News Flash

Tata Motors Unexpectedly Posts Loss as Slowing Indian Economy Hurts Sales Tata Motors Ltd., the Indian truck maker that owns Jaguar and Land Rover, posted its first quarterly loss in seven years as tighter credit and slower economic growth hurt vehicle sales and it had a foreign exchange loss.

Indian Court Temporarily Lifts Ban on Natural Gas Sales From Reliance Area The Bombay High Court temporarily lifted a ban on the sale of natural gas from Reliance Industries Ltd.’s largest field off India’s east coast, paving the way for supplies to fuel-starved fertilizer and power companies.

India Allows Duty Free Sugar Imports For First Time Since 2006 on Prices India, the world’s biggest consumer of sugar, permitted duty free imports of the sweetener for sale domestically to prevent an increase in prices as output slumps.

Suzlon Reports Unexpected Third-Quarter Loss After Replacing Faulty Blades Suzlon Energy Ltd., India’s biggest maker of wind-turbine generators, unexpectedly reported a loss in the third-quarter after making payments to replace faulty equipment and the value of orders declined.

Larsen & Toubro Profit Rises on Bridge, Road Orders, Sale of Concrete Unit Larsen & Toubro Ltd., India’s biggest engineering company, said third-quarter profit more than tripled as it built more roads, bridges and factories and sold its ready- mix concrete business.

Spice's Modi Makes $408 Million Offer for Acquiring Control of Satyam Spice Corp. Chairman B. K. Modi offered 20 billion rupees ($408 million) for a controlling stake in Satyam Computer Services Ltd., joining Larsen & Toubro Ltd. in the race for the fraud-hit software exporter.

Bharat Heavy to Deliver Orders on Time, Meet Sales Target, Chairman Says Bharat Heavy Electricals Ltd., India’s biggest power equipment maker, expects to deliver orders on time and meet its sales growth target for the year ending March 31, Chairman and Managing Director K. Ravi Kumar said.

Benchmark Sensitive Index Declines; Bharat Heavy, Sun Pharmaceutical Drop Indian stocks fell, driving the benchmark down the most in a week. Bharat Heavy Electricals Ltd., the nation’s biggest maker of electrical equipment, dropped after reporting third-quarter profit that missed analyst estimates.

U.S. Economy Shrinks at 3.8% Pace, Most in 26 Years, as Spending Crumbles The U.S. economy shrank the most since 1982 in the fourth quarter as consumer spending recorded the worst slide in the postwar era, a trajectory that’s likely to continue in coming months.

Wall Street Bonuses May Go Way of Dodo as Casualty of Government Bailouts The Wall Street bonus, considered a sacred ritual, may become the industry’s biggest casualty as governments worldwide bail out financial institutions.

Chicago Purchasing Managers' Index Falls a Fourth Month as Economy Worsens U.S. business activity shrank in January for the fourth consecutive month, a sign the downturn in manufacturing may worsen this year.

Credit-Swap Overhaul Is Planned for March as Dealers Attempt to Limit Risk Dealers plan to overhaul credit- default swaps in March to curb risks in the $28 trillion market, making the derivatives more like bonds and creating a committee that will arbitrate disputes.

Caterpillar Will Fire Additional 2,110 Workers on Top of 20,000 Job Cuts Caterpillar Inc., the world’s largest maker of bulldozers and excavators, will fire 2,110 additional factory workers at three manufacturing plants in Illinois.

Tata Motors Unexpectedly Posts Loss as Slowing Indian Economy Hurts Sales Tata Motors Ltd., the Indian truck maker that owns Jaguar and Land Rover, posted its first quarterly loss in seven years as tighter credit and slower economic growth hurt vehicle sales and it had a foreign exchange loss.

Ireland's Credit-Rating Outlook Lowered by Moody's as Budget Deficit Grows Ireland’s government debt-rating outlook was lowered by Moody’s Investors Service, which said the financial crisis is likely to “significantly impact” the country’s economic strength.

source: Bloomberg

DBS Chola MF declares dividend

Record date for dividend is 04 February 2009

DBS Chola Mutual Fund has announced the dividend under dividend option of DBS Chola Interval Income Fund - Quarterly Plan C. The record date for the declaration of dividend is 04 February 2009.

The AMC plans to distribute 100% of the distributable surplus available on the record date as dividend. The NAV for retail and institutional plan of the scheme was Rs 10.2961 and Rs 10.2880 per unit as on 28 January 2009.

DBS Chola Interval Income Fund - Quarterly Plan C is a debt oriented interval income fund with an objective to generate regular income through investments in debt (including securitised debt), money market and government securities normally maturing in line with the time profile of the plan.

Benchmark Mutual Fund launches its Shariah BeES

NFO period from 04 February 2009, 25 February 2009

Benchmark Mutual Fund has announced the new issue period of Shariah Benchmark Exchange Traded Scheme. It is an open ended listed index scheme. The new offer period (NFO) will be open for subscription from 04 February to 25 February 2009. The face value of new issue is Rs 10 per unit.

Details

The investment objective of the Scheme is to provide returns that, before expenses, closely correspond to the total returns of the securities as represented by the S&P CNX Nifty Shariah Index by investing in securities which are constituents of S&P CNX Nifty Shariah Index in the same proportion as in the Index.

The S&P CNX Shariah index comprises stocks that are Shariah compliant. As a result, the fund will not invest in business activities related to pork, alcohol, gambling, financials, advertising and media (newspapers are allowed and sub-industries are analyzed individually), pornography, tobacco and trading of gold and silver.

The scheme offers only growth option. The minimum application amount will be Rs 10,000 and in multiples of Re. 1 thereafter. The scheme seeks to collect a minimum target amount of Rs 1 crore during the NFO period.

The scheme will invest 90%-100% in securities covered by the S&P CNX Nifty Shariah Index with medium to high risk profile. The scheme will reserve 10% as cash.

For investment between Rs 10000 to Rs 49,99,999, the scheme charges 1.50% entry load. For investment between Rs 50 lakh to Rs 1,99,99,999, the scheme will charge 1.00% entry load. For investment between Rs 2 crore to Rs 4,99,99,999, the scheme will charge 0.50% entry load and for the investment of Rs 5 crore and above no entry load will be charged.

The scheme will not charge any entry load for continuous offer and it will not charge any exit load.

The benchmark index for the scheme would be S&P CNX Nifty Shariah Index.

Vishal Jain will be the fund manager for the scheme.

DWS Insta Cash Fund changes investment pattern

Change will be on a prospective basis

Deutsche Mutual Fund has announced changes in the investment pattern of DWS Insta Cash Fund (DICPF), an open ended liquid income scheme.

In accordance with Sebi circular date 19 January 2009, the investment pattern indicating characteristics of the portfolio of the DICPF have been revised as follows:

a) With effect from 01 February 2009, DICPF shall make investments in / purchase debt and money market securities with maturity of upto 182 days only.

b) With effect from 01 May 2009, DICPF shall make investments in / purchase debt and money market securities with maturity of upto 91 days only.

c) Inter-Scheme transfers of securities having maturity upto 365 days and held in other schemes as on 01 February 2009 shall be permitted in DICPF till 31 October 2009. With effect from 01 November 2009 such inter scheme transfer of securities held in other schemes having maturity of upto 91 days only shall be permitted in DICPF.

