Punch for India, pat for markets
Morgan lowers India’s weight
Infosys net spurts 31% in 2nd quarter
Bharti gets licences for Net service
Air travel to be costlier
Bengal wants pvt parties to take over IISCO
Kinetic rides auto start dream
CATS takes the US cue, to hand out pink slips
Foreign Exchange, Bullion, Stock Indices

 
 
PUNCH FOR INDIA, PAT FOR MARKETS 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, Oct. 10: 

Sensex leaps 102 points, rupee hardens

Stock markets overcame war fears and slowdown jitters today with a 102.18-point sensex surge fuelled by Lever’s bonus announcement and a sterling performance by infotech bellwether Infosys Technologies. The biggest percentage gain in the key market barometer since the September 11 attacks in the US incident, is expected to hold over the next few days, provided there are no big upsets.

The rebound was triggered by Lever’s announcement on Tuesday that it was considering a bonus issue of debentures. The FMCG giant, a make-or-break scrip in the sensex, ended a 10 barren years without a bonus and perked up the market. The move is seen as a bonanza not only for parent Uniliver, but for its legions of shareholders too.

Another booster came from software star Infosys. One of the country’s fastest-growing infotech companies, it unwrapped better-than-expected second quarter numbers and, more important, said it was on course to meet earnings estimates for the next three months. The shine rubbed off on other technology shares like NIIT and Satyam Computers.

The sensex opened at 2836.74 and rallied sharply, rising past the 2,900-mark. It closed at 2896.60 against Tuesday’s finish of 2794.42, scoring a gain of 102.18 points or 3.66 per cent.

Among the big draws of the day were NIIT, which jumped by 10 per cent, Satyam Computers ( up 9 per cent), ITC (up 8 per cent) and Global Tele-systems (up 14 per cent).

Lever stole the show, notching up a combined volume of 12 million shares on the BSE and NSE. The stock ended at a 52-week high and a gain of Rs 18.85 (8 per cent over its previous close) at Rs 230.25. Reliance Industries was also one of the day’s darlings, vaulting on reports that its weightage in the recast MSCI index has gone up.

Brokers are of the opinion that the underlying trend will remain cautiously bullish, but its course will over the next few days will depend on the fresh crop of second-quarter figures and the profit forecasts of software majors like Wipro and Satyam Computers.

Rupee edges up

The rupee ended higher at 48.04/05 against the dollar following adequate supply of greenbacks in the inter-bank foreign exchange market. Opening at 48.11/12, the currency hardened by a sharp 8 paise over its previous close.

Maruti Udyog was one of the major corporate clients to have sold dollars. Unconfirmed reports in the market put the amount at $ 35 million.

Analysts say the rupee is likely to remain stable in the immediate term — it could even appreciate by 5 paise over its current levels — if there are no big setbacks to the country’s economy from international events.

Gold weaker

Gold extended its losses today following a weak trend in the overseas markets. Standard gold dropped by Rs 70 to Rs 4750 (per 10 gms) from its previous level of Rs 4820.

Ten-tola gold bar (.999 purity) also moved down further to Rs 55,700 from Rs 56,550 previously. Silver spot (.999 fineness) also fell by Rs 165 to Rs 7750 from Rs 7915.

   

 
 
MORGAN LOWERS INDIA’S WEIGHT 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, Oct. 10: 
Morgan Stanley Capital International, the global investment banker which tracks stock markets world-wide and compiles indices that fund managers across the world use as a beacon while shovelling funds, has pruned India’s weightage in the emerging markets Asia-Pacific index by 0.93 per cent.

The fresh round of revisions in the MSCI emerging markets index show that while the weightage of stock indices of South Korea, South Africa and China has gone up, India’s has taken the hardest knock. The country figures on the top of the chart of nations considered less favourable for investments now. Malaysia is the second, with 0.90 per cent being lopped off its weightage.

The changes will take effect from the close of business on November 30. MSCI said it is the first phase of its adjustments in investment indices to reflect the number of shares in each market available for trading — something called “free float” in stock parlance.

There is something redeeming in the way MSCI’s emerging markets index has been revamped: a handful of Indian companies have seen their stocks move up on the weightage ladder, and the primary consideration influencing the decision has been their liquidity.

