for their textile industries. Bangladesh textile industry experts say that crop damage by floods in Pakistan, the world's fourth largest cotton producing country, and a restriction put by the Indian government on its cotton exports have led to the price spiral. Khan said Bangladesh wants to settle the cotton supply issue with India so that the country remains 'immune' to any Indian ban on the commodity's export, the newspaper said.