Indian rupee falls on trade gap worries

The partially convertible Indian rupee fell towards 13-month lows on Tuesday on growing concerns of a deterioration in the trade deficit because of record oil prices and worries about slowing capital inflows.

At 9:35 a.m. (0405 GMT), the rupee was at 42.63/64 per dollar, nearly a quarter of a percent weaker than Friday’s close of 42.53/54 per dollar. Markets were closed on Monday for a holiday.

The rupee hit a low of 42.92 on Friday, its weakest since mid-April 2007.

"Oil is at a record and there is no signs of any relief in the near term, and outflows are a continuing worry," said Amit Garg, a currency dealer at Allahabad Bank, who expects the local unit to trade in a 42.55-42.70 band for the session.

Oil CLc1, India’s biggest import, has surged to record highs near $128 a barrel, raising the risk of the trade deficit widening. India imports more than two-thirds of its oil needs, and crude refiners are the biggest buyers of dollars.

That and signs of growth slowing as inflation has risen to 3-½ year highs have pushed the rupee down 5 percent against the dollar so far this month, taking its losses to nearly 8 percent this year.

As well foreigners have sold a net $2.7 billion of stocks this year, although so far in May they have been net buyers of about $70 million of stocks.

A Reuters poll showed investors have increased their short positions in the rupee and other Asian currencies.Goldman Sachs expects the rupee to weaken further in the near term, putting next support at 43.82 per dollar.

SEBI revises payment process for IPOs

India’s market regulator has changed the payment process for subscribing to initial public offers and rights issues.

Under the new process, the application money will remain in the bank account of the applicant till allotment is finalised, the Securities and Exchange Board of India (SEBI) said in a statement after its board meeting late on Tuesday.

Currently, the money is debited from the bank account, and based on the number of shares allotted the excess money is returned. The regulator said the new system would eliminate the refund process.

The modalities of the entire process will be worked out separately, it said.

The SEBI board also increased the minimum net worth requirement for registration as a portfolio manager to 20 million rupees from 5 million rupees.

It said existing portfolio managers with lower net worth will have to increase it to at least 10 million rupees within six months, and to the new prescribed limit in the next six months.

SEBI said portfolio managers will not be allowed to pool the resources of clients like mutual funds and must keep assets of each client separately.

Portfolio managers working on pooled basis have been given six months to convert their perations to individual basis, the statement said

Oil past $127 on supply fears, OPEC remarks

Oil extended its rally on Tuesday past $127 a barrel, driven by renewed fears of supply disruption and OPEC’s reluctance to raise output at its next meeting in September.

U.S. light crude contract for June delivery rose 35 cents to $127.40 a barrel by 0155 GMT, having settled up 76 cents in New York. Prices were within sight of the intraday record of $127.82 hit on Friday.

"The market is focusing on the supply side again. The supply side risks are driving prices higher," said Gerard Burg of National Australia Bank in Melbourne.

Supply fears resulted from a global diesel boom led by China, the Middle East, South Africa and South America for diesel-fired power generators.

China, the world’s second-biggest energy user, released a total of 8,312 tonnes of refined fuel from its little-known strategic reserves to help relief efforts in quake-hit Sichuan and Gansu provinces.

The amount is less than the worst-hit province of Sichuan uses in one day, and China may be driven to import more diesel to meet peak summer demand.

State Chinese refiners have already bought 650,000 tonnes for June, near the record high of 842,000 tonnes imported for January.

Elsewhere, events shaped to put fuel supply under threat French port workers will hold a 24-hour strike at the oil port of Fos-Lavera on Tuesday in a series of protests against the privatisation of the loading activities of state-run ports.

Nigerian security forces clashed with gunmen trying to rob a bank on Monday outside the gates of a Royal Dutch Shell compound on Bonny Island, home to the Nigerian Liquefied Natural Gas facility.

Oil companies and trading sources say a recent spate of attacks and sabotage have shut in about 559,000 barrels per day of Nigerian production, about 19 percent of the installed output capacity of around 3 million bpd in the West African state.