Reliance Industries, NIIT and Global Tele-Systems are the three companies that have gained more currency in the Morgan Stanley investment basket after the revision. Reliance’s weightage has increased from 0.40 per cent to 0.49 percent, NIIT’s from 0.40 per cent to 0.45 and Global Tele-Systems from 0.40 per cent to 0.49 per cent.

Within the developed markets, the MSCI USA Index will increase to 53.4 per cent from 50.7 per cent of ACWI Free and its UK Index will increase to 96.2 per cent. The French, German and Japanese indices will see the sharpest declines in the shake-up of ACWI Free. Many analysts said the changes are likely to prompt fund managers to rework their investment strategies.

Unlike India, Brazil has benefited the most in the emerging markets (Latin America). Latin America, as a region, will be dealt the hardest blow when country weightages are revised in November and May next year.

MSCI has consulted more than 125 investors, government and other interested parties before it made its changes. Already stocks like Reliance Inds and Reliance Petroleum rose sharply on the back of the news that MSCI has given credence to liquidity as a single most important factor for apportioning weightage.

   

 
 
INFOSYS NET SPURTS 31% IN 2ND QUARTER 
 
 
OUR BUREAUX
 
Oct. 10: 
At a time when frustration and anxiety is the order of the day, Infosys Technologies today lent a smile to the financial markets of the country by announcing a handsome 30.87 per cent rise in net profit at Rs 201.56 crore for the quarter ended September. In the comparable quarter last year, the software major had notched up a net profit of Rs 154.01 crore.

The Bombay Stock Exchange was quick to acknowledge the company’s robust result and the Infosys scrip which closed at Rs 2415.40 yesterday surged 6.6 per cent to day’s high of Rs 2,575 before closing at Rs 2512.60.

Infosys, however, took note of the escalating tension over Afghanistan which might impact its business in the coming months. The rise in net profit by 30.87 per cent compared with the corresponding period last year is the highest in any quarter. Quarter-on-quarter net profit has grown by 6.1 per cent, which beat analysts’ expectations.

The Nasdaq-listed company’s income for the reporting quarter rose to Rs 650.13 crore, an increase of 45.74 per cent over the June-September figure of last year. On a sequential basis, the income growth has been an identical 6.1 per cent.

The Infosys board declared an interim dividend of Rs 7.50 per share (par value Rs 5 each) compared with Rs 2.50 for the corresponding period last year. Basic earning per share has gone up to Rs 30.47 from Rs 23.28 per cent in the corresponding period last fiscal. The company said it is on course to meet revenue and earning targets for the third quarter and the current fiscal.

“At this point in time, we reiterate our estimates of revenues and earnings per share for the quarter ending December 31, 2001 and the year ending March 31, 2002,” chairman and CEO, N.R. Narayana Murthy, said.

Speaking at a news conference after the board meeting, he, however, said, “there may be a business impact due to the extraordinary situation arising out of the escalating tensions in Afghanistan.”

Numbers for the second quarter have exceeded analysts’ expectations, who had projected a 2.2 per cent sequential rise in revenues and a slight earnings decline of 0.5 per cent.

Both volume and billing rates increased by 2.6 per cent last quarter even in the face of the worldwide downturn in infotech spending, Infosys said.

New clients

Infosys has acquired 28 new clients in the September quarter, including ING Group, National Health Service, JDS Uniphase and Vivendi Water Systems, compared with 26 customers in the previous three months. As many as 11 clients were added after the September 11 terrorist strikes in the US.

According to Nilekani, the net addition of employees during the quarter was 607 compared with 116 during the quarter ending June 30 this year. Gross addition was 833, including 92 lateral hires.

   

 
 
BHARTI GETS LICENCES FOR NET SERVICE 
 
 
FROM M RAJENDRAN
 
New Delhi, Oct. 10: 
The Bharti group today signed licences to provide category A internet services. The group will provide this service through three subsidiaries — Bharti Aquanet, Bharti Telesonic and Bharti Cellular.

With this, the group now has four licences to provide internet services. Bharti is already providing internet services under the brand name Mantra Online.

“There were five applications from the group but only three companies signed the licences. They will have to launch the services within a year as per the licence conditions,” said a source in the communications ministry.

“The company officials have promised to launch the services soon. The decision will be taken after the company top brass meets. It will be a challenge to compete against each other,” he added:

Bharti executives were not available for comment.Mantra Online is the first private internet service provider with its own international gateway.

