"Oman Air flight from Muscat for Kuala Lumpur made an emergency landing here at 13:47 pm due to a mid-air bomb threat. The aircraft has been taken to isolation bay," a Mumbai airport spokesperson said. Further details are awaited.
According to Securities and Exchange Board of India (Sebi), foreign instituitional investors (FIIs) offloaded about Rs 2136 crore worth equities on Thursday, highest since May 13, 2011 ( Rs 3706.4 crore).
Thursday saw the Sensex tank over 500 points, its steepest crash since February 27, 2012. What triggered this sharp fall was US Federal Reserve chairman Ben Bernanke's decision to taper the country's monetary stimulus program- the quantitative easing 3 (QE3).
Bernanke said the bond buying program, to the tune of USD 85 billion per month, will be slowed down over the coming months and will be brought to a complete halt by mid 2014. Bernanke's speech sent global markets in a frenzy seeing a fall in equities, commodities and currencies as investors panicked at the thought of a slowdown in foreign capital flows into the markets.
End to cheap liquidity
Most global markets were funded for long by cheap liquidity from various countries monetary stimulus programs- the United Kingdom's long term refinancing operation (LTRO), the United States' quantitative easing (QE) and Japan's bond buying program. Banks across the globe used this liquidity to invest in various asset classes to earn quick returns rather than lending it to borrowers to kickstart the economy as expected by respective central banks.
Double whammy
Weak fundamentals, dismal earnings, high company debts and a prolonged political logjam deterred companies from posting positive returns for FIIs on their investments.
What came as a double whammy was the depreciating rupee that saw its all time low of 59.93 against the dollar- a figure far higher from the average dollar rate of 51.80 for the past two years (May 2011-May 2013). This translates into a 15 percent loss for the FIIs on currency conversion based on the current exchange rate of rupees 59 per dollar.
As a testimony to the weak sentiment prevailing among investors, FIIs pulled out capital worth Rs 1768 cr (provisional) from equities on Friday.
Having pumped record amounts of cash into corporate bonds, investors are learning that entering the market is a lot easier than leaving.
The problem is that, while companies can sell large chunks of debt at opportune moments - think of Apple attracting $52bn of orders for its record $17bn offering at the end of April - turning around at a later date and trying to sell your holdings in the so-called secondary market is a far different proposition.
Unlike the common equity price for a company that can be bought and sold effortlessly, corporate debt consists of thousands of individual bonds with various interest rate coupons and maturities.
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This fragmented market structure is why trading in the secondary market generally consists of small orders in the vicinity of a few million dollars at a time.
The situation has only deteriorated since the financial crisis, thanks to tougher capital and risk management rules, with dealers retreating from supporting the bond market.
Hardly a comforting backdrop for investors in the $5.5tn US investment grade corporate market when the Federal Reserve is signalling a desire to reduce its hefty stimulus in the coming months.
The boom years of record investor inflows and a central bank pulling interest rates to artificially low levels has long sowed a sense of foreboding among leading players in the market that, when the cycle turns, the rush for the exit has the makings of being far worse in terms of volatility and losses than in previous bond routs.
A liquid secondary market that can help offset the mass sale of bonds and contain investor panic is badly required but the industry is struggling to reach common ground.
Over at BlackRock, the topic animates their fixed income team and this week the world's largest fund manager made a renewed push to get the market thinking about trying to become a cleaner, easier place to trade.
The solution, which they readily admit is no silver bullet, would involve Wall Street banks assuming a leadership role and setting a standard for other corporate treasurers to follow.
In essence, it would involve companies issuing bonds at regular times during the year as done by the US Treasury.
This would greatly reduce the amount of individual bonds issued and a standardised market would concentrate liquidity to the greater benefit of investors.
But the proposal has received a lukewarm reception from banks, who are among the biggest debt issuers, and other investors.
They question why corporate treasurers would forego the flexibility of being able to tap the market whenever interest rates declined or when a company wanted to fund an acquisition or stock buyback.
The abiding principle for a corporate treasurer is to maximise flexibility and not risk being shut out of the funding market, so staggering and diversifying debt sales is a prudent strategy.
It's easy to see why BlackRock wants a better secondary market. They, like other big investors, focus on harvesting total returns from a bond portfolio, which consists of capital gains and the income received by holding securities. A liquid secondary market would help these type of investors adjust their portfolios and maximise investment returns.
Some standardisation of the bond market is unavoidable over time, argues BlackRock and other big investors.
The drive by banks to cut costs and embrace electronic trading along is a factor, while the rise of fixed income exchange traded funds that need a liquid secondary bond market only accentuates the need for the bond market to become more streamlined.
One way to get there faster would be for banks to look at selling some at least some of their debt in a more standardised manner. With their trading desks providing less support for the market, there is a view among the big bond investors that they should take a leadership role on the issuance side.
With the normalisation of interest rates brewing, investors need a buoyant secondary bond market more than ever. Until then, they better like the bonds they own or accept that getting out early will come at a cost.
But unlike regulators in the US and France, the Information Commissioner's Office stopped short of fining Google, saying it had found "insufficient evidence" to show that the company had intended to collect the data.