Bharti AXA MF announces changes In Portfolio Characteristics of Liquid Fund

Change will be on a prospective basis

Bharti AXA Mutual Fund has announced modification in the portfolio characteristics of Bharti AXA Liquid Fund, an open ended liquid scheme.

In accordance with Sebi circular date 19 January 2009, the investment pattern indicating characteristics of the portfolio of the liquid scheme. Accordingly, following changes are being made in the offer documents/ scheme information documents/ key information memorandum of Bharti AXA Liquid Fund.

1) With effect from 01 February 2009, the scheme shall make investments in / purchase debt and money market securities with maturity of upto 182 days only.

2) With effect from 01 May 2009, the scheme shall make investments in / purchase debt and money market securities with maturity of upto 91 days only.

3) With regards to 1 and 2 above, in case of securities where the principal is required to be repaid in a single payout, the maturity of the securities shall mean residual maturity. In case the principal is to be repaid in more than one payout, the maturity of the securities shall be calculated on the basis of weighted average maturity. In case of securities with put and call options (daily or otherwise), the residual maturity of the securities shall not be greater than 182 days with effect from 1 February 2009 and 91 days with effect from 01 May 2009.

4) Inter-Scheme transfers of debt and money market securities having maturity upto 365 days and held in other schemes of Bharti AXA Mutual Fund as on 01 February 2009 shall be permitted in upto 31 October 2009. Thereafter, inter-Scheme transfers will be permitted for debt and money market securities having maturity upto 91 days only.

Sahara MF announces changes In Investment Pattern of Liquid Fund

Change will be on a prospective basis

Sahara Mutual Fund has announced modification in the portfolio characteristics of Sahara Liquid Fund, an open ended liquid scheme.

In accordance with Sebi circular date 19 January 2009, the investment pattern indicating characteristics of the portfolio of the Sahara Liquid Fund have been revised as follows:

i) With effect from 01 February 2009, the scheme shall make investments in / purchase debt and money market securities with maturity of upto 182 days only.

ii) With effect from 01 May 2009, the scheme shall make investments in / purchase debt and money market securities with maturity of upto 91 days only.

iii) In case of securities with put and call option (daily or otherwise) the residual maturity of the securities shall not be greater than 182 days with effect from 01 February 2009 and 91 days with effect from 01 May 2009.

iv) In case the maturity of the security falls on a non-business day then settlement of securities will take place on the next business day.

v) Inter-Scheme transfers of securities having maturity upto 365 days and held in other schemes as on 01 February 2009 shall be permitted till 31 October 2009. With effect from 01 November 2009 such inter scheme transfer will be permitted for securities having a maturity of upto 91 days only.

AIG MF announces changes in Investment Pattern of Liquid Fund

Change will be on a prospective basis

AIG Mutual Fund has announced changes in the characteristics of investment pattern of AIG India Liquid Fund an open ended liquid scheme.

In accordance with Sebi circular date 19 January 2009, the investment pattern indicating characteristics of the portfolio of the AIG India Liquid Fund have been revised as follows:

i) With effect from 01 February 2009, the scheme shall make investments in / purchase debt and money market securities with maturity of upto 182 days only.

ii) With effect from 01 May 2009, the scheme shall make investments in / purchase debt and money market securities with maturity of upto 91 days only.

iii) Inter-Scheme transfers of securities having maturity upto 365 days and held in other schemes as on 01 February 2009 shall be permitted till 31 October 2009.

iv) With effect from 01 November 2009 such inter scheme transfer will be permitted for securities having a maturity of upto 91 days only.

Lotus India MF changes Portfolio Characteristics of Liquid Schemes

Change will be on a prospective basis

Lotus India Mutual Fund has announced changes in the characteristics of investment pattern of Liquid Schemes.

In accordance with Sebi circular date 19 January 2009, the investment pattern indicating characteristics of the portfolio of the Liquid schemes have been revised as follows:

i) With effect from 01 February 2009 till 30 April 2009, scheme shall make investments in / purchase debt and money market securities with maturity of upto 182 days only.

ii) With effect from 01 May 2009, the scheme shall make investments in / purchase debt and money market securities with maturity of upto 91 days only.

Baroda Pioneer MF introduces new investment plan under Liquid Fund

To generate income with the high level of liquidity

Baroda Pioneer Mutual Fund has introduced the new investment plan namely Institutional Plan in Baroda Pioneer Liquid Fund. Institutional Plan is having investment objective of generating income with the high level of liquidity by investing in portfolio of money market instrument & debt.

Details

The initial offer period for subscription under this plan is from 27 January 2009 till 4 February 2009. Offer Price is Rs 10 per unit. The plan will reopen on 9 February 2009.

Baroda Pioneer Liquid Fund is an open ended liquid fund that seeks to provide a high degree of safety and liquidity while generating reasonable returns, by investing in a portfolio of a range of money market and short term debt instruments.

The schemes offer growth and dividend option and the dividend option further offers monthly dividend payout and daily/weekly/monthly reinvestment facilities.

The minimum application amount of the scheme is Rs 1 crore.

The scheme will charge neither entry nor exit load.

The Fund Managers are Alok Sahoo and Hetal Shah.

Canara Robeco MF introduces new option

With effect from 2 February 2009

Canara Robeco Mutual Fund introduces growth plan and dividend plan under the Canara Robeco Equity Tax Saver Fund. The dividend plan further offers dividend payout and reinvestment option, with effect from 2 February 2009.

Existing unit holders may note that their existing investments will be held under dividend payout option under the dividend plan as default plan/option.

The above mentioned plans/ options will be available for fresh investments with effect from 2 February 2009 and such investments will be subject to a statutory lock in period of three years from the date of allotment in terms of the rules and regulations governing the Equity Linked Savings Scheme (ELSS).

Bullion metals shine

Weak economic reports act as the catalyst

Dour and weak economic reports pushed gold prices higher on Thursday, 29 January, 2009. Gold prices also rose as it increased the appeal of the metal as a safe haven against alternate investment. Gold rose despite the strong dollar.

Generally, a stronger dollar pressures demand for dollar-denominated commodities, such as crude oil and gold, which become more expensive for holders of other currencies and also vice versa. But silver prices dropped.

On Thursday, Comex Gold for February delivery rose $16.9 (1.9%) to close at $905.1 an ounce on the New York Mercantile Exchange. Last week, gold prices ended higher by 6.7%. This year gold has gained 3.1% till date. On 17 March, 2008 prices had skyrocketed to a high of $1,034/ounce. But prices have dropped significantly (14%) since then.

On Thursday, Comex silver futures for March delivery rose 38.2 cents (1.5%) to end at $12.145 an ounce. For 2008, silver had lost 24%.

At the currency market on Wednesday, the dollar index, which tracks the dollar against a trade-weighted basket of six major currencies, continued to rise. The dollar index rose 0.3% today.

Among major economic reports for the day, there were quite a few of them. The durable goods order, initial jobless claims data and December new home sales data all checked in below expectation.