The company has set up two gateways in Delhi and Pune at a cost of about Rs 25 crore. It plans to set up six more gateways in Calcutta, Chennai, Mumbai, Hyderabad, Bhopal and Bangalore.

Last year, Mantra Online tied up with Looksmart, an online search company, to create an India-specific real estate market through a web directory/search engine called www.indiaproperties.com. It also entered into an alliance with Trend Micro Inc to offer network based antivirus solutions.

   

 
 
AIR TRAVEL TO BE COSTLIER 
 
 
FROM OUR SPECIAL CORRESPONDENT
 
New Delhi, Oct. 10: 
Air-India and Indian Airlines are likely to be asked to raise fares by $ 2-3 in order to share a part of the costs of the government’s continued third party war insurance cover for their aircraft.

A high-level meeting held here has finalised an earlier decision that the government’s cover should be extended beyond the October 15 deadline. But keeping in view the government’s mounting costs, the finance ministry made it clear that airlines should chip in by charging more on their current insurance surcharge of Rs 100.

The government has already taken on third party cover of $ 500 for Indian Airlines planes and $ 1.5 billion for Air-India aircraft till October 15. The government had taken on third party insurance cover after global insurance giants slammed a $ 50 million cap on insurance payouts in the aftermath of the terror attacks in the US, which used hijacked aircraft to hit targets in Pentagon and New York.

Third party insurance cover is meant to cover damage to passengers and other property which may be damaged as a result of an accident or an attack.

The finance ministry also asked Indian Airlines to give their purchase plans so that it could release Rs 325 crore awarded to them by the Union Cabinet almost a year back. However, pleas by Air-India to give them a handout has not been accepted.

The government feels the Rs 1,000 crore that Air-India is likely to earn by selling Hotel Corporation of India can well be utilised to financially restructure the airline. It also does not want the national carrier to buy aircraft at the moment and would much rather favour leasing in, as divestment moves are likely to start afresh.

Indian Airlines officials said the domestic carrier plans to use up Rs 325 crore as margin money to buy up to 16 planes which would replace some 23 ageing aircraft.

IA wants to buy a mix of 100 seaters and 180-200 seater aircraft. The purchase to be made over five years will replace IA’s ageing fleet of Airbus 300s and Boeing 737-200s. The loss-making domestic airline is looking at Boeing 737-900s, Airbus 321 and Airbus 320s to replace the eleven 250-seater Airbus 300 planes and Boeing 737-600s, Boeing 717s and Airbus 319s to replace eleven Boeing 737-200s.

Initially, IA wants to buy 8-10 planes with options to buy more to part replace the six 118 seater Boeings 737 and eight 245 seat Airbus 300s which have turned older than 20 years next year.

Indian Airlines currently has a total fleet of 55 aircraft, with an average age of 12 years.

   

 
 
BENGAL WANTS PVT PARTIES TO TAKE OVER IISCO 
 
 
BY ANIEK PAUL
 
Calcutta, Oct. 10: 
The West Bengal government has approached private steel companies, urging them to take stake in IISCO, the ailing Steel Authority of India (SAIL) subsidiary.

While the state government continues to resist the BIFR decision to close down Iisco, it has lost hope of keeping Durgapur-based Mining and Allied Machinery Company (MAMC) afloat. “I am afraid there appears to be no hope for MAMC,” chief minister Buddhadeb Bhattacharya said.

Speaking on Iisco, Bhattacharya said: “Besides asking private companies to look into possibilities of reviving Iisco, we have written to the Prime minister seeking his assistance in keeping Iisco alive. We have written to SAIL as well.”

TyazPromExport (TPE) and the Mitsui-Broken Hill combine had in the recent past conducted due diligence exercise for IISCO.

   

 
 
KINETIC RIDES AUTO START DREAM 
 
 
FROM OUR CORRESPONDENT
 
New Delhi, Oct. 10: 
Leather jackets, faded jeans, smouldering cigarette and blazing tires—welcome to the macho world of mean machines. Throw in the leather boots and a kick-starter and the pretty picture throbs to life with a roar.

One lady—Sulajja Firodia-Motwani—plans to change all that, perhaps forever.

Firodia-Motwani, joint managing director of Kinetic Engineering Ltd, is launching the country’s first motorcycle with an auto start.

Auto start? For a mobike? The bike aficionados may well gasp, but the lady is betting that is what the world is coming to—and India can’t be far behind.

