| LTRO-2 to power markets |
| Cheap funding for European banks from ECB may see some of the liquidity flowing to emerging markets |
Malini Bhupta / Mumbai Mar 03, 2012, 00:22 IST Earlier this week, the European Central Bank (ECB) announced that 800 banks had borrowed 530 billion euro under its second tranche of long-term refinancing option (LTRO). The ECB opened its long-term refinance window for the first time in December 2011, when European banks were severely cash-strapped and they did not have the required funds to repay maturing debts. As the risk of peripheral European countries defaulting zoomed, some action was required to prevent a banking crisis in the euro zone. The ECB loosened its purse strings through the LTRO, which enabled banks to raise funds for three years at one per cent.
So, why is LTRO important for emerging markets like India? For starters, European banks are flush with funds and after an infusion of one trillion euro, they will not need capital till 2014. This means these banks will not sell assets (especially Asian assets) under stress. But more importantly, some of the liquidity released by the ECB, has found its way into emerging markets like India, pushing up asset prices.
Barclays Capital expects the medium-term effect of LTRO-2 on emerging market (EM) asset prices to be positive. “However, the risk of profit-taking in the near-term cannot be fully discarded. Our analysis suggests that the historical initial reaction of EM asset prices to non-conventional monetary measures has been fairly muted (with some profit-taking bias), but that in the following months the additional liquidity in the system finds its way to support EM asset prices.” This probably explains why the market did not fall through the week even on weak GDP and PMI numbers.
According to Kotak Institutional Equities, although Indian valuations are fair at 13.8 times earnings per share (12-month forward consensus), these liquidity-injection phases have stretched fair valuations in the past. The brokerage believes this second round of liquidity injection has exceeded its predecessor and may sustain Indian market sentiments in the near term. However, Kotak believes the signals sent by the government through the FY13 Union Budget will be critical in maintaining the positive momentum locally.
If risk appetite continues to improve, the rupee, too, could hold on to its gains. After being beaten down last year, the rupee has outperformed its regional peers year-to-date. If risk appetite continues to improve, the rupee could appreciate further. However, Barclays Capital says, weak fundamentals are likely to limit the rupee appreciation.
The first round of LTRO generally improved not only the health of European banks but also the general risk appetite. However, analysts are not very gung-ho about the second round of easing by ECB. The market is comparing both the LTROs with the two rounds of quantitative easing undertaken by the US Fed. While the first QE worked rather well, the second one did not.
Explains Edelweiss Securities: “Undoubtedly, LTRO–1 has been a phenomenal success, particularly with regard to the banking sector outlook and general risk appetite in financial markets. In fact, it is by far the most aggressive and effective step taken by EU since the onset of the debt crisis. However, it is not yet clear whether LTRO has made any material improvement in the real economy.”
THANKS TO THE NEW IDEAS TO SAVE FOR SOME TIME .....WHEN THE MARKETS ARE LOW GRAB.....WEAK HANDS TO DEEP POCKETS.....A FEW ENJOY....OFCOURSE AS ALWAYS..
THE RULE IS SIMPLE KILL ....PAINLESS WAY...
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Saturday, March 03, 2012
LONG TERM SUPPORT-LTRO WAY
Wednesday, February 29, 2012
ICONIC RESHAPE...CITI NEVER SLEEPS...
SEE SAW MOVES AT MARKETS ARE COMMON TILL THE BUDGET PRONOUNCEMENTS ARE MADE. THE BULLS CONTROL IS INTACT AS I MENTIONED IN PREVIOUS POST- RELIANCE COULD TRADE ABOVE 803 AND TOUCH ( TODAY TOUCHED 828 H-804 L). SO THE GOING GOOD TO BULLS.
NOW THE ECONOMIC CONCERNS ARE WILD ACROSS THE GLOBE, OUR INDUSTRIAL OUT PUT IS SLOWING DOWN, DAY BY DAY, MONTH AFTER MONTH, GDP TOUCHED 6.1%. FOR A BRIEF PERIOD THE BANKS MAY UNDER PERFORM BUT THE RBI MAY CUT THE RATES TO PROMOTE INVESTMENTS AT AFFORDABLE RATES.