Initial jobless claims for the week ended Jan. 24 increased modestly to 588,000, which is a bit above the consensus estimate of 575,000 claims. Continuing claims climbed to 4.78 million. That is the highest level of continuing claims dating back to four decades.

December durable goods orders declined 2.6%. That was the fifth straight monthly decline reflecting an ongoing pullback in business investment. The drop was more than expected. Excluding transportation, orders were down 3.6%.

In 2008, gold prices ended higher by 5.5%. The dollar index had gained 12% that year.

Last year, the weakening dollar and higher global demand for raw materials had led to records for commodities including gold. Gold reached a record in March 2008 as a U.S. housing slump and credit crisis spurred the Federal Reserve to slash borrowing costs. In the last move, the Federal Reserve has cuts its target bank lending rate to 0.25% from 5.25% in September, 2007. The Fed did it in nine steps.

Prior to 2008, gold had witnessed the greatest annual gain in twenty eight years by gaining $200/ounce (31%) in FY 2007 as lower interest rates had sent the dollar tumbling, and crude-oil prices rose to a record. Silver had climbed 16% in FY 2007. In 2006, silver had jumped 46% while gold gained 23%.

At the MCX, gold prices for February delivery closed higher by Rs 252 (1.8%) at Rs 14,146 per 10 grams. Prices rose to a high of Rs 14,172 per 10 grams and fell to a low of Rs 13,753 per 10 grams during the day's trading.

At the MCX, silver prices for March delivery closed Rs 238 (1.2%) higher at Rs 19,508/Kg. Prices opened at Rs 19,182/kg and rose to a high of Rs 19,580/Kg during the day's trading.

source: Capital Market

Crude drops

Demand concerns weigh on crude prices

Crude prices ended lower on Thursday, 29 January, 2009 as a set of weak economic data hinted towards lower energy demand in the coming months. Prices also went lower after yesterday's weekly inventory report showed build up in crude inventories for fifth straight week.

On Thursday, crude-oil futures for light sweet crude for March delivery closed at $43.6/barrel (lower by $0.72 or 1.7%) on the New York Mercantile Exchange. Last week, crude prices ended higher by 9%. Prices had reached a low of $40.18 earlier during the day today.

Prices reached a high of $147 on 11 July but have dropped almost 65% since then. Year to date, in 2009, crude prices are lower by 15.7%. On a yearly basis, crude prices are lower by 55%.

Among major economic reports for the day, there were quite a few of them. The durable goods order, initial jobless claims data and December new home sales data all checked in below expectation.

Initial jobless claims for the week ended Jan. 24 increased modestly to 588,000, which is a bit above the consensus estimate of 575,000 claims. Continuing claims climbed to 4.78 million. That is the highest level of continuing claims dating back to four decades.

December durable goods orders declined 2.6%. That was the fifth straight monthly decline reflecting an ongoing pullback in business investment. The drop was more than expected. Excluding transportation, orders were down 3.6%.

The Energy department had reported yesterday that U.S. crude stockpiles jumped 6.2 million barrels last week to reach 338.9 million barrels. That's the highest level the EIA has reported since August 2007. U.S. refineries operated at 82.5% of their operable capacity last week, down from the 83.3% a week ago. EIA had also reported that gasoline inventories fell 100,000 barrels, and distillate fuel stockpiles, which include heating oil and diesel, dropped 1 million barrels last week.

Against this background, March reformulated gasoline rose 4% to $1.2309 a gallon, and March heating oil rose 0.5% to $1.4283 a gallon.

March natural gas rose 3.5% to $4.576 per million British thermal units. EIA reported today that U.S. natural-gas inventories fell 186 billion cubic feet in the week ended 23 January, 2009. Gas in storage was higher by 34 billion cubic feet than at this time last year and by 29 billion cubic feet compared to the five-year average.

At the MCX, crude oil for February delivery closed at Rs 2,034/barrel, lower by Rs 16 (0.8%) against previous day's close. Natural gas for February delivery closed at Rs 218.6/mmbtu, higher by Rs 2.4/mmbtu (1.1%).

source: Capital Market

Gold Sparking Even After Dollar Strength

Moves Nearer To All Time Highs In Domestic Futures Market

Gold is again enlightened for a second straight day. Both MCX and COMEX saw smart recovery last night and have continued their bull run. COMEX Gold was trading at $ 925.30 an ounce, up $18.80 when last seen.

MCX Gold April expiry opened in green and spooked higher. The contract is at Rs 14198 per 10 grams up Rs 89. the prices are near to thier all time highs of Rs 14450 registered on 10th October 2008.
The surprising part of this rally in domestic and international markets is the fact that Dollar has shown constant up gradation against Euro and other major currencies. Dollar is now trading at 1.2853 up 104 pips. Dollar was at 1.2953 at the time of close on Thursday.

Weakening the EURO was further bad report from the Eurozone. The Eurozone jobless rate rose to 8% in December from an upwardly revised 7.9% in November, the Eurostat said Friday. The statistical office revised the rate for November from 7.8%. Economists had expected a rate of 7.9% for the month of December.

The gold price is likely to hit record highs in dollar terms as fears grow about the stability of the US currency, the chairman of Barrick Gold said last night at the World Economic Forum (WEF) in Davos.

The founder of the world's largest goldmining company said that there was even a possibility that central banks, including China's, might start to switch from dollar holdings to gold, which could cause the price of the metal to treble.

Yesterday, the U.S. Census Bureau said that new home sales were at an annual rate of 331,000 units in December, down 14.7% from November's pace and weaker than expected. For all of 2008, there were 482,000 new homes sold, down 38% from 2007.

The U.S. Labor Department said that jobless claims were up 3,000 last week to 588,000, more than expected. The U.S. Commerce Department said that durable goods orders were down 2.6% in December, weaker than expected. For all of 2008, orders were down 5.7%, the second largest decline on record.

source: Capital Market

News Flash

Indian Exporters Cut 1 Million Jobs as Foreign Orders Decline, Pillai Says Indian exporters have shed as many as 1 million jobs, more than 15 times a December estimate, amid the most protracted decline in overseas sales in a decade, the commerce ministry said.

Asia Stocks Rise, Led by Banks, on Rate Cuts, Stimulus; BHP Billiton Gains Asian stocks rallied for a third day, led by banks and commodity producers, on optimism lower interest rates and U.S. stimulus measures will revive the global economy.

India's Inflation Holds Near 11-Month Low as Oil, Commodity Prices Decline India’s inflation rate held near an 11-month low as demand slowed and oil and commodity prices eased.

Benchmark Sensitive Index Declines; Bharti, DLF Fall as Automakers Advance Indian stocks fell, with the benchmark index snapping a two-day, 6.7 percent rally. Bharti Airtel Ltd. and Reliance Communications Ltd., India’s two biggest mobile-phone operators, dropped after they had their price targets cut at Goldman Sachs Group Inc.

Cairn India May Export Rajasthan Crude Oil if Domestic Buyers Aren't Found Cairn India Ltd., a unit of U.K. explorer Cairn Energy Plc, has the option to export crude oil from its fields in India’s Rajasthan state if the government doesn’t find a buyer for the entire output.