“The international trend in automoblies is shifting from manual start to automatic start—be it cars, scooters or motorcycles,” says Firodia-Motwani.

But Kinetic—which incidentally introduced the first auto start in scooters over a decade ago with mixed results, at least initially—is hedging its bets. “We have kept both options. The biker can use the kick-start, but he will also have the option of using the automatic start,” says Firodia-Motwani who virtually runs the show at the Pune-based company.

On Wednesday, Kinetic launched its GF 125 which is coming straight out of Korean mobike maker Hyosung’s stable. The performance bike will be pitched against TVS Suzuki’s Fiero and Hero Honda’s CBZ.

The GF 125, whose 150 cc variant is also scheduled to be launched soon, is also the pioneer in 4-valve motorcycles which ensures a smoother ride.

The motorcycle segment is the fastest growing segment in the automobile industry.

“With the Challenger launch followed by this 125 cc motorcycle, we aim to capture a 15 per cent market share in the motorcycle segment over the next three years. In scooters, we already have a 20 per cent market share,” Firodia-Motwani added.

It may have come up with the auto start for mobikes, but Kinetic is no wimp: it plans to launch one new bike (or a variant of an existing model) every quarter over the next 12 months.

“We need 6-8 models to reach our targeted market share. Hence, the aggressive launch. Although the market is not in great shape right now and sales are down, we hope to be ready with new offering by the time the brand gets established,” says Firodia-Motwani.

   

 
 
CATS TAKES THE US CUE, TO HAND OUT PINK SLIPS 
 
 
BY ALOKANANDA GHOSH
 
Calcutta, Oct. 10: 
The war drums may be beating in distant Afghanistan, but they are resonating loud and clear in the software industry here. The sector, yet to recover from the impact of the dotcom bust, is now gasping for breath in the aftermath of the September 11 terrorist attacks in the US.

The Calcutta-based Computer Associates TCG Software (CATS) has decided to cut payroll by at least 10 per cent, to stay afloat in the face of the unprecedented slump.

“The US economic slump and the impact of the September 11 terrorist attacks have changed the global economic scenario. We want to align our manpower strength and skills to suit present business needs,” chief executive officer Rajeev Goswami said.

CATS, which is a 51:49 joint venture between Computer Associates and TCG Software, however is not alone in adopting the pink slip route for survival.

Industry sources say several IT firms are drastically pruning staff strength because of the down turn in demand.

“Most city-based software companies have major business interests in North America, which have taken a severe beating after the September 11 attacks on the US,” they added.

CATS, however, is the first to have come out in the open with its manpower reduction exercise.

Earlier, Computer Associates, which holds a 51 per cent stake in CATS, resorted to a mass firing of staff in the US.

Sources said several companies even failed to pay employees their dues when handing out pink slips, due to the acute financial crunch, but CATS says it is not in such a bad shape.

“The information technology sector has been in recession for the past few months especially after the dotcom bust. But now the situation is going from bad to worse,” industry sources said.

Goswami said the company was also open to ‘rehiring’ those who are being be retrenched now, once business looks up. The company has ceased all recruitments from the beginning of this year.

Meanwhile, with markets in the US unlikely to recover soon, CATS is also exploring business opportunities in south east Asia and Europe.

   

 
 
FOREIGN EXCHANGE, BULLION, STOCK INDICES 
 
 
 
 

Foreign Exchange

US $1	Rs. 48.05	HK $1	Rs.  6.10*
UK £1	Rs. 69.87	SW Fr 1	Rs. 29.20*
Euro	Rs. 43.85	Sing $1	Rs. 26.30*
Yen 100	Rs. 39.90	Aus $1	Rs. 23.75*
*SBI TC buying rates; others are forex market closing rates

Bullion

Calcutta			Bombay

Gold Std (10gm)	Rs. 4845	Gold Std(10 gm)	Rs. 4750
Gold 22 carat	Rs. 4575	Gold 22 carat	NA
Silver bar (Kg)	Rs. 7700	Silver (Kg)	Rs. 7750
Silver portion	Rs. 7800	Silver portion	NA

Stock Indices

Sensex		2896.6		+102.18
BSE-100		1332.46		+ 36.60
S&P CNX Nifty	 940.35		+ 27.65
Calcutta	  99.66		+  4.04
Skindia GDR	 420.75		+  0.07
   
 

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