NIFTY SHALL NOT TRADE BELOW 4300 LEVEL DURING THIS WEEK CAN OFFER GOOD GAINS IN FUTURE....
-----------------
Terri Dial, Who Helped Reshape Citigroup After 2008’s Crisis, Dies at 62
By Laurence Arnold - Feb 29, 2012 9:04 PM GMT+0530Terri Dial, whose work on the reshaping of Citigroup Inc. (C) in 2008 culminated a three-decade banking career that made her a much-watched woman in business, has died. She was 62.
She died yesterday in a hospice in Miami, Karen Kaplowitz, a friend and family spokeswoman, said. The cause of death was pancreatic cancer.
Terri Dial, late senior advisor at Citigroup Inc. Source: Citigroup Inc. via Bloomberg
In 27 years at Wells Fargo & Co. (WFC), Dial rose from teller to executive vice president and head of the San Francisco-based company’s California banks and business banking. The U.K.’s Lloyds TSB Group Plc hired her in 2005 to run its consumer banking. In 2008, as Vikram Pandit began assembling a new team to lead Citigroup from the ruins of financial crisis, he chose Dial to head its North Americanconsumer banking unit.
Forbes magazine in 2009 included Dial, at No. 73, on its annual list of the 100 most powerful women. On American Banker magazine’s 2009 list of “women to watch,” she was No. 10.
“Terri was kind of a bigger-than-life figure in banking circles,” said her friend and former colleague, Deborah Doyle McWhinney, chief operating officer of Citigroup’s Global Enterprise Payments division. “Globally she is probably one of the top five women in financial services” in the last 15 to 20 years.
Dial didn’t shy away from being seen as a role model for women aiming for the boardroom.
“Women will work themselves to death in the belief that if they do more and more, that will get them ahead, when it isn’t so,” she told the Wall Street Journal in 2004 for an article on why some women find it a struggle to advance. “They think, ‘If I do the work, my bosses will see it and reward me.’”
First Appointment
Women need to engage in self-promotion, which they are reluctant to do, she said.
“Good girls don’t advertise,” she told the Journal. “We feel dirty promoting ourselves.”
Dial was the first senior appointment by Pandit after he became chief executive officer at New York-based Citigroup in December 2007 and began developing a strategy to reshape management along regional rather than product lines.
In her 21 months as head of consumer banking in North America, and as global head of consumer strategy, Dial worked with Pandit to group the worst-performing consumer units, including the CitiFinancial personal-lending business, in a new division, Citi Holdings, for disposal.
The challenge was formidable: Two months before her March 2008 appointment, Citigroup had reported a $9.8 billion fourth- quarter loss, the biggest in its 196-year history, and the industry was still reeling from the collapse of the subprime mortgage market.
The Plan
Dial began developing a strategy to retool the North American consumer business as a so-called Bank of the Future, offering rejuvenated Internet and mobile-phone portals alongside branches, Bloomberg News reported in September 2009. She hired Michelle Peluso, the then-37-year-old former head of airline- reservation website Travelocity.com, to oversee the planning sessions.
As it turned out, the bank never announced a new consumer strategy. A proposal to shut or sell some of its 1,001 branches in the U.S. and Canada was scrapped.
Citing personal reasons, Dial stepped down in January 2010 and became a senior adviser.
Culture of Success
Dial “put together a management team that was largely new in their jobs, me included, that worked as well together as I’ve seen in a large corporation,” said McWhinney, a former president of Charles Schwab Institutional hired in March 2009 to lead personal wealth management at Citigroup. “We figured things out and supported each other, and that was the culture Terri created.”
Teresa Arlene Dial was born on Oct. 30, 1949, in Miami. She earned a bachelor’s degree in political science from Northwestern University in Evanston, Illinois, in 1971.