Maruti Third-Quarter Profit Falls as Slowing Economy Hurts India Car Sales Maruti Suzuki India Ltd., maker of half the cars sold in the country, posted its smallest quarterly profit in more than four years after tighter credit and a cooling economy eroded vehicle demand.

Bonds Decline Before Government Debt Auction, Yields Climb to 3-Week High India’s 10-year bonds declined for a third day on speculation investors are selling to make room for securities to be offered at a government debt auction tomorrow.

India May Make World Trade Organization Complaint Over EU on Generic Drugs India may drag the European Union to the World Trade Organization for trying to prevent its companies from selling generic copies of drugs, citing infringement of patents, Commerce Secretary G.K. Pillai said.

U.S. New-Home Sales Decline to Lowest Level on Record Amid Credit Freeze Sales of new homes in the U.S. fell in December to the lowest level on record after banks tightened lending and job losses mounted.

Ford Burns $5.5 Billion in Cash, Taps Revolving Loan After Worst Loss Ever Ford Motor Co., insisting it can survive without federal loans, said it burned $5.5 billion in cash in the fourth quarter and will tap a revolving credit line after the worst annual performance in its 105-year history.

Jobless-Benefit Rolls in U.S. Surge to Record High; Initial Claims Climb The number of Americans receiving unemployment benefits soared to a record, as companies slash jobs to lower costs in a deepening recession.

U.S. Stocks Retreat on Earnings, Durable Goods, Jobs Data; Allstate Slides U.S. stocks fell, halting a four-day advance, as more companies posted disappointing earnings and reports on durable goods and jobless claims spurred concern the recession is deepening.

Treasury Said to Back $60 Billion Plan to Revive U.S. Student-Loan Market The U.S. Treasury agreed to commit as much as $60 billion to shore up the market for student loans and help reduce the illiquid assets clogging banks’ balance sheets, according to three people familiar with the matter.

Shipping Investor Nobu Su Offers 20 Supertankers to Crude Oil Speculators Shipping investor Nobu Su plans to offer his fleet of 20 supertankers to speculators to store crude and bet that prices will appreciate later in the year.

Dimon Says Banks Gave Consumers `Weapons of Mass Destruction' on Borrowing Jamie Dimon, chief executive officer of JPMorgan Chase & Co., blamed banks and regulators for letting consumers amass debt like “weapons of mass destruction,” leading to the global economic crisis.

source: Bloomberg

Tata MF declares dividend

Record date for dividend is 03 February 2009

Tata Mutual Fund has declared dividend under dividend option of Tata Floating Rate Fund – Long Term. The record date for dividend is set as 03 February 2009.

The quantum of dividend is upto 100% of the returns generated between 04 November 2008 to 03 February 2009, subject to the availability of the distributable surplus available on the record date will be distributed as dividend for the face value Rs 10 per unit. The dividend distribution is subject to availability and adequacy of distributable surplus on the record date.

The NAV of the scheme was at Rs 10.5097 per unit as on 27 January 2009.

Principal Growth Fund proposes to change in asset allocation

With effect from closure of business hours on 3 March 2009

Principal Pnb mutual fund has announced the revision in asset allocation pattern of Principal Growth Fund, an open-ended equity scheme. The restructure of this scheme shall be effected on closure of business hours on 3 March 2009.

According to the revised asset allocation pattern, the scheme will invests upto 65%-100% of its corpus in the equity and equity related instruments. It will invest upto 35% in the debt and money market instruments. Investment in securitised debt may be upto 35% of the net asset of the scheme.

The fund house may invest in derivatives upto 50% of the net assets of the scheme. The AMC further reserves the right to invest in ADRs / GDRs and / or overseas financial debt instruments including overseas mutual funds not exceeding 15% if the net assets of the scheme.

Existing asset allocation is as follows: the scheme invest its entire corpus in equity and equity related instruments and invest upto 10% in the debt and money market instruments, debt includes securitised debt.

The fund house may invest in derivatives upto 50% of the net assets of the scheme. The AMC further reserves the right to invest in ADRs / GDRs and / or overseas financial debt instruments including overseas mutual funds not exceeding 15% if the net assets of the scheme.

The investors who have objection for the above changes may exit from the scheme without payment of any exit load. The exit without payment of exit load can be exercised from 30 January 2009 to 2 March 2009 (upto 3 p.m) both days inclusive.

UTI Liquid Plus Fund renames as UTI Treasury Advantage Fund

With effect from 28 January 2009

UTI Mutual Fund has decided to change in the nomenclature of UTI Liquid Plus Fund to UTI Treasury Advantage Fund with the effect from 28 January 2009. All the other features of the scheme remain unchanged.

UTI Treasury Advantage Fund is an open ended income scheme with an investment objective to generate attractive return for its investors consistent with capital preservation and liquidity by investing in a portfolio of quality debt securities money market instruments and structured obligations.

ICICI MF announces changes in portfolio of its Liquid Plan & Sweep Plan

Change will be on a prospective basis

ICICI Mutual Fund has announces changes in the portfolio of ICICI Prudential Liquid Plan and ICICI Prudential Sweep Plan.

In accordance with Sebi circular date 19 January 2009, the investment pattern indicating characteristics of the portfolio of the schemes will be changed to the following:

i) With effect from February 01, 2009, the Schemes shall make investments in / purchase debt and money market securities with maturity of upto 182 days only and

ii) With effect from May 01, 2009 the Schemes shall make investments in / purchase debt and money market securities with maturity of upto 91 days only.

Fidelity Cash Fund changes its investment pattern

Change will be on a prospective basis

Fidelity Mutual Fund has announces changes in the investment pattern of Fidelity Cash Fund (FCF). The changes will be effected in the offer documents/ scheme information documents/ key information memorandum of Fidelity Mutual Fund on a prospective basis.

In accordance with Sebi circular date 19 January 2009, the investment pattern indicating characteristics of the portfolio of FCF will be changed to the following:

(i) With effect from 01 February 2009, FCF will make investment in/purchase debt and money market securities with maturity of upto 182 days only.

(ii) With effect from 01 May 2009, FCF will make investment in/purchase debt and money market securities with maturity of upto 91 days only.

(iii) Inter-scheme transfers of securities having maturity of upto 365 days and held in other schemes of the fund as on 01 February 2009 will be permitted till 31 October 2009.

(iv) With effect from 01 November 2009, inter-scheme transfers in FCF will be permitted for debt and money market securities with maturity of upto 91 days only.

HDFC MF announces changes in characteristics of portfolio of liquid schemes

Change will be on a prospective basis

HDFC Mutual Fund has announced changes in the characteristics of portfolio of HDFC Liquid Fund and HDFC Cash Management Fund – Saving Plan and Call Plan (Liquid Schemes).

In accordance with Sebi circular date 19 January 2009, the investment pattern indicating characteristics of the portfolio of the liquid schemes have been revised as follows:

i) With effect from February 01, 2009 till 30 April 2009, the Schemes shall make investments in / purchase debt and money market securities with maturity of upto 182 days only and in case of securities with put and call options (daily or otherwise) the residual shall not be greater than 182 days.

ii) With effect from May 01, 2009 the Schemes shall make investments in / purchase debt and money market securities with maturity of upto 91 days only and in case of securities with put and call options (daily or otherwise) the residual shall not be greater than 90 days.