But oil cartel OPEC said oil markets were well supplied, and blamed high prices on speculation, a weak dollar and geopolitical problems.

OPEC President Chakib Khelil said the group would not meet before its September scheduled gathering and was unlikely to boost output then.

Saudi Oil Minister Ali al-Naimi said the world’s top exporter had boosted oil output by 300,000 bpd to meet demand and compensate for other producers’ lower output.

Forecasts in a Reuters preliminary poll on U.S. petroleum inventory data due out on Wednesday called for a 600,000-barrel rise in crude stocks, a 500,000-barrel gain in gasoline stocks and a 1.3-million-barrel build in distillate stocks.

India Stocks: IL&FS, Lanco, Maruti, Reliance, State Bank

The Bombay Stock Exchange’s Sensitive Index, or Sensex, fell 0.7 percent to 17,308.94 as of 10:20 a.m. local time. The S&P CNX Nifty Index on the National Stock Exchange slid 0.7 percent to 5,122.25.

IL&FS Investsmart Ltd. (ILFI IN) slid 1.1 percent to 196.10. HSBC Holdings Plc plans to buy 73.2 percent of IL&FS Investsmart, an Indian brokerage, for 10.03 billion rupees ($235 million). HSBC will acquire 43.85 percent from a Mauritius-based unit of E*Trade Financial Corp. and the rest from the Indian brokerage’s founder, Infrastructure Leasing & Financial Services Ltd., for 200 rupees a share, HSBC said in a statement e-mailed from Hong Kong on May 17. HSBC will also make an offer to buy an additional 20 percent from other shareholders.

Lanco Infratech Ltd. (LANCI IN) added 0.8 percent to 533.05. The Indian builder of roads and ports is seeking to raise about $200 million from overseas private-equity funds for its real estate business, the Press Trust of India reported, citing Managing Director G. Venkatesh Babu.

Maruti Suzuki India Ltd. (MSIL IN) gained 1.1 percent to 830.50. The maker of half the cars sold in the country increased prices of its cars by as much as 18,000 rupees because of higher raw material costs, the Times of India reported, without saying where it obtained the information.

Reliance Industries Ltd. (RIL IN) slid 0.5 percent to 2,623.95. India’s largest company by market value has formed a $1 billion joint venture with New York-based Vornado Realty Trust to set up a real estate fund, the Economic Times reported yesterday, without saying where it obtained the information.

State Bank of India (SBIN IN) fell 1.4 percent to 1,683.20. The nation’s biggest bank by assets has halted advances for buying farm equipment to prevent an increase in bad loans, the Times of India reported, citing a bank circular.

Asian Stocks Fall for First Time in Seven Days; Banks Decline

Asian stocks fell for the first time in seven days, led by financial and real-estate companies, after Macquarie Group Ltd. reported profit that missed estimates and Credit Suisse Group downgraded Japanese developers.

Macquarie, Australia’s largest securities company, slumped the most in two months. Sumitomo Realty & Development Co. dropped in Tokyo after Credit Suisse said a decline in house prices may accelerate as banks curb loans. Samsung Electronics Co. led technology stocks lower after SanDisk Corp., the world’s biggest flash-memory card maker, said sales were ``soft’’ last month.

``The growth outlook for banks is still very challenging,’’ said Daphne Roth, Singapore-based vice president of equity research at ABN Amro Private Bank, which oversees $20 billion of Asian assets. ``There’s still some uncertainty over how well capital markets will do.’’

The MSCI Asia Pacific Index lost 0.7 percent to 153.27 as of 1:41 p.m. in Tokyo, snapping a six-day, 3.7 percent advance. The retreat halted a 16 percent rally in the past two months as the Federal Reserve’s bailout of U.S. banks and a surge in commodity companies restored investor confidence in stocks.

All 10 industry groups declined today. Japan’s Nikkei 225 Stock Average lost 0.9 percent to 14,140.02. China’s CSI 300 Index dropped 1.4 percent on concern the country’s deadliest earthquake in three decades will erode earnings. All other benchmark indexes in the region declined apart from the Philippines and Thailand.