Working as a teller at a Wells Fargo branch in San Francisco’s Mission District, she took on the male-dominated order by successfully challenging the practice of having female staffers clean the kitchen, according to a 1999 Wall Street Journal profile.
She was selected for Wells Fargo’s management-training program, in which she met her husband, Brian Burry.
Role in Merger
As an executive vice president, a title she gained in 1989, she was responsible for loans and banking services to small business across the U.S. She was made a vice chairman in 1996. After helping carry out the 1998 merger of Wells Fargo with Norwest Corp., she retired from the company in 2001 and served on several corporate boards.
“Terri has communicated a vision of the future for our California bank and her other businesses, and motivated her team to embrace and pursue that vision with great success,” Richard Kovacevich, Wells Fargo’s then-CEO said when she left the bank.
In 2005, Eric Daniels, the first American to run London- based Lloyds, hired Dial as group executive director for U.K. consumer banking. In that role, she pushed sales of Scottish Widows insurance and savings products, to capitalize on the retirement needs of older clients, while introducing services such as instant check clearing to win younger customers.
‘Human Cyclone’
British newspapers reported that she had been known as the “human cyclone” among her Wells Fargo colleagues.
“I don’t know where the nickname came from, but it’s not a bad thing,” she told American Banker magazine. “My pace is a little bit more aggressive than probably people have been used to, and I think they just go, ‘Oh yeah, that’s right, she’s that human cyclone.’ So it’s actually served me well.”
McWhinney said Dial kept her work in balance with her personal life. Dial’s passion was travel, and the southern region of Africa her favorite vacation destination, she told the San Francisco Business Times in 1996.
“Terri and Brian had the richest and most diverse set of friends,” McWhinney said. “You went to their house and had the best meals with the best wine. Life was just robust and fun and eclectic. It’s a lesson to be learned for all of us.”
Tuesday, February 28, 2012
MOBILE MONEY -TELECO GAINS....
Bharti Airtel has roped in IT major Infosys to power its mobile wallet services. Under this partnership, Airtel will deploy Infosys' WalletEdge technology to support cashless payments.
The mobile commerce offering serves as an alternative to cash/ card payments online, after the user loads cash on to his account. The account can be recharged either through retail outlets- similar to recharging a prepaid account, or using net banking facilities from the user's bank account.
Once the cash is loaded in the account, Airtel customers can pay bills, recharge accounts, shop at over 7,000 merchant outlets, transact online through multiple channels including mobile phones, Interactive Voice Response, ATMs and Point of Sale.
The Airtel Money service is currently available in over 300 cities across India. “This will be our USP going forward as it helps in financial inclusion,” Mr Rohit Malhotra, CEO, Karnataka Bharti Airtel, told Business Line after the launch of the service in Karnataka. He added that with increased mobile phone penetration in rural areas, this could be a good market for the service.
INFOSYS PLATFORM
The Infosys platform is a scalable platform capable of supporting millions of transactions annually in a secure environment.Delivered through a private cloud, it creates a shared services framework that allows members of the ecosystem to process payment instructions seamlessly and cost efficiently.
Mr V. Balakrishnan Member of the Board, Infosys, said, “The game-changingmobile commerce platform will also unleash new market opportunities for Bharti Airtel in the digital commerce space.”
Mobile payment services are slowly but surely gaining currency in the Indian market, going by the spate of announcements in the last few days by global payment companies, banks, telecom vendors and mobile financial solution providers. All of them are keen to grab a slice of the Indian mobile payments market, which is seen as the next bastion of growth.
Global payments company MasterCard announced the launch of its open-loopWorldwide Mobile Money Partnership programme, in partnership with Comviva, a mobile financial solution provider. The partnership aims to help financially under-served consumers globally access mainstream financial services as also make purchases, transfer funds and pay bills via their mobile phones.
HDFC Bank and Movida had also launched a mobile payment service that allows customers to make payments through their mobile phones.