ICICI Prudential MF files offer document with Sebi

Plans to launch ICICI Prudential Dividend Yield Fund

Name of Fund: ICICI Prudential Dividend Yield Fund

Type of Scheme: It is an open ended equity fund

Investment Objective: ICICI Prudential Dividend Yield Fund seeks to generate long term capital appreciation and / or income distribution by investing predominantly in equity and equity related securities of high dividend yield companies. The balance may be invested in other equity and equity related securities, debt securities and money market instruments as per the allocation pattern.

Investment Options: The Scheme will have two options, viz, retail option and institutional option I. The retail option will have growth and dividend sub-options with dividend payout and dividend reinvestment facilities available under dividend sub option. Institutional option I will have growth sub-option only.

Asset Allocation: The scheme will invest 65%-100% in the equity & equity related securities, it invests upto 35% in other equity and equity related securities with medium to high risk profile. And the scheme will invest upto 35% in debt and money market instruments including securitised debt of upto 50% of allocation to debt instrument

Equity investment includes derivatives instruments to the extent of 75% of the Net Assets as permitted vide SEBI and Including investment in ADR/GDR up to 50% of allocation to Equity & Equity related securities, being maximum permitted under SEBI Regulations.

NFO price: Rs 10 per unit

Entry Load: For retail plan, 2.25% of exit load will be charged for the subscription less than Rs 2 crore and nil, for the subscription of Rs 2 crore and more. For institutional plan I, no entry load will be charged.

Exit Load: For subscription of less than Rs 2 crore, the scheme will charge an exit load of 1.50% if redeemed on or before completion of 6 months from the date of allotment and 1.00%, if the amount sought to be redeemed on or after 6 months but before 12 months from the date of allotment. If the amount redeemed on or after 12 months, no exit load will be charged. And the scheme will not charge any exit load for the investments of more than Rs 2 crore.

For Institutional plan I, the scheme will not charge any exit load.

Minimum Investment Amount: The minimum investment amount under retail plan will be Rs 5,000 and in multiples of Re.1 thereafter and under institutional plan I, minimum investment amount will be Rs 1 lakh and in multiples of Re.1 thereafter.

Minimum Targeted amount: The Fund seeks to collect a minimum subscription amount of Rs 5 crore during NFO.

Benchmark Index: S&P CNX Nifty.

Fund Manager: Deven Sangoi will manage the fund.

Insurance-dual benefit of protection and returns on investments

Insurance as an asset class is gaining attention, not only as part of tax saving investments, but also due to the current slowdown in the global and domestic economy. With uncertainties looking large and the economic prospects weakening, and also due to huge losses staring in most investment asset classes including commodities, shares, real estate etc, time has come for the investor to restore the balance, which is historically tilted against insurance for ages.

Industry Performance:

The industry recorded 38,8976 policies in the month of November 2008 under the individual single premium category with Rs 1309.62 crore premium under written. The 1992 policies under group single premium collected a premium of Rs 927.14 crore in November 2008 and Rs 8052.26 crore upto November 2008 compared with Rs 5455.68 crore in the corresponding period of previous year. However the number of policies under group single premium category was more in the period upto November 2007 (14028) over the period upto November 2008 (12513). Cumulative premium / no.of policies upto the month is net of cancellations which may occur during the free look period.

Meanwhile under individual non-single premium category, 3327976 policies collected premium of Rs 3073.94 crore in November 2008 and Rs 25167.57 crore in the period upto November 2008 through 23080840 policies/schemes. The group non single premium category collected premium of Rs 2289.01 crore in April-November 2008 over Rs 673.38 crore in the corresponding period of previous year. Here the number of policies/schemes was more than in April-November 2007.

In the month of November 2008 the non life insurance general category recorded a premium of Rs 2223.45 crore, a rise of 0.11% over Rs 2220.96 crore in November 2007. The public sector insurers had higher share of Rs 1284.12 crore over Rs 939.33 crore of private sector in November 2008. However the rise in total premium under written in November 2008 over November 2007 was primarily due to rise in private sector premium collection, while the fall in public sector premium collection restricted this rise. The gross premium underwritten rose by 9.57% in April-November 2008 over April-November 2007 mainly led by a rise of 15.19% in premium collection by private sector.

Among the specialized institutions, Star Health & Allied Insurance shined like a star by collecting premium of Rs 318.76 crore in April-November 2008 over Rs 98.99 crore in the corresponding period of previous year.

Need of the hour:

An adequate insurance will ensure that even if your income or heart stops ticking, your family / dependent's lifestyle does not change significantly. Viewing this as benchmark, most of us are under insured.

As the financial year draws to a close, investors rush to make investments in tax saving instruments. Section 80C lists down the instruments, which you can invest in order to save tax. You can invest a maximum of Rs 1 lakh in all these instruments put together and the entire amount of Rs 1 lakh will be deducted from your taxable income. Among others are Unit linked insurance plans (ULIPs) offered by insurance companies.

ULIPs: Unit Linked Insurance Plans or ULIPs are fast emerging as a way to enjoy best of both worlds - Life insurance with the benefits of Equity investments. ULIP for planning long term goals, like regular pensions, children's education and marriage, invest the premium money in equity market, thereby providing much higher returns in the long run.

All ULIP plans provide income tax deductions of up to Rs. 1,00,000 under section 80C. In this, the Returns are tax-free in the hands of the investor. ULIPs also allow an investor to switch funds during a downturn and protect his investment, and, importantly, also give him a life cover. However, if your annual premium exceeds 20% of the sum assured on the policy, the investor will not get the tax benefit.

In a recent move to save the life insurance industry several hundred crore in capital requirement, the insurance regulator has eased solvency margins for unit-linked insurance plans. Solvency margin is the excess of assets over liabilities that an insurer maintains as a prudential measure in the interest of policyholders.

The move will help enhance ULIP sales, especially pension and health products. It will also lower the cost structure in ULIPs. Life insurers selling ULIPs will have a level playing field vis a vis companies selling traditional products whose solvency margins were lowered recently. A lower solvency capital would mean that insurers will also have more money to underwrite new business. It will also ease the pressure on bringing in extra capital.

Pension Plans: Pension plans apart from playing a significant role in retirement planning, also offer tax benefits under a dedicated section i.e. Section 80CCC. Premiums paid for the same are eligible for deduction. It is a market-linked security and the interest rate depends on the fund management.

The Maximum investment limit is Rs 10000. Most insurance companies give the individual an option to withdraw a part (25-33%) of this sum as a lump sum on maturity. The amount withdrawn or the cash component is tax-free. As there is no tax rebate for those with income above Rs 500,000 it is better to invest in a retirement plan and thereby, claim the Section 80CCC deduction.

With the entry of private players in the Insurance sector, the Unit linked insurance policies (ULIPS) have gained huge popularity. But with the crash in capital markets, most of these ULIPs have seen massive erosion in their NAVs. As a result, now pure insurance products (like Endowment policy, Whole Life Policy) and guaranteed returns policies are gaining momentum.

