Housing scam: CBI arrests top officials of PSU banks, financial institutions

The Central Bureau of Investigation (CBI) on Wednesday arrested top officials from some leading PSU banks and public/private financial institutions. The agency alleged a big housing loan scam involving top officials of some financial institutions. It declined to put a figure to the size of the scam. The impact on individual banks will depend upon their total exposure to real estate lending.

Those arrested include Ramchandran Nair, Chief Executive Officer, LIC Housing Finance Ltd. ,Naresh K Chopta, Secretary (Investment), LIC, Mumbai; R.N.Tayal, General Manager, Bank of India, Mumbai; Maninder Singh Johar, Director (Chartered Accountant), Central Bank of India, New Delhi; Venkoba Gujjal, DGM, Punjab National Bank , New Delhi; Rajesh Sharma,Chairman & Managing Director and two other officials of a Mumbai-based private financial services company in a bribery case.

The CBI FIR states that the Central Bank staffer was asking for Rs 37 lakh bribe.

As per reports coming in CBI has named some big corporates in the scam. As per reports coming in at 7.30 p.m., corporates such as Adani, Religare, Suzlon, Pantaloon, DB Realty, BCG Group and J P Hydro are among the names mentioned in the FIR. More clarity is awaited on the names CBI has mentioned in its FIR.

Preliminary reports earlier in the afternoon also named Godrej Realty and Ashapura Minechem. Both these companies have denied any involvement.

CBI conducted raids in five cities and has arrested top officials of leading organizations. As per reports, the arrests included the CEO of LIC Housing Finance and the CMD of Money Matters. Senior officials from PNB, Bank of India and Central Bank of India have also been raided. An official from LIC has also been arrested by the CBI. Money Matters CEO and LIC HF's Nair have been remanded to custody till Nov 29.

The CBI said it had busted a racket in which Money Matters was "allegedly bribing senior officials of public sector banks and financial institutions for facilitating large scale corporate loans." Raids were conducted at Mumbai, Jaipur, Delhi, Chennai and Jalandhar. CBI began investigation on Monday. Money Matters specialises in advising corporate clients on how to borrow money. The CBI has also closed all offices of Money Matters.

Earlier in the day, shares of LIC Housing Finance plunged 18.32 per cent to Rs 1068.55 on the BSE. It touched a low of Rs 1031.10 in trade. Shares of Central Bank of India also tanked on the same issue. The scrip fell 8.02 per cent to Rs 197.90 on the BSE. It touched a low of Rs 191.40 in trade.

Shares of Money Matters Financial Services also faced selling pressure. The scrip tanked 19.99 per cent to intraday low of Rs 531.20 on the BSE on rumours of a raid

Source: www.economictimes.com

Thanks,
Gaurav Agarwal
Head Dealer
DENIP Consultants Pvt Ltd

PRICEBAND FOR MOIL LTD.

Thank you,
Minita Aiya
Client Service Associate
DENIP Consultants Pvt. Ltd.

MOIL Limited IPO Details with Price Band

MOIL Limited

BRLM: Edelweiss Cap Ltd./ IDBI Cap Mkt Ser Ltd./ JP Morgan India Pvt. Ltd.
Syndicate Member: Edelweiss Sec Ltd.
Issue Period: November 26 – December 01, 2010
Issue Period (For QIB): November 26 – November 30, 2010
Issue Period (For Retail & HNI): November 26 – December 01, 2010
Price Band: Rs. 340 - Rs. 375/-
Lot Size: 17 Equity Shares into multiples of 17 Equity Shares
Retail & Employee Discount: 5% to the offer price adjusted at the time of allotment
Registrar: Karvy Computershare Pvt. Ltd.

