Sensex blasts past 13K

Benchmark stock indices vaulted to new highs on Monday, driven by a heady cocktail of strong corporate earnings, a rapidly growing economy and relatively stable crude oil prices.

After the vacations of Diwali and Eid the market is again at its full fledge. Sensex finally crossed the psychological mark of 13,000.

The rise in the market is due to the positive result of most of the company in their second quarter result. The economy is growing and the government is also stable. So there is no threat to the market.

But the rise in sensex is not reflected in mid-cap stocks and small cap stocks. So the Sensex is not showing the actual picture of the market. But market is expecting a boom in mid cap stocks.

There has not been a correction in the market for a long time. So a huge correction is due to the market. It is one of the reasons which is keeping the retail investors away from the market. The retail investors are cautious as they have incurred loss when the market crashed in May of this year.

The present rise in the market is due to increase in foreign funds which stood at $6.3. It is a 38% rise in 2006. It has increase liquidity in the market. It is the right time for retail investor to sell their stocks rather then invest further.

Hero Honda to focus on 100-cc segment

With an eye on volumes to arrest erosion in crucial market share, Hero Honda has decided to strengthen presence in the 100-cc segment where it will launch new bikes.

Hero Honda is the market leader in the two wheeler market in India. It is the highest seller of bike in the world. But it is loosing its market share to Bajaj Auto. The two-wheeler market has become duopoly. Majority of the market is covered by these two companies.

Hero Honda is known for its quality bikes with good mileage. Bajaj Auto which was earlier manufacturing only scooters and was market leader in that segment has shifted itself from that segment to two-wheeler auto. Pulsar becomes its key product which helped it to grab the market in the segment where Hero Honda has no presence.

Bajaj is competing with very low profit and selling its bike at a very competitive price. It is trying to take away the sells of Hero Honda completely with the price advantage. Hero Honda has decided to face the challenge by Bajaj Auto by launching new bikes in the 100-cc segment which is the entry level. It will launch these bikes at competitive price.

But in a recent interview in Fortune Asia Rajiv Bajaj said that they are looking at the future market of India as 125-cc bike. When Bajaj is looking at the future of the two wheeler market Hero Honda is going back to the entry level. It is known to everyone that Indian consumers are price conscious. So only time will say that who wins the present or the future of this segment.

Reliance Fresh opens

Reliance Retail, the Rs. 25,000-crore India’s most ambitious retail venture, will launch its operations with the first set of pilot stores in Hyderabad’s up market Banjara Hills on Friday.


The wait for the Reliance retail store to open is going to get over with the opening of its first retail store in Hyderabad. Reliance has started with food item because it was already in this business. It was a supplier fruits as well as exporting them.

This is going to help the economy. I am talking not only in the sense of organized business which is going to increase the revenue of the government. But also in India most of the perishable goods are not properly taken care. The result is the farmers have to bear the loss as they can not sell it in time or the goods are not in saleable conditions. With the entry of organized sector the wastage of perishable is definitely going to decease.

This will not only bring revenue to the government and the retail store but the customer will also be benefited. If the fruits are taken care properly, wastage will be low. So there will be more supply of the fruits. Then it will reduce the price of the fruits. In one short this is going to pay everyone.

Reliance is coming up with its private label i.e. Reliance Select spread across grocery brands. In India all the existing retail stores have their private labels. It will help Reliance to sell its own product under this brand. As reliance itself is a big brand it will help to get the customer confidence on their product.

In India the majority of the sells is from the grocery items in retail sector. So retailers can not ignore this segment though it is less profitable for them. They are keeping grocery items in order to increase the footfall in their store. This is a good strategy to attract customers to visit to your store. This may be one of the reasons behind Reliance opening first retail store which will sell the grocery items only.

India and the global economy

If we could rise to the challenges and stay on the path of sound economic policies and fiscal prudence, the repositioning of India in the global order would be faster than what has been predicted.
P. Chidambaram

India as of now is emerging as a strong economy with GDP growth rate of more than 8%.
India is becoming the favorite destination for FDI investment. The dependence on agriculture is decreasing year on year basis. Now the share of agriculture in GDP has decreased to 19.9% in the year 2005-06.

The manufacturing sector is on a boom. So our growth is not solely dependent on the service sector. Earlier our economy was dependent on the domestic consumption. Now a lot of investment is taking place and we are exporting goods to other countries.

Recent statistics shows that India’s share of global GDP in Purchasing Power Parity terms was 4th highest with 5.9% in 2005. In the 11th five year plan the targeted GDP growth is 9%. Now we are looking for achieving more as our economy has become strong to grab this opportunity.