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Google admitted in 2010 that cars taking photographs for its Street View mapping service had gathered private information from unsecured wireless networks, such as email addresses, website addresses and passwords relating to thousands of individuals.
Drawing a conclusion to its probe on Friday, the ICO ordered Google to delete the data within the next 35 days.
Stephen Eckersley, ICO head of enforcement, said: "The early days of Google Street View should be seen as an example of what can go wrong if technology companies fail to understand how their products are using personal information."
Google said it was now proceeding to delete the data in compliance with the ICO's order.
"We work hard to get privacy right at Google," the company said. "But in this case we didn't, which is why we quickly tightened up our systems to address the issue. The project leaders never wanted this data, and didn't use it or even look at it."
The UK watchdog said that while Google's breach of data protection rules was serious, it had not caused enough harm to meet the strict criteria required to issue a fine.
"The punishment for this breach would have been far worse if this payload data had not been contained," said Mr Eckersley.
In March, Google agreed to pay a $7m fine in the US to settle with 38 states where its Street View cars had collected personal data.
The French data protection agency fined the US group ?100,000 in 2011.
Separately, the ICO said it was continuing to investigate whether Google's privacy policy complies with the data protection act. The probe is part of a co-ordinated move by data watchdogs across Europe to assess whether Google's latest privacy policy clearly explains how individuals' personal information is being used across the company's products.
The ICO said it would "shortly" be writing to Google to explain its preliminary findings.
European data protection authorities in Britain, Germany, France, Italy, Spain and the Netherlands this week threatened to fine Google if the Silicon Valley company does not address their privacy concerns within three months.
The co-ordinated move by regulators could result in Google having to pay several million euros, under proposed new rules.
"Prime Minister directs Department of Revenue to make public report of Rangachary Committee on Taxation of Development Centres & IT Sector," the Prime Minister's Office said today.
The committee, headed by former Central Board of Direct Taxes (CBDT) chairman N Rangachary, was set up by the Prime Minister in July 2012. The panel had submitted its report in September, 2012, suggesting parameters to identify contract R&D services provider with insignificant risk and application of profit split method, among others.
Following the report, CBDT issued circulars to streamline taxation rules in line with the recommendations of the panel. The circulars, issued with relation to the applicability of Transfer Pricing rules for taxation of development centres in the IT sector, will help in providing certainty to taxpayers, the Finance Ministry had said earlier.
The development centres, it said, should be treated as contract R&D service provider to their foreign principal if the risk attached to such centres is insignificant. The Transfer Pricing officers, while deciding on taxation issues concerning development centres, it said, should look into the conduct of the parties and not on mere contractual terms.
The committee was also asked to engage in sector-wide consultations and finalise the Safe Harbour provisions announced in Budget 2010 sector-by-sector. Safe Harbour principles are international disclosure practices to check litigations in transfer pricing - an accounting mechanism undertaken by MNCs to reduce tax liabilities.
Stocks on Wall Street end mixed after a volatile session. For the week though Wall Street closed in the red clocking its worst weekly drop since mid April. Meanwhile, Indian equity benchmarks closed rangebound session with marginal gains on Friday, after previous day's carnage on rupee depreciation. The BSE Sensex rose 54.95 points to close at 18774.24, after a 526 points fall in previous session. The NSE Nifty gained 11.75 points to finish at 5667.65.
Shares of Infosys, Bharti Airtel, Dr Reddys Labs and Maruti Suzuki rallied more than 2 percent.
Oil and Natural Gas Corporation (ONGC) shares rose 2.56 percent, after Deutsche Bank recommended buying the stock with a target price of Rs 395. Finance minister P Chidambaram after the CCEA meeting, said the cabinet would take up gas price issue in CCEA next week.
So, here are the stocks that are likely to be in focus next week.
Co-Chaired by National Association of Manufacturers (NAM) and the US Chamber of Commerce's Global Intellectual Property Center (GIPC), AFTI represents top American business and advocacy groups. It was formed early this week.
"The overwhelming bipartisan support from Congress pressing for action to stop India's unfair and damaging practices shows the scope and impact on American businesses and jobs," said NAM Vice President of International Economic
Affairs Linda Dempsey. "Our hope is that Secretary Kerry can engage India's leaders at the highest levels and urge them to put an end to these discriminatory practices," Dempsey said.
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"India's deteriorating intellectual property system is a detriment to economic growth, future innovation and competitiveness-for both India and the global economy," said GIPC executive vice president Mark Elliot. "The bipartisan support of more than 200 members of the House and Senate rings loud that Indian intellectual property practices cannot stand," he said.
In nearly half a dozen separate letters, more than 200 members of the House of Representatives and 42 influential Senators expressing concerns with India's discriminatory trade and intellectual property practices urged US President Barack Obama and Secretary of State John Kerry to take immediate action
to address them. The Alliance for Fair Trade with India was launched earlier this week by 15 multi-industry business groups to work with the Administration and members of Congress in pursuing public policy options that help create a level playing field for US exporters and innovative companies operating in India.