Retail Appl Limit: Rs. 2,00,000/-

Issue size: 3,36,00,000 Equity Shares of Face Value Rs.10 each through an offer for sale by the President of India, Acting through the Ministry of Steel, Govt. of India.
Employee Reservation: 6,72,000 Equity Shares
Net Issue: 3,29,28,000 Equity Shares
QIB Book: 1,64,64,000 Equity Shares (50% of Net issue size)
Retail Book: 1,15,24,800 Equity Shares (35% of Net issue size)
HNI Book: 49,39,200 Equity Shares (15% of Net issue size)

Thank you,
Minita Aiya
Client Service Associate
DENIP Consultants Pvt. Ltd.

KRC Derivative Research dt. 24/11/2010

SECTORAL OPEN INTEREST SNAPSHOT

FERTILIZER
1. CHAMBLFERT added 4% in open interest on back of long accumulation.
2. TATACHEM shed 1.2% in open interest.

FMCG
1. HINDUNILVR added 10.7% in open interest. DABUR and MCLEODRUSS added 3.5% and 2.4% respectively.
2. COLPAL shed 8.8% in open interest.

BANKING
1. INDUSINDBK added maximum in open interest by 27% on back of long build up. HDFC and KOTAKBANK added 17.4% and 10.6% respectively.
2. SYNDIBANK, VIJAYABANK and KTKBANK shed 11%, 6.9% and 6.2% respectively in open interest.

POWER & ENG
1. CROMPGREAV shed maximum open interest by 44.9%. POWERGRID and VOLTAS shed 10.6% and 10.57% respectively.
2. TATAPOWER, ADANIPOWER and BEML added 8%, 5.97% and 5.8% respectively.

TEXTILES
1. BRFL and ABIRLANUVO shed in open interest by 6.4% and 2.6% respectively.
2. ALOKTEXT and SKUMARSYNF added 2.98% and 2% respectively in open interest.

Thanks,

Gaurav Agarwal

Head Dealer

DENIP ConsultantsPvt Ltd

Markets Today - 23/11/2010 - Disclaimer Post Applies

Implications: Nifty future is trading at ~6 points premium with spot. On account of put concentration, 5,900 to act as a support on downside whereas call writing and concentration at 6,000 indicates this level to act as a resistance on the upside also Nifty is facing difficulty in sustaining higher levels. Thus, we expect 5,900 to act as a support and below that 5,800 whereas upside is capped at 6,000/6,050 for November expiry. 

Option Analysis:

·         Call writing: In November series, major call concentration is witnessed at 6,200 CE and 6,300 CE of 77 lakh and 77.5 lakh shares and fresh writing at 6,000 CE and 5,900 CE of 14.58 lakh and 18.94 lakh shares resp. In December series, major concentration at 6,000 CE of 36.9 lakh shares.   

·         Put Writing: On the other hand, in November series, put concentration is witnessed at 5,900 PE of 61.2 lakh shares. In December series, maximum writing is witnessed at in-the-money strikes i.e. between 5,900 PE and 5,600 PE; the outstanding open interest added is 28.3 lakh shares.

Implications: On account of put concentration, 5,900 to act as a support on downside whereas call writing and concentration at 6,000 indicates this level to act as a resistance on the upside also Nifty is facing difficulty in sustaining higher levels. Thus, we expect 5,900 to act as a support and below that 5,800 whereas upside is capped at 6,050/6,100 for November expiry

India VIX (Inverse relationship between Nifty and Indian VIX)

·         Volatility for 23^rd November, 2010 close at 23.26 which is 16.7% higher as compared to previous close, after touching an intraday high of 24.95 and low of 19.4.

Implications: Indian VIX traded surged and thereby closed above 20 levels. We expect it to move upwards and we are Bullish on the same which would have negative impact on Nifty.

KRC Research - Rollover Analysis dt. 23/11/2010

ROLLOVER ANALYSIS

Market Snapshot for August Series – Gained ~22 points in November series
November series has been volatile, where Nifty after hitting a 34 month high at 6,336 gave a fall of 472 points i.e. down 7.5% thereby breaking all support levels. During the November series, FII were net buyers in 11 trading sessions out of 16 trading sessions.