Life insurance companies have recently started offering guaranteed-return products to entice risk-averse investors who are looking to park their earnings in safe havens. Mostly these are single-premium policies where you have to invest a certain sum of money with the maturity proceeds coming to you only at the end of the chosen term. Besides, most of these policies also provide tax benefits to investors.

An investor can get almost equal return on investment when compared with similar tax-exempt schemes. The interest rate on investment in National Savings Certificate (NSC) (with a half-Yearly Compounding), and public provident fund (PPF) (Compounded annually), is 8% with a lock in period of 6 and 15 years respectively.

In bank fixed deposit (FD) schemes, rate on long-term FD of five years or more is in the 8-9% range from the New Year. This would translate into an interest income of 9.5-11% over five years. In life insurance, take for instance, the new schemes coming up are promising a guaranteed return upto 9%-10% per annum, depending upon the investment tenure.

Though, in terms of returns these investments provide nearly equal returns but they are relatively illiquid instruments, as investors cannot get the money back before maturity even in times of exigencies. Single-premium life insurance schemes, however, give investors the freedom to walk out of the scheme after a year.

Here we take a look at some of guaranteed-return insurance plans:

IDBI Fortis Bondsurance

Aiming to tap customers looking for guaranteed returns, IDBI Fortis Life Insurance has recently launched a guaranteed-return plan named Bondsurance. Bondsurance offers guaranteed return on investment along with life insurance cover. With a one-time minimum investment of just Rs 20,000, Bondsurance is specially crafted for those looking for attractive guaranteed returns with the promise of insurance protection.

The plan, in fact, addresses the needs of those willing to put away money for either 5 years or 10 years, earning a guaranteed return on the premium paid. At the same time, in the short term, Bondsurance offers liquidity after the first year with a special surrender value in case one needs the funds in urgency. The plan also comes with two attractive tax benefits under Sec 80C and 10(10D) of the I-T Act.

According to the company, an investment of Rs 100,000 in Bondsurance would fetch Rs 2.03 lakh for customers in the age bracket of 8 years to 32 years on maturity, at the end of ten years. The maturity amount, however, varies with age and term of the plan.

Aegon Religare Guaranteed Return Plan

This is also a single-premium plan that guarantees tax-free returns along with life cover. It is a close-ended scheme that offers guaranteed returns at a compounded annual rate 7.2 per cent for two tenures: 7 and 10 years.

Anybody in the age group of 90 days to 45 years can buy this policy by paying single premium in the range of Rs 50,000 to Rs 4 lakh. The returns on maturity are tax-free and the plan comes with an added benefit of life cover -- five times of the single premium paid. The policy, which requires no medical test, is open for subscription for a limited period only.

Tata AIG Life InvestAssure Insta

Tata AIG Life Insurance Company Limited has launched Tata AIG Life InvestAssure Insta. The policy can be bought for anyone between the ages of 30 days and 60 years with maximum maturity age of 75 years. The policy offers annualized premium options of Rs. 20,000, Rs. 30,000, Rs. 40,000 and Rs. 50,000 which the customer can decide upon in accordance to his convenience. The premium paid under this policy is eligible for tax benefits u/s 80C of the Income Tax Act, 1961. Moreover, life insurance proceeds enjoy tax benefits as per section 10(10D) of the said Act.

Tata AIG Life InvestAssure Insta is designed to help the policyholder obtain valuable protection enhanced by the benefit of getting the most out of his investment and the growth potential through high allocation rates and further supplement it with a guaranteed maturity bonus. The customer can choose from a spread of five fund options depending upon his risk taking appetite:

Top 50 fund

Top 200 fund

Aggressive Flexi fund

Stable Flexi fund

Bond fund

On survival to the end of the policy term, the policyholder will receive the Total Fund Value, which is equal to the value of the Regular Premium Account, plus the value of the Top-Up Premium Account (if applicable) valued at applicable unit price. In addition, they will also receive the Maturity Bonus of 5% of the Regular Premium Account as on the maturity date, provided all due premiums have been paid. However, the maturity bonus will not be applicable on death/lapse/surrender or on the Top-up Fund Value under the policy.

Reliance Life ULIPs with guaranteed return

Reliance Life Insurance has launched two unique unit-linked plans under Reliance Guaranteed Return Plan Series I with insurance and pension options, assuring financial security with guaranteed maturity benefit at 6.85 per cent compounded annually plus upside, if any.

The single unit linked insurance plan is available for limited period in two options: Reliance Guaranteed Return Plan Series I , Insurance and Reliance Guaranteed Return Plan Series I , Pension with fixed term of five years. Under Reliance Guaranteed Return Plan Series I, investment rate of return would amount to 10.4 per cent presuming tax benefits at 10 per cent rate of return and tax rate of 33.99 per cent.

The new plan also provides partial withdrawal benefits in insurance option after three years. Minimum withdrawal amount would be Rs 5,000, whereas maximum withdrawal amount should be 20 per cent of the fund value at the time of withdrawal.

Besides maturity additions in insurance option, death benefit comes with sum assured plus fund value. The insured can choose any life cover between 1.25 to 5 times of single premium. In pension variant, in addition to maturity benefits, the guaranteed return on death is available during the fifth year.

Birla Sun Life's Dream Plan

Birla Sun Life Insurance Dream Plan is a long-term unit linked insurance plan which offers guaranteed maturity benefits with options to double or triple the guaranteed maturity benefit by choosing 200 per cent or 300 per cent options.

It also gives choice to enhance life cover anytime during the policy term at minimal additional cost. However, the enhanced sum assured chosen must be at least Rs 50,000. This is not a limited period plan and you can pay the policy premium monthly, quarterly, half-yearly or annually.

Outlook

With the financial crisis compounding, investors have started giving more preference to financial protection. And thus the new schemes of insurance companies with guaranteed returns are seeking more attention of the investors. Along with protection tax benefits provided by these schemes have also pulled tax savvy investors towards them.

source: Capital Market

Insurance industry is hovering for impressive growth

The number of policy holders to double at 530 million within the next five years

Indian insurance sector is poised for a massive expansion. And insurance companies have been recruiting more employees and coming out with newer products. On the other hand, the banks and other financial institutions have stopped the process of expansion, and also begun retrenching employees, according to Mr Puneet Nanda, Executive Vice-President & CIO of ICICI Prudential Life Insurance, and Mr Vikram Kotak, Chief Investment Officer of Birla Sun Life Insurance. They were addressing an interactive seminar on "Insurance as Long-term Investment Avenue" organized by Indian Merchants' Chamber on 27 January 2009.

Based on the present pace of insurance industry's growth, they expected the number of policy holders to double at 530 million within the next five years. All this was happening under a tight regulatory regime and strict vigilance of the Insurance Regulatory & Development Authority (IRDA), which was very conservative.

Mr Puneet Nanda said that insurance was becoming the most popular form of household savings and also the instrument of security to people. There was a great scope for growth, as at present insurance industry's share was only 16.9% of household financial savings.