Our economy has become strong to resist the effects of shocks. The share market fell by around 30 percent in May. Now with in five months it has regained the position of May and it is still doing well. Indian companies are in expansion phase. They are expanding themselves to the developed countries. They are competing with the world class companies in US and European market.

These factors of development have to be sustained in order to make India a developed country. Because we have a dark side to our development as well. Though our IT sector is one of the best in the world the literacy rate is 72 percent which is not considered good. We have to be cent percent literate. India has the highest number of population below poverty line. The disease like AIDS is increasing in our country. We have to control it in order to make our people healthy.

Source: Economic Times

Reliance Cola

Coca-Cola India and Pepsi are all set to face a new competitior. And it’s non other than Reliance. Mukesh Ambani’s Reliance retail plans to launch its own cola which will be retailed through its supermarkets across the country.



The brands owned by the retailers are known as private brands. Reliance has plans to introduce private brand across a range of products. It will enable to sell the product at a cheaper rate. Worldwide the share of private label is 17% in FMCG sector.

Reliance is betting on large customer base. It is going to open its retail store across the whole country. So this strategy adopted by the company is definitely going to work for it if it is selling the right product. It is said that it is in talk with some Chinese company. If the news is correct then it is following the strategy of major retailers like Wal-Mart and Tesco. Many of their products are manufactured in countries like China and India and sold under the private brands. It enables them to sell the product at comparatively lower price.


The existing companies like Coca-Cola and Pepsi will be having tough time. They are already loosing their market because of the political issue of pesticide. This will be another attack to these MNCs.

There is a huge potential in cold drinks market in India. The per capita consumption in India is between 5 to 6 which is very less compared to Chinas per capita consumption of around 20.

Recently it was found that the local brands are doing well in the Retail stores in terms of their sales. So the Reatail chain is a place where the customer has wide range of choice to buy a product in the same category. If the local brands can compete with the established brands then Reliance can have win-win situation.

The present retail chains like Food-World of RPG and Big-Bazar of Future Group (Pentaloon) have their private brands across food products such as Jam, Sauces, Pickles, Ghee, Atta etc. These private brands are preferred because they are of lesser price then the products from HLL and P&G etc. As the Indian consumers are price conscious they choose these products for a trial. If the product is good it gets the preference of the customer.

With the emergence of the private brands the competition will increase. This is definitely good for the customers as they will get quality product at lesser price.

Source: Economic Times

FDI commitment to IT, telecom

With companies like Intel, Microsoft, Cisco, Nokia and Ericsson outlining ambitious expansion plans for India, the FDI commitment in the telecom and IT sector combined have touched Rs. 80,000 crore over the last 20 months.

India has become preferred destination for investment in IT and Telecom sector. Most of the FDI investment is taking place in this two sector.

The companies investing are the leader in their respective field. This is a good sign for India as it is able to attract these world class companies to invest in.

The investment is taking place not only in the expansion of their existing plant but also in the R&D activity and investment in Indian companies. So these companies are in going to improve these sectors of India.

The investment is R&D is a good sign for India. This means that the new product developed by these companies will have contribution from India. India is becoming the favorite destination for any activity related to IT. The reason is not only the work at a lower price but also the quality work is being done in India.

But India has to make stringent rule in its emerging sector. One of the major FDI is BPO and the data theft in BPO sector is increasing. The government has to maintain the credibility of the Indian firms as well as the country. So stringent rules are needed to make the investment a continuous one.

India Inc gains zip in Q2

India Inc. is on a roll. The result of 450 companies’ show a combined growth rates of 30% and 36% on net sales and net profits basis for the quarter ended September 2006 compared with the previous year.

This shows the strong economic condition of the country as the growth is seen in all sector. This is going to make a great impact on the stock market. The stock market has achieved its highest point ever after the result of IT firms like Infosys and TCS.

This shows that the growth of Indian companies is not only in IT sectors but in various other sectors such as Oil, cement etc. The growth is the result of increasing export as well as increasing domestic demand. India is now in the process of developing its infrastructure. So the growth in related industries like cement and steel is going to sustain. The GDP growth in 1st quarter has reached to 8.9% above the target of 8%. This is because of the good performance of companies across all industries.

Videcon signs preliminary deal to buy Daweoo

Videocon is looking for expanding globally. It is quite clear from its punch line “The Indian Multinational”. In India the consumer spending on consumer durables is second highest after the expenditure on food. In India Videocon has market share of 17% in consumer durables where as the South Korean companies LG and Samsung jointly have a market share over 40 percent. These South Korean players are growing at higher pace and they have made a good brand of themselves.