U.S. financial stocks fell yesterday after Citigroup Inc. lowered its earnings forecast for Goldman Sachs Group Inc. and other U.S. brokerages, saying lower fees from trading and underwriting will reduce second-quarter bank earnings.

`Challenging’ Outlook

Macquarie tumbled 5.2 percent to A$62.68, the biggest drop since March 17, after Nicholas Moore, who takes over as chief executive officer on May 24, said the outlook is ``challenging.’’ Net income rose 1.8 percent to A$743 million ($708 million) in the six months ended March 31, missing the A$760 million median estimate of analysts surveyed by Bloomberg.

Financial companies also dropped in Australia after the nation’s central bank said it spent ``considerable time’’ discussing the case for a rate increase this month.

``This is very hawkish and the fact they considered a rate rise has given the market a fright,’’ said Sally Auld, an interest-rate strategist at Australia & New Zealand Banking Group Ltd. in Sydney.

Babcock & Brown Ltd., an Australian fund manager, fell 3.4 percent to A$15.16.

Developers Ratings

Sumitomo Realty lost 4.2 percent to 2,635 yen, while bigger rival Mitsubishi Estate Co. slipped 3.6 percent to 2,790 yen. Developers posted the biggest drop among 33 industry groups on Japan’s broader Topix index.

Credit Suisse analysts Yoji Otani and Masahiro Mochizuki yesterday cut their rating on Japan’s developers to ``underweight’’ from ``market weight.’’

Samsung, the world’s biggest computer-memory maker, declined 3 percent to 706,000 won in Seoul. Hynix Semiconductor Inc., the second-largest, dropped 3.3 percent to 29,600 won, the most since April 28.

SanDisk Chief Executive Officer Eli Harari said yesterday rising oil prices prompted consumers to tighten their budgets. SanDisk’s memory cards are used in consumer electronics such as digital cameras and media players.

Quake Losses

Sichuan Hongda Chemical Industry Co., China’s third-largest zinc producer, plunged by the daily 10 percent limit to 32.68 yuan as it resumed trading after a five-day halt. The company said the May 12 earthquake that hit China’s southwestern Sichuan province killed 74 employees and caused a loss of 387.7 million yuan ($56 million).

STX Pan Ocean Co., South Korea’s largest shipping line, led gains by dry-bulk operators after rates to transport coal, iron ore and other commodities rose to a record for a third straight day.

STX Pan Ocean advanced 7.3 percent to S$3.98 in Singapore, headed for the highest close since Oct. 30, 2007. Merrill Lynch & Co. raised its price target for the stock by 35 percent to S$5 as it increased profit forecasts. Cosco Corp. Singapore Ltd., the ship-repair and bulk-carrier unit of China’s largest shipping line, gained 2 percent to S$3.63.

The Baltic Dry Index, a measure of shipping costs for commodities, rose 2.2 percent yesterday in London due to a shortage of vessels to haul iron ore and coal.

``Shipping lines are rallying as they’re an indirect play on the commodity cycle,’’ said Leslie Phang, Singapore-based head of private client investments at Schroders Plc, which manages $275 billion. ``There may be legs to this rally as they have more pricing power.’’

A measure of raw-materials producers has advanced 29 percent since this year’s low on Jan. 22, the most among MSCI’s Asian 10 industry groups, while energy stocks climbed 28 percent on speculation Chinese and Indian demand for metals and fuel will rise.

Common mistakes committed in the Stock Market

Throughout your investing career, it is likely that you will be guilty of committing a lot of mistakes. There is no one today who has not committed costly financial mistakes including the legendary Warren Buffet. However it is the ability to recognize and learn from your mistakes that will determine whether you are able to achieve your investment objectives. It is thus paramount to commit as few mistakes as possible. Failure is often the best teacher provided you allow yourself to be taught.

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  The last three months have exposed investors to several such mistakes. Here we highlight eight of the common ones.
  Relying on tips and hearsay is the first and most common mistake committed by most investors.
  