The insurance industry enabled people to do savings by offering them its products such as the long-term regular premium and single premium insurance policies. It also catered to people's different needs by way of different policies such as such as life plan, child plan, health plan, pension plan etc.

The insurance industry started offering health insurance products recently, as the mediclaim insurance policies, which were in vogue, did not satisfactorily meet the needs of people, who looked for safety, transparency, consistency and good return from the insurance companies, he said.

For safeguarding itself against the erosion of its funds as a result of vagaries of the market, the insurance industry, as a rule, deployed its investible resources in diversified portfolios consisting of a large number of sound corporates and sectors -- each with sector-specific and company-specific limits -- in a disciplined manner. Also, they invested only in highly rated corporate debts, observing prudent regulatory norms.

Mr Puneet Nanda said that different asset mixes served different investor needs, and in all such cases optimal asset allocation was critical. "The Brinson study on investment by the US insurance industry in the past 100 years reveals that asset allocation was 91.50%, stock selection was 4.60%, market timing was 1.80% and others 2.10%," he said.

Mr Nanda said that the insurance industry was a major source of domestic finance for investment in key sectors, as the country could not rely on the funds of FIIs, "which quickly moved in and also quickly moved out. Inflow of funds from external sources is too volatile to cater to the need of long term investments. Also more than 95% of such funds are retail."

He said the insurance industry owned 6% of India's capital market and managed assets worth Rs.8,57,000 crore. It had emerged as the largest investor segment in the capital market in the past few years.

"The net market inflow during FY 2008 was Rs.55,000 crore from the life insurance sector, Rs.53,403 crore from FIIs, and Rs.16,305 crore from the Mutual Funds. This only goes to show that the insurance industry is one of the most important financial intermediary for both the individual consumers and the national economy", Mr Puneet Nanda.

Mr Vikram Kotak said that there were 21 life insurance companies with a capital of over Rs.16,235 crore in India in FY 2008. Despite some slowdown in growth under the impact of the global recession, he expected the Indian insurance industry would regain its growth momentum within a year.

As India did not have a social security system for the general public, life insurance was of cardinal importance to provide them security. And there products such as ULIP, the insurance-linked equity, that provided both security and value growth to consumers.

"In view of its popularity both in the urban and rural areas, the sale of ULIP has recorded 80% growth in FY 2008. ULIP has become most popular because it is among the most transparent retail financial investment avenue," Mr Vikram Kotak said.

source: Capital Market

World growth is projected to fall to half percent in 2009-WEO

World Economic Outlook

Global growth in 2009 is expected to fall to half percent when measured in terms of purchasing power parity and to turn negative when measured in terms of market exchange rates. This represents a downward revision of about 1 percentage point from the November 2008 World Economic Outlook (WEO) Update.

On a positive side, helped by continued efforts to ease credit strains as well as expansionary fiscal and monetary policies, the global economy is projected to experience a gradual recovery in 2010, with growth picking up to 3 percent. However, the outlook is highly uncertain, and the timing and pace of the recovery depend critically on strong policy actions.

A sustained economic recovery will not be possible until the financial sector's functionality is restored and credit markets are unclogged. For this purpose, new policy initiatives are needed to produce credible loan loss recognition; sort financial companies according to their medium-run viability; and provide public support to viable institutions by injecting capital and carving out bad assets. Monetary and fiscal policies need to become even more supportive of aggregate demand and sustain this stance over the foreseeable future, while developing strategies to ensure long-term fiscal sustainability. Moreover, international cooperation will be critical in designing and implementing these policies.

The report indicates that in the advanced economies, market conditions will likely continue to be difficult until forceful policy actions are implemented to restructure the financial sector, resolve the uncertainty about losses, and break the adverse feedback loop with the slowing real economy. In emerging economies, financing conditions will likely remain acute for some time, especially for corporate sectors that have very high rollover requirements.

Growth in emerging and developing economies is expected to slow sharply from six one fourth percent in 2008 to three one fourth percent in 2009, under the drag of falling export demand and financing, lower commodity prices, and much tighter external financing constraints (especially for economies with large external imbalances). Stronger economic frameworks in many emerging economies have provided more room for policy support to growth than in the past, helping to cushion the impact of this unprecedented external shock.

Accordingly, although these economies will experience serious slowdowns, their growth is projected to remain at or above rates seen during previous global downturns. Developing countries in Africa and elsewhere are also better prepared this time to face policy challenges because of improved macroeconomic policy implementation, but the continent is in a weaker position than most other regions because of its poverty levels and reliance on commodity exports.

In current circumstances, the timely implementation of fiscal stimulus across a broad range of advanced and emerging economies must provide a key support to world growth. Fiscal stimulus packages should rely primarily on temporary measures and be formulated within medium-term fiscal frameworks that ensure that the envisaged buildup in fiscal deficits can be reversed as economies recover and that fiscal sustainability can be attained in the face of demographic pressure. Countries that have more limited fiscal space should focus their efforts on supporting the financial sector and credit flows, while ensuring that budgets adjust to less favorable external conditions.

Inflation at 5.64%

Moderation expected

India's whole sale price index based inflation increased 5.64% in the week ended 17 January 2009, up from 5.60% in the week ended 10th January 2009, and also higher than 4.45% in the week ended 19th January 2008 (a year ago). The truckers' strike, which began on 5 January 2009, restricted the movement of goods, leading to shortage and price rise. WPI for week ended November 22 has been revised to 8.26% versus 8.4% (provisional).

After eight weeks of consistent fall, India's inflation has started to crawl upwards thanks to the rise in food articles (part of primary articles), food products (part of manufactured products) too rose by 1% in the week ended 17th January 2009 over the previous week. Food articles have 15.40246% weightage while manufactured products have 63.75% weightage in India's WPI.

Besides rising food articles and manufactured products, the Fuel, Power, Light & Lubricants also registered a rise primarily due to 4% rise in aviation turbine fuel and 1% rise in furnace oil.

Primary articles group declined by 0.1% on 0.2% fall in non food articles, but the fall was arrested by 0.1% rise in food articles. Inflation of primary articles was 11.01% in the week ended 17th January 2009, and remains in double digits for 33 weeks in succession since 7th June 2008.

The annual rate of inflation for food articles stood at 11.17% for the week ended 17th January 2009 as compared to 11.64% in the previous week. It was 2.27% as on 19 January 2008. Manufactured products recorded 0.3% rise, primarily due to 1.0% surge in the index of food products and chemicals & chemical products. The index of beverages tobacco & tobacco products rose by 0.6%, Textiles too rose by 0.1%.The index of basic metals alloys & metal products group rose marginally..

Within manufactured products, the sub group that recorded a fall of 0.1% was non-metallic mineral products (0.1%). Machinery & machine products, and paper & paper products groups reported steeper 0.3% fall while transport equipment and parts declined by 0.2%.

Outlook

There is a slight acceleration in inflation number on week on week basis due to the growth in manufactured index, which is holding highest weight in WPI basket.

Reserve Bank of India is expecting further moderation in inflation rate. In recent policy review the apex bank of the country has revised inflation projection downward to 3% by end- March 2009 from 7% set earlier.