If we see the consumer durable market in India the players are reducing. The competition is decreasing as players like BPL, Onida and Philips are loosing market share. Daweoo has a better brand image in India and world over. So this is a great advantage for Videocon. It can market its product under the Daweoo brand.

South Koreans companies are competitive. So the acquisition of Daweoo makes Videocon more competitive to grab the new markets. Last year it has acquired the Electrolux. Now the company has global brands under its arm. This is going to help the company expand globally with the help of these global brands.

MFs worry over capital protection plans

This is a recent scheme allowed by SEBI to be launched by the Mutual Funds. This fund predominantly invests in high quality debt. It also invests in equities in-order to increase the return for the investor. With investment in high quality debt the return of this fund is expected to be around 7 to 8 percent. So this fund is protecting investors fund from the inflation. The return is not high.

Another issue with this fund is that it is a close ended fund. So there is lock in period for the investor for 3 years to 5 years. The return given is equal to fix deposits provided by banks. So we can say the investor is getting the same return. But the banks are now providing innovative products like fix deposit of around 1 year with interest rate of around 8 percent. So the time horizon can attract customers to invest in banks fix deposit rather than the Capital Protection Plans. Mutual funds sell their products through various channels. Bank is one of them and banks contribute the highest in terms of amount of investment. So the success of this product lies with the co-operation from the banks.

Banks are promoting their FDs in-order to increase the deposit. Because the growth of credit (30%) is more than the growth of deposits (22%). So it is unlikely that the bank will suggest capital protection fund instead of their FDs. Banks are promoting these FDs vary aggressively through advertisement in print media and television. In India investors the investment in stock is just 4 percent of savings. Whereas it is above 40 percent in banks. Generally many are ignorant about mutual fund and the market crash of May has made a bad impact on the investors. Investors have more trust on banks and also public sector banks rather then any other financial institutions.

In present scenario it seems that this product is not going to succeed.

Sources: Economic Times

All Steeled: Corus Cool To Tata Takeover

This is the biggest takeover by any Indian company ever. This move will make Tata Steel the 5th largest steel maker in the world. So it will make Tata Steel a global brand. This is a good sign for Indian MNCs. Indian companies are now accepted by the Western Countries as they have proved themselves as the qualified and efficient companies.Another reason for the success of Indian companies is there strong Corporate Governance. In Corus bid Tata had to compete with Russian companies. The strong corporate governance of the company fetches the bid to Tata.

This will give confidence to other companies who are looking for acquisition in Europe. Indian Pharma companies are expanding themselves in Europe. This is going to increase the trade between India and Europe.Now China is the highest buyer of steel in the world because of the infrastructure development in the country. So the next is the turn of India. So it is better for economic point of view that Indian companies equip themselves to fulfill the demand going to be created in the near future.

This is the result of globalization. As we are gaining from the effect of globalization we should open to loose from globalization. We may have sell some of our companies to foreigners if their bid is attractive and they are efficient. In the era globalization we can not stop anyone to enter and operate in our country. So when we are cheering for the successful acquisition by Indian company, we have to prepare ourselves not to oppose in the case of acquisition of Indian company.

Maruti plans to expand in overseas market

Maruti is the largest car maker of the country. It has more than 50 percent market share in the Indian market. It is also in the business of export of its car. The Indian market is of more than 1 million cars per year. This market is growing at a good pace. But still the car manufacturers are expanding themselves abroad. In India the car market is dominated by small car manufacturers. Now the trend in the world is also changing towards small car. It is because of increasing price of crude oil. So the consumers are looking for fuel efficient cars.

Europe constituent major part of the export of Maruti. This year the export to Europe has declined. But export to other countries has seen tremendous growth. This is because of the diversification strategy of the company. The company don’t want to concentrate in one country alone. This will diversify its business and the company can become global brand.Hyundai is also one of the major exporters of cars from India. Its major market is Europe. Now with this move the revenue will come from various countries. In order to compete with Hyundai this is a good strategy to focus countries beside Europe.The move of diversifying its export is good for the economy as well. The two wheelers major like Hero Honda and Bajaj are also focusing on exports. So the export of auto sector from India is going to increase.

Gujrat Co-operative Banks

“Proudly Cooperative is the new brand initiative that the Gujrat State Urban Cooperative Banks Federation wants to undertake for the cooperative banking sector in the state.”

Co-operative Banks in Gujrat have come across many bad situations like the scam of Ketan Parekh and the collapse of some of the co-operative banks. In order to regain the confidence of the investors this is a good initiative taken by the federation to brand them. Now a day the new generation banks are branding themselves and getting more and more customers. So in order to compete with PSUs which are having large customer base and the big brand private banks the co-operative banks have to brand themselves. It will help them to retain the existing customers and attract new customers.