We expect 6,000 to act as a support on the downside on account of more of put concentration than call and on the upside 6,100 to act as a stiff resistance on basis of more call concentration than puts. However, on basis on concentration the range for November expiry is 6,200 on the upside and 5,900 on the downside.


Rollover– Positive Rollover cost of ~50bps in November series

Nifty has rolled 32% positions into December series, which higher as compared to D-3 of last expiry (29%). Nifty holds an OI of 586,234 contracts which is 6% (625,731 contracts) lower than D-3 of October expiry. In value terms, Nifty OI is `176 bn, which is lower by 8% (OI of ` 192 bn) than of October expiry. Around 69,557 contracts got rolled whereas the total OI added by 4,877 contracts.

Market wide futures OI is currently ` 681 bn, which is 11% lower than the (OI of ` 769) D-3 of October expiry. Market wide rolls is 31% which is at par compared to D-3 of last expiry (32%).

Sector-wise Rollovers

Highest long Roll: Bullish Signal
SUGAR (39.9%), CEMENT (36%), POWER (36%),

Highest Short Roll: Bearish Signal

Lowest Rollover
PHARMA (24.6%), TELECOM (24%) , MEDIA (21%)

Stocks Rollovers

Highest long Roll: Bullish Signal
GTL (67%), MCLEODRUSS (55.8%), CAIRN (52.4%)

Highest Short Roll: Bearish Signal
SCI (45.5%), RELCAPITAL (40%), HEROHONDA (39%)

Lowest Rollover
CONCOR (4%), BEL (4.4%), ASIANPAINT (4.6%)

Thanks,

Gaurav Agarwal

Head Dealer

DENIP Consultants Pvt Ltd

Coal India H1 net profit up 29% at Rs 4020 cr

India's largest coal producing company and state-owned Coal India has announced its results for the period of six months ended on September 2010. It has reported net profit at Rs 4,020.2 crore in H1FY11 as against Rs 3,115 crore in H1FY10, a growth of 29.06%.

Net sales jumped 16.13% to Rs 25,943.4 crore from Rs 22,340.2 crore.

Earning before interest, tax, depreciation and amortisation (EBITDA) margin improved to 27.6% versus 24.2%.

The company had raised more than Rs 15,100 crore through IPO in last month.

Source: www.moneycontrol.com

Thanks,
Gaurav Agarwal
Head Dealer
DENIP Consultants Pvt Ltd

Indian Stock Market Outlook

The Korean Crisis - As per the Reuters report, North Korea has alleged that South Korea started firing shells and North Korea only responded to the firing. However South Korea claims that although it was firing shells it was in the west and merely test firing the shells.

The Irish Crisis – With Ireland requesting a bailout from the EU, probe has begun again in Spain & Portugal. With political instability in Ireland, getting a bailout for now seems difficult. However as per the latest Wallstreet journal report, EU has stated that the political crisis in Ireland shouldn't affect negotiations on Irelands bailout.

US Crisis – With the aftermath of the 2008 crisis still at large US, the FED has started probing big banks again to conduct a stress – test. The SEC also raided some of the Hedge funds sending shockwaves across the financial world. With the US housing data expected tonight i.e. 23^rd of November 2010 the bulls of the stock markets could face some beating.

However all said and done, India still remains a good investment bet. If at all a war was to break out in Korea, India would ideally take a neutral stance which would keep the macro economics of the country stable. The 2G Scam that could have triggered massive macro-economic instability seems to have been handled carefully for now by the Congress.

In such a scenario, the stock market fall could turn out to be nothing but a minor correction before the Nifty hits levels of 7000+. We stick to our stance that SIP was the best route of investments post Diwali since historically for the past 10 years or so, every November we witness a downfall which lasts till December which turns out to be nothing but a buying opportunity.