The trigger for these launches is the fact that there are more mobile phones in use in India than the number of bank accounts. Mr Sanjay Kapoor, CEO-India and South Asia, Bharti Airtel, said that national rollout of Airtel Money would accelerate mobile-based commerce in India. While an estimated 240 million people across India hold bank accounts, more than 90 per cent of country's population uses cash to pay for its daily needs.
http://www.thehindubusinessline.com/industry-and-economy/info-tech/article2939074.ece
The mobile commerce offering serves as an alternative to cash/ card payments online, after the user loads cash on to his account. The account can be recharged either through retail outlets- similar to recharging a prepaid account, or using net banking facilities from the user's bank account.
Once the cash is loaded in the account, Airtel customers can pay bills, recharge accounts, shop at over 7,000 merchant outlets, transact online through multiple channels including mobile phones, Interactive Voice Response, ATMs and Point of Sale.
The Airtel Money service is currently available in over 300 cities across India. “This will be our USP going forward as it helps in financial inclusion,” Mr Rohit Malhotra, CEO, Karnataka Bharti Airtel, told Business Line after the launch of the service in Karnataka. He added that with increased mobile phone penetration in rural areas, this could be a good market for the service.
INFOSYS PLATFORM
The Infosys platform is a scalable platform capable of supporting millions of transactions annually in a secure environment.Delivered through a private cloud, it creates a shared services framework that allows members of the ecosystem to process payment instructions seamlessly and cost efficiently.
Mr V. Balakrishnan Member of the Board, Infosys, said, “The game-changingmobile commerce platform will also unleash new market opportunities for Bharti Airtel in the digital commerce space.”
Mobile payment services are slowly but surely gaining currency in the Indian market, going by the spate of announcements in the last few days by global payment companies, banks, telecom vendors and mobile financial solution providers. All of them are keen to grab a slice of the Indian mobile payments market, which is seen as the next bastion of growth.
Global payments company MasterCard announced the launch of its open-loopWorldwide Mobile Money Partnership programme, in partnership with Comviva, a mobile financial solution provider. The partnership aims to help financially under-served consumers globally access mainstream financial services as also make purchases, transfer funds and pay bills via their mobile phones.
HDFC Bank and Movida had also launched a mobile payment service that allows customers to make payments through their mobile phones.
The trigger for these launches is the fact that there are more mobile phones in use in India than the number of bank accounts. Mr Sanjay Kapoor, CEO-India and South Asia, Bharti Airtel, said that national rollout of Airtel Money would accelerate mobile-based commerce in India. While an estimated 240 million people across India hold bank accounts, more than 90 per cent of country's population uses cash to pay for its daily needs.
http://www.thehindubusinessline.com/industry-and-economy/info-tech/article2939074.ece
Monday, February 27, 2012
BEARS ENTERED, CAN THEY BREAK????
I HAVE MENTIONED THE BAD NEWS WILL FLOW SOON....NOW ENGULFING....THE MARKETS ARE HEAVY AT THE TOP AND THE LITTLE PARTICIPATION FROM THE RETAIL INVESTOR DROPPED THE MARKET FROM HIGHS!!!
THE NIFTY IS GOOD ONLY WHEN IT CROSSES 5424 AND RELIANCE TRADES ABOVE 803.
SO FAR NO PROBLEM, THE NIFTY TRADES BELOW 5135 IN THIS WEEK WILL CREATE RIPPLE EFFECT....THE TATAMOTORS SHALL NOT TRADE & CLOSE BELOW 239-41 AREA ON ANY GIVEN DAY, THEN THE BULLS LOST EVERY THING....FOR SURE....
--------A GOOD THOUGHT....PLEASE.....READ...
Time for a portfolio clean-up ( )
Should I jump ship, join the party or just cruise along? That is the question many people seem to be asking after this New Year rally. But the profile of the top gainers shows that picking winners in this stock market move has been nothing short of a lottery.