By 2009 the foreign banks will be permitted to operate in India. So the competition in this sector is going to increase. This move taken by the federation is a strategic. The federation is competing not only for the present scenario but also for the future. Indian banking sector is in mergers and acquisition spree. In order to fight with the giant foreign banks the banks are trying to expand them as quick as possible. So they are going for mergers and acquisition. This branding will help the cooperative banks to get a fair price if they are merged or acquired by any other bank.

Mega Prize for Micro banker

First of all I would say an economist got the Nobel Peace Prize. This is a strange thing but it is the reality. Mr. Muhammad Yunus with his hard work of three decades has proved to the world that poor women are trust worthy. Credit can be given to these class of people. Muhammad Yunus has given the model for the micro finance to the world. Everywhere in the world Grameen bank model is being appreciated and followed. The major beneficiaries of the micro finance are the poor and the needy people. This model helps any economy to upgrade the people below poverty line. It gives credit for self employment of the person. So the entrepreneurial activities of the country increase. This is one of the factors of production. So any country will like to eradicate poverty in a way which will not only give employment to the poor but also the standard of living will increase. The microfinance concept is criticized because of the higher interest rate charged by them. But the financers do not take any security to give credit. So it is right from the context of the financer in order to reduce their risk. Again here one can argue that the interest rate charged in credit card is more then what the rate charged in micro finance. Micro finance is an alternative for the poor to the moneylender. Money lender charges higher rate and usually take security for the credits. Mr. Muhammad Yunus has contributed a great concept to the world for which he deserves the Nobel Prize be it in Peace.

Film Industry running for Insurance Cover

The first movie to be insured in India was Taal. The music of this movie was insured by United Insurance in 1998. Since then United Insurance has insured more than 22 movies (22 by 2002). This is a new market for the insurers. Again the movies being insured are the top banner movies like from Yahs Raj Films, Priyadarshan Films etc. So the risk is low and the movies are of higher budget. Currently around 10 percent of the movies are insured. The reason behind it is that the financers are insisting on the insurance to cover their risk. Again incidents like fire on stage are another reason for the producers to go for insurance. The insurance companies are not restricting them only to Hindi movies. Now they are approached by the other movie industry like Tamil industry. There is a huge potential in this market for the insurers. Again the benefit for them is that the time period of the insurance is short. With the increase in popularity of TV serials another market can be created for the insurers.
Source: Economic Times

Indian Railways- Path Breaking PPP initiatives

According to 11th five year plan Indian Railway requires Rs. 346,000 crore. Of this Rs. 150000- Rs. 200000 Crore is expected to come from PPP. But presently of the 90 PPP projects taking place in the transport and urban sectors railway accounts for only 1%. Indian Railway was considered white elephant in one of the committee established to find solution for heavy losses for the Indian Railway. This year railway has become profitable with increasing traffic and increase in passenger. Indian railway is the highest employer in the world. The productivity of its employee is increasing these days. The factors responsible for the loss of this organization are becoming the key factor for its success. Now this is the time for Railway to go for PPP and improve its performance. Now railway is heaving stiff competition from the Low Cost Airlines. Many countries such as
Latin America and Australia have moved most railway activity to private provision.
India is following China’s development model in many of the areas to boost the growth. The best example is free trade zones (SEZ). China also allows Private participation in railway. Indian Railway need to constantly innovate and reinvent itself.

BSE: Can it regain its position?

The oldest stock exchange in Asia, the 5th largest in terms of volume of trade and the highest number of companies listed. All this credit goes to Bombay Stock Exchange. With all the above credit it is the second largest stock exchange in India behind NSE ( National Stock Exchange of India). NSE is a young generation stock exchange which has surpassed the most experienced stock exchange of Asia with its technological framework. With the introduction of NSE the regional stock exchanges have lost their business. This stock exchange brought revolution in the trade market. The investment being proceed online removed the outcry system. The arbitration is not possible as there is not much difference in trade price between the two major stock exchange of India.

Now BSE is going to be public with the guidelines of SEBI to be demutualised. The news of NYSE taking 26% stake in BSE has not been confirmed yet. But if this deal is succeedeed then it will be a great advantage for BSE. Now it is loosing its business to NSE. In India the transaction is shifting to more and more toward derivative then cash market. The derivative transaction is more then 4 times then cash transaction. Again 98% of the derivative transaction takes place in NSE. So if NYSE becomes a majority stake holder in BSE it will help the stock exchange to frame the strategy to regain its position of number one stock exchange in India. For this what BSE needs is better technological infrastructure and transparency in the trade.

Only time will show who wins the battle in the emerging market like India.