We believe that investors having positions in the F&O space should roll over to the January series and wait for their turn to earn money. Traders can go short even at these levels for the December series.

Hope this provides some soothing to your nerves.

Source: Various News Reports & In house research

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LIC of India : Of Notional Losses and Profits

The real guarantee with LIC is its scale and size that makes it too big to fail.

Last week, there was this news item in a number of newspapers about the Life Insurance Corporation discovering (or admitting to, it wasn't clear which), a Rs 14,000-crore shortfall in three guaranteed return annuity schemes that it runs. This shortfall has come to happen because these schemes were launched with guaranteed returns of around 12% during the 80s and 90s.

Now, the fixed income returns that are realizable in the Indian economy are sharply lower and so there's a gap between what the assets in these schemes should be worth if they are to meet future liabilities and what they are actually worth.

In its defense, LIC has offered two mitigating factors - one, that these losses are notional. And two, the shortfall will be compensated by other plans - there are always some plans which have a surplus and some in deficit. This is encouraging to hear but nonetheless a little problematic.

Firstly, I think the experience of the 2008 economic crisis has made all of us a little skeptical of the actual nationality of notional losses. I often wonder why companies dismiss notional losses in such an off-handed manner while never managing to do the same for notional profits.

After all, if some schemes are always in deficit and in some in surplus, then the surpluses must, correspondingly, be precisely as notional as the losses. Why don't we ever hear a company management say, "Listen, don't pay any attention to all these gains we have on our investments - they are mere notional profits. They are irrelevant." Why this step-motherly treatment for notional losses alone?

In any case, the root cause of this gap doesn't sound notional to me. A gap between the returns that are guaranteed is not only real but more alarmingly is very likely to grow at an exponentially higher rate. Fixed income returns in India are likely to be lower than the 12% the schemes need in the foreseeable future. Quite possibly, the annual gap will be at least three to four per cent on a sustained basis. This means that the shortfall, whatever it is, will grow at a compounding rate. The guaranteed schemes yet have a few decades more to run. A three per cent p.a. gap will compound to 80% in twenty years and to 165% at 5% a year over the same period. It's very likely that the gap will always be a manageable proportion of LIC's total asset base, but it certainly will be a far from trivial amount.

Still, as an LIC customer, you needn't ever worry. If there's an organization in India that really is too big to fail, then that's LIC. No matter how much it mismanages its products or its investments, the Government of India will step up to the plate. Whatever be the shortfall, the taxpayer will fill it. And that's the real guarantee

KRC Derivative Research dt 23/11/2010

SECTORAL OPEN INTEREST SNAPSHOT

BANKING

1. UCOBANK, HDFCBANK, BANKBARODA and PNB added 14.4%, 12%, 9% and 6% in open interest respectively on back of long accumulation.
2. BANKINDIA, AXISBANK and INDUSINDBK shed 7.75%, 5.6% and 5.7% respectively in open interest respectively.

FMCG
1. HINDUNILVR, ITC and COLPAL added 5.6%, 4.6% and 3.3% in open interest respectively.

SUGAR
1. BAJAJHIND, RENUKA and BALRAMCHIN added in open interest by 3%. 2.57% and 1% respectively on back of long positions build up.
2. TRIVENI shed 2% in open interest.

FINANCE
1. IDFC, RECLTD and RELCAPITAL shed 11.56%, 7% and 7% respectively in open interest.
2. LICHSGFIN and HDFC shed 7% and 5.7% respectively in open interest.

POWER & ENG
1. ADANIPOWER, CUMMINSIND and CROMPGREAV shed in open interest by 7.7%, 6.1% and 6% respectively on back of profit booking in long positions.
2. TATAPOWER and PUNJLLOYD shed 12.6% and 9.9% respectively in open interest on account of long build up.

Thanks,

Gaurav Agarwal

Head Dealer

DENIP Consultants Pvt Ltd