Jun 22, 2013, 05.07 PM IST
At the International Festival of Creativity, popularly known as the Cannes Lions festival, awards for 12 of the 16 categories have been announced so far and the Indian Lion haul has already reached 32, making this year the country's best performance at Cannes.
Like this story, share it with millions of investors on M3
India bags 32 awards at Cannes; best performance yet
At the International Festival of Creativity, popularly known as the Cannes Lions festival, awards for 12 of the 16 categories have been announced so far and the Indian Lion haul has already reached 32, making this year the country's best performance at Cannes.
Like this story, share it with millions of investors on M3
India bags 32 awards at Cannes; best performance yet
At the International Festival of Creativity, popularly known as the Cannes Lions festival, awards for 12 of the 16 categories have been announced so far and the Indian Lion haul has already reached 32, making this year the country's best performance at Cannes.
At the International Festival of Creativity, popularly known as the Cannes Lions festival, awards for 12 of the 16 categories have been announced so far and the Indian Lion haul has already reached 32, making this year the country's best performance at Cannes.
Mumbai's property market remains subdued. High prices continue to dampen buyer sentiment. Jones Lang LaSalle is particularly bullish on the western suburbs and Navi Mumbai. It also advises buyers to hold on to purchases for now.
Rohan Sharma, Senior Manager Research, at Jones Lang LaSalle India says, "For a buyer it might make sense for him to see if the continued pressure on developers on unsold inventory makes them come down on prices. That trend has not been seen. But increasing pressure may lead to a situation where they might be able to get better. Schemes are being introduced in which they can enter into the market. So, they might get favourable payment terms and they might want to hold on for a minute and then enter the market."
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Mumbai's loss is often seen as Pune's gain. With the average price being less than Rs 5,000 a square feet Jones Lang LaSalle is bullish on Pune as an investment option.
"We have locations like Wakad and Aundh towards western side and Hadapsar which are doing well. However, they are still yet to pick up pace on the overall level of development. So, prices may not move up very quickly", adds Sharma.
New Delhi's builder flats have also witnessed a slowdown. Builders in Defence Colony and Panchsheel Park have been finding it difficult to sell independent floors but still don't want to budge on prices.
These flats are being viewed as too expensive and buyers have a plethora of options in the suburbs of Gurgaon and Noida with bigger specks and plenty of amenities.
"In terms of investment activity the Dwarka Expressway is seeing a lot of launches and good traction. There was a lot of end-user activity in this part of Gurgaon. Now, price points have increased, projects are being offered with better specifications. So, investor activity is also happening here. However, there are situations where a project priced at Rs 6500 a square foot in the primary market from a developer an investor is willing to sell-off at around Rs 5500-5600 a square feet.
Bangalore has seen many launches off-late. Jones Lang LaSalle says prices as well as rents have increased marginally since April. It expects rents for residential properties to continue to head north.
Sharma says, "Hebbal Flyover, in a radius of 3-4 kilometers, there is a good amount of residential activity happening. There is the North-East quadrant which we talk about Bangalore and where most of the residential launches and sales are happening."
And in Chennai Old Mahabalipuram Road (OMR) continues to be the hotspot for new launches. However a few high-end launches in the City Centre, where there is little available land, have been witnessed.
Overall Chennai is a stable market with no major movement expected in prices.
"Prices are looking stable in Chennai and they are merging corridors. They will take a while and this is a slightly slower market with respect to overall sales. So, entering today or maybe three, four months down the line would not make much of a difference on pricing", adds Sharma.
Prices in Kolkata have remained steady. It is not easy to get a home in Central Kolkata as the concept of apartment complexes is still developing. All the action though seems to be at Eastern Metropolitan (EM) bypass and Rajarhat.
Sharma says, "EM Bypass has projects available at higher end segment. They can go as high as Rs 14,000-15,000 a square feet and prices at Rs 7,000-8,000. So, a larger part it is catering to the upper-mid to a slightly luxury segment kind of profile. Rajarhat is slightly on the lower side. It is more an affordable location. Prices are typically between Rs 3,000-5,000 a square feet."
He also focused on sticking to the basics which becomes the thumb rule while investing. He cited the investment decision examples from Jhunjhunwala for whom he works with and trades for.
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Suri said that he learnt that the important part of investment strategy was to live and work with the rules of investment and do adequate research before any such decision. "Using price to earnings (PE), discounted cash flow (DCF) are all semantics. The important part is the valuations", he added.
He called trading as a very momentum-based activity. On one evening, a trader might be bullish on the market and then sell of everything the next morning. That is the mind of the trader; an ability to turn on a dime based on price, he said.
Speaking on portfolio management, he said that the common mistake done by everyone was to get confused with advices and speculations. He cited examples on how portfolios are influenced by rumours, insider information.
Once the price of such stocks comes down, then one goes back to valuations and basics and it (the stock) becomes a part of the long-term portfolio, he said. That keeps on adding to the portfolio and eventually ends up being one which is down 70-90 percent, he added.
Very few people really work that hard or are that oriented towards investment. Most people just try to play momentum based on what somebody has told you and it becomes a long term portfolio.