Penny stocks have shot up faster than index heavyweights. Companies with high debt have been avidly bought, while those with tonnes of cash have been cold-shouldered. And sectors that are up against a bevy of regulatory or other problems have been eagerly lapped up as ‘value' buys. Backed as it is by foreign institutional investor (FII) flows, it is difficult to say if this up-move pre-empts better days for India Inc or is merely a pull-back from rock-bottom prices. After all, who can argue with liquidity? But irrespective of whether this rally continues or fizzles out, it offers investors a golden opportunity to de-risk their portfolio. Here is how they can do it.
Upgrade to XL
In a usual bull market, it is blue-chips that lead from the front. But this rally has been completely different. The BSE Midcap and Smallcap indices gained 23-24 per cent trouncing Sensex gains of 16 per cent. Thanks to this trend, the valuation equation has turned topsy-turvy. Today, while the Sensex sports a moderate price-earnings multiple (PE) of 18.5 times, the BSE Midcap index trades at 19 times, with the BSE Smallcap index poised at 20 times. Now, there appears to be no fundamental reason to accord smaller companies such a premium today. With the economic troubles within India far from over and interest rates still hovering at high levels, small and midsized companies are far more vulnerable to business risks than their larger counterparts.
Moreover, whenever valuations of mid and smallcap stocks have caught up with the Sensex in the past, it has always spelt trouble (or bubble!). This makes it a great time for investors to make switches in their portfolio. If you own small or mid-cap stocks that have run up sharply, switch into large-caps within the same sector. Looking at the recent set of gainers, this would mean switching from a UCO Bank to ICICI Bank or from a BGR Energy into BHEL.
Go for quality
Then there is the phenomenon of investors indiscriminately bidding up all ‘cheap' stocks trading below their book value or at single digit PEs.
Now, any true-blue rally usually begins with ‘value' stocks outperforming ‘ growth' stocks. But when investors completely ignore business risks that threaten the core operations or brush aside governance issues that had them paralysed just two months ago, it is certainly time to be cautious. After their 60-130 per cent gains in barely two months, it may be time to sell stocks such as Lanco Infratech, Indiabulls Real Estate, Jai Corp and Reliance Communications.
Even if recent expectations about improved coal supplies to the power sector, or a revival in real-estate demand do come about, investors can play these themes through better-quality stocks in the power or realty sectors. You may not get a better opportunity to replace such choices with safer names such as NTPC or Bharti Airtel.
Tread carefully on debt
A third trend in this rally is the sharp rerating of debt-laden companies — the same ones which bore the brunt of the market meltdown last year. Now, even if factors such as moderating raw material prices and a strengthening Rupee reduce the cost pressures on India Inc, it will be some time before companies with high leverage, foreign currency loans or FCCB out-standings will be able to clean up their balance sheets. For one, while interest rates have flattened out they are showing no signs of falling steeply from current levels. Two, with the global and sovereign credit crises still holding sway, refinancing existing debt at lower cost will also remain quite difficult for anyone but top-rung companies. While stock markets investors may be in the mood to take on risk, lenders may not immediately follow suit.
This again argues for investors to go for quality in their portfolio. Here, the so-called defensive sectors such as FMCG or pharma may not be an ideal choice, given their high PEs. But investors could switch from high-debt companies to those with lower debt levels within the same sectors. That may call for swapping Unitech with Oberoi Realty, Wockhardt with Lupin or a Shree Renuka Sugars with Balrampur Chini Mills.
A shift to quality on the above lines may not ensure quick gains if this rally carries on in the current vein. But it surely will protect your wealth better, if the FIIs decide that they will go thus far and no further.
http://www.thehindubusinessline.com/features/investment-world/article2932345.ece?homepage=true&ref=wl_home
THE NIFTY IS GOOD ONLY WHEN IT CROSSES 5424 AND RELIANCE TRADES ABOVE 803.
SO FAR NO PROBLEM, THE NIFTY TRADES BELOW 5135 IN THIS WEEK WILL CREATE RIPPLE EFFECT....THE TATAMOTORS SHALL NOT TRADE & CLOSE BELOW 239-41 AREA ON ANY GIVEN DAY, THEN THE BULLS LOST EVERY THING....FOR SURE....