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  Expecting Big Gains fast. Very few people have the mindset and patience required to invest in equity. A common expectation is to make big gains quickly. There is no focus on the risk the investment exposes your portfolio to. A classic example of recent times was the Power sector. Any stock that had the name ‘Power’ in it was considered sacrosanct. People did not even care about risk involved in taking exposure to such stocks. Instant gratification is injurious to your wealth.
  


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  Leverage in equity markets can have disastrous consequences not just on your financial health but on your physical health.
  It’s not easy to always make money in equities and there could be periods of negative returns. Though over time, returns can even out, in the short run there could be sizeable downside. So don’t be surprised by it. Understand, expect corrections and be realistic.
  


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  Have reasonable expectations from equity. As an asset class equity should technically deliver returns in line with corporate earnings. However we do not invest in a utopian stock market but a market that drives on hope, greed and fear. Hence you are bound to see eras of excesses and exuberance and those of pessimism.
  


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  It’s all easy to know ‘Buy low and sell high’, but majority of people would end up doing exactly the opposite. Most investment banks, brokerages, hedge funds, FIIs, domestic investors, gurus and analysts are super confident in a bullish market when highs are torn apart every other day. Things suddenly change for them when the market corrects and no one is ready to put even their thumb in the market. Learn to embrace market sell offs. People who could not earlier invest had an excellent opportunity to invest at 14000 to 15000 levels but I do not know too many people who had the gut to really invest.
  


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  When the market corrects, do not put all your eggs immediately. Corrections that happen after very sharp rallies tend to extend themselves over a few months. One of the strategies that can be adopted is to invest in a staggered fashion. You should start investing if the market has corrected by more than 15-20% and go higher when it crosses 30-35%. There is no way to know what the bottom could be and I don’t know how people come up with their holy predictions on how lower can the index go. When the going is bad, all one hears is bad news and it’s very important to grow beyond these daily projections. Investing is certainly not a poker game and you would be harming your economic interests by following what a bunch of unknown people are doing.
  


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  Don’t keep looking at your portfolio because things are not going to change even if you see it many times. A quarterly or semi annual review should be good enough for most people. Looking daily is harmful to your overall thought process and can urge you to take emotional decisions whether on the way up or way down.

This is the time to take stock of what you actually have. The first step is to understand the various investments in your portfolio and how they fit within the overall scheme of things.

Most people would like to see their investments grow right from day one. For a long term investor, it should not matter if prices do not rise right away. Infact if investment values indeed go down, you should be happy to see your buying happening at lower levels. Eventually when the market recovers, you are bound to get much higher returns because of these inefficiencies in a turbulent market. The only time your stock prices should be up is when you need to sell.

Currently one sees lower volumes in the market due to fear and several other factors. The increase in STT (securities transaction tax) and short term capital gains tax also has had some impact on volumes. There is a lack of clarity on the direction of the market. However just because this is the case, there is no need to change your investment strategy. Continue to buy in a staggered fashion and just stay put if you already have.

Source : Moneycontrol

India's Rupee Falls; Refiners Buy More Dollars as Oil at Record

India’s rupee fell on speculation crude oil near a record will increase demand for dollars needed to pay for the commodity.

The Indian rupee fell on Tuesday heading towards new 13-month lows with weak Asian stocks seen dampening foreign appetite for local stocks and renewed dollar buying by oil refiners to meet their month-end needs.

* At 9:14 a.m. (0344 GMT), the partially convertible rupee was at 42.62/63 per dollar, weaker than Friday’s close of 42.53/54 and a low of 42.92, which was its weakest since April 12, 2007, according to Reuters data. Markets were closed on Monday for a holiday.

* Asian stocks edged lower on Tuesday, snapping a six-day rising trend, weighed by retailers as oil continued a relentless rise, keeping inflation fears high.

* Oil CLc1, India’s biggest import, hit record highs above $127 a barrel on Friday, raising the risk of the trade deficit widening. India imports more than two-thirds of its oil needs, and crude refiners are the biggest buyers of dollars.

The rupee declined 0.3 percent to 42.635 per dollar as of 9:04 a.m. in Mumbai, from 42.5125 on May 16, according to data compiled by Bloomberg. Markets were closed yesterday for a holiday.