--------A GOOD THOUGHT....PLEASE.....READ...
Time for a portfolio clean-up ( )
Should I jump ship, join the party or just cruise along? That is the question many people seem to be asking after this New Year rally. But the profile of the top gainers shows that picking winners in this stock market move has been nothing short of a lottery.
Penny stocks have shot up faster than index heavyweights. Companies with high debt have been avidly bought, while those with tonnes of cash have been cold-shouldered. And sectors that are up against a bevy of regulatory or other problems have been eagerly lapped up as ‘value' buys. Backed as it is by foreign institutional investor (FII) flows, it is difficult to say if this up-move pre-empts better days for India Inc or is merely a pull-back from rock-bottom prices. After all, who can argue with liquidity? But irrespective of whether this rally continues or fizzles out, it offers investors a golden opportunity to de-risk their portfolio. Here is how they can do it.
Upgrade to XL
In a usual bull market, it is blue-chips that lead from the front. But this rally has been completely different. The BSE Midcap and Smallcap indices gained 23-24 per cent trouncing Sensex gains of 16 per cent. Thanks to this trend, the valuation equation has turned topsy-turvy. Today, while the Sensex sports a moderate price-earnings multiple (PE) of 18.5 times, the BSE Midcap index trades at 19 times, with the BSE Smallcap index poised at 20 times. Now, there appears to be no fundamental reason to accord smaller companies such a premium today. With the economic troubles within India far from over and interest rates still hovering at high levels, small and midsized companies are far more vulnerable to business risks than their larger counterparts.
Moreover, whenever valuations of mid and smallcap stocks have caught up with the Sensex in the past, it has always spelt trouble (or bubble!). This makes it a great time for investors to make switches in their portfolio. If you own small or mid-cap stocks that have run up sharply, switch into large-caps within the same sector. Looking at the recent set of gainers, this would mean switching from a UCO Bank to ICICI Bank or from a BGR Energy into BHEL.
Go for quality
Then there is the phenomenon of investors indiscriminately bidding up all ‘cheap' stocks trading below their book value or at single digit PEs.
Now, any true-blue rally usually begins with ‘value' stocks outperforming ‘ growth' stocks. But when investors completely ignore business risks that threaten the core operations or brush aside governance issues that had them paralysed just two months ago, it is certainly time to be cautious. After their 60-130 per cent gains in barely two months, it may be time to sell stocks such as Lanco Infratech, Indiabulls Real Estate, Jai Corp and Reliance Communications.
Even if recent expectations about improved coal supplies to the power sector, or a revival in real-estate demand do come about, investors can play these themes through better-quality stocks in the power or realty sectors. You may not get a better opportunity to replace such choices with safer names such as NTPC or Bharti Airtel.
Tread carefully on debt
A third trend in this rally is the sharp rerating of debt-laden companies — the same ones which bore the brunt of the market meltdown last year. Now, even if factors such as moderating raw material prices and a strengthening Rupee reduce the cost pressures on India Inc, it will be some time before companies with high leverage, foreign currency loans or FCCB out-standings will be able to clean up their balance sheets. For one, while interest rates have flattened out they are showing no signs of falling steeply from current levels. Two, with the global and sovereign credit crises still holding sway, refinancing existing debt at lower cost will also remain quite difficult for anyone but top-rung companies. While stock markets investors may be in the mood to take on risk, lenders may not immediately follow suit.
This again argues for investors to go for quality in their portfolio. Here, the so-called defensive sectors such as FMCG or pharma may not be an ideal choice, given their high PEs. But investors could switch from high-debt companies to those with lower debt levels within the same sectors. That may call for swapping Unitech with Oberoi Realty, Wockhardt with Lupin or a Shree Renuka Sugars with Balrampur Chini Mills.
A shift to quality on the above lines may not ensure quick gains if this rally carries on in the current vein. But it surely will protect your wealth better, if the FIIs decide that they will go thus far and no further.
http://www.thehindubusinessline.com/features/investment-world/article2932345.ece?homepage=true&ref=wl_home
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