On the other hand, inflation based on various consumer price indices (CPI) is still in double digits due to the firm trend in prices of food articles and the higher weight of food articles in measures of consumer price inflation.

As a measure to reduce inflation the governnment, on 28 January 2009, has reduced petrol prices by Rs 5 a litre, diesel by Rs 2 and cooking gas by Rs 25 per cylinder. The new prices became effective from midnight. The lowering of prices is thus expected to help reduce inflation and increase the impact of the government's economic and fiscal stimulus packages.

As the decline in input prices percolates over time to the prices of manufactured and other products, consumer price inflation too is expected to soften in the months ahead.

source: Capital Market

Bullion metals drop as dollar strengthens

Gold and silver prices continue to turn pale

After rising for three consecutive sessions, gold prices ended lower for second straight day on Wednesday, 28 January, 2009 as the dollar strengthened. Gold price also fell due to other lower commodity prices, especially crude oil.

Generally, a stronger dollar pressures demand for dollar-denominated commodities, such as crude oil and gold, which become more expensive for holders of other currencies and also vice versa. But silver prices dropped.

On Tuesday, Comex Gold for February delivery fell $11.3 (1.3%) to close at $888.2 an ounce on the New York Mercantile Exchange. Last week, gold prices ended higher by 6.7%. This year gold has gained 1.2% till date. On 17 March, 2008 prices had skyrocketed to a high of $1,034/ounce. But prices have dropped significantly (14%) since then.

On Wednesday, Comex silver futures for March delivery fell 21.2 cents (1.7%) to end at $11.763 an ounce. For 2008, silver had lost 24%.

At the currency market on Wednesday, the dollar index, which tracks the dollar against a trade-weighted basket of six major currencies, continued to rise even after the Fed meeting. The dollar index rose 1% today.

Today, The Federal Open Market Committee kept its interest rate target in a range of zero to 0.25%, as expected. It said it would continue to flood the financial system with money. Regarding the economy, the Fed admitted that the economy was in worse shape than in its prior meeting in December. But a gradual recovery will begin later this year. The central bank stressed that deflation was the biggest concern

In 2008, gold prices ended higher by 5.5%. The dollar index had gained 12% that year.

Last year, the weakening dollar and higher global demand for raw materials had led to records for commodities including gold. Gold reached a record in March 2008 as a U.S. housing slump and credit crisis spurred the Federal Reserve to slash borrowing costs. In the last move, the Federal Reserve has cuts its target bank lending rate to 0.25% from 5.25% in September, 2007. The Fed did it in nine steps.

Prior to 2008, gold had witnessed the greatest annual gain in twenty eight years by gaining $200/ounce (31%) in FY 2007 as lower interest rates had sent the dollar tumbling, and crude-oil prices rose to a record. Silver had climbed 16% in FY 2007. In 2006, silver had jumped 46% while gold gained 23%.

At the MCX, gold prices for February delivery closed lower by Rs 196 (1.4%) at Rs 13,877 per 10 grams. Prices rose to a high of Rs 14,055 per 10 grams and fell to a low of Rs 13,847 per 10 grams during the day's trading.

At the MCX, silver prices for March delivery closed Rs 206 (1.05%) lower at Rs 19,270/Kg. Prices opened at Rs 19,402/kg and fell to a low of Rs 19,131/Kg during the day's trading.

source: Capital Market

Crude pares early losses

Prices surge by more than 4%

Crude prices ultimately ended higher on Wednesday, 28 January, 2009 after dropping earlier during the day. Prices went lower after weekly inventory report showed build up in crude inventories for fifth straight week. Later prices went up after Fed came out with its latest statements on US economy.

On Wednesday, crude-oil futures for light sweet crude for March delivery closed at $43.6/barrel (higher by $2.2 or 4%) on the New York Mercantile Exchange. Last week, crude prices ended higher by 9%. Prices had reached a low of $41 earlier during the day today.

Prices reached a high of $147 on 11 July but have dropped almost 65% since then. Year to date, in 2009, crude prices are lower by 14%. On a yearly basis, crude prices are lower by 53%.

The Energy department reported today that U.S. crude stockpiles jumped 6.2 million barrels last week to reach 338.9 million barrels. That's the highest level the EIA has reported since August 2007. U.S. refineries operated at 82.5% of their operable capacity last week, down from the 83.3% a week ago.

EIA also reported that gasoline inventories fell 100,000 barrels, and distillate fuel stockpiles, which include heating oil and diesel, dropped 1 million barrels last week.

Total petroleum production supplies in the U.S. averaged 19.4 million barrels a day over the past four-week period, down 4% compared to the similar period last year. Using nearly 20 million barrels a day, the U.S. is still the world's largest oil consumer. China, the second largest, only uses about 7 million barrels a day.

Today, The Federal Open Market Committee kept its interest rate target in a range of zero to 0.25%, as expected. It said it would continue to flood the financial system with money. Regarding the economy, the Fed admitted that the economy was in worse shape than in its prior meeting in December. But a gradual recovery will begin later this year. The central bank stressed that deflation was the biggest concern

Against this background, March reformulated gasoline gained 6.7% to $1.1835 a gallon and March heating oil rose 3.4% to $1.4215 a gallon.

February natural gas futures fell slightly to $4.476 per million British thermal units.

source: Capital Market

News Flash

Tata Steel Profit Declines For First Time in 3 Years, JSW Turns to Loss Tata Steel Ltd., India’s biggest producer, reported its first decline in quarterly profit in almost three years and third-ranked JSW Steel Ltd. posted a loss as demand waned from builders and makers of cars and appliances.

India to Keep Wheat, Rice Export Curbs Until Polls, Trade Secretary Says India, the world’s second-biggest wheat and rice producer, may retain curbs on exports to check prices until the nation concludes elections due by May.

Stocks Rise to Highest in More Than a Week in Mumbai Trading; ICICI Gains Indian stocks rose for a second day, driving the benchmark index to its highest in more than a week, on expectation the U.S. will form a so-called bad bank to absorb toxic assets, helping stimulate the world’s biggest economy.

ONGC 3rd-Quarter Profit Falls 43 Percent on Oil Prices, Subsidy Payouts Oil & Natural Gas Corp., India’s largest oil producer, reported a 43 percent decline in third- quarter profit after oil prices dropped from a record and the company paid subsidies to state-run refiners.

Tata Motors Advances in Mumbai Trading on U.K. Government's Loan Guarantee Tata Motors Ltd., the maker of Jaguar cars and Land Rover sport-utility vehicles, rose the most in more than three weeks in Mumbai after the U.K. government offered carmakers loan guarantees to help them cope with the recession.

Rupee Closes Near One-Week High on Speculation Some Exporters Sold Dollars India’s rupee closed near a one-week high on speculation some exporters took advantage of the currency’s recent losses to convert overseas earnings.

Nalco Expects Profit to Continue to Decline Should Prices Fail to Recover National Aluminium Co., India’s second- biggest producer, posted a drop in third-quarter profit and forecast earnings will slide further should prices fail to improve.

Stocks Rise Worldwide, U.S. Futures Gain on Bank-Bailout Plan, SAP Profit Stocks rose around the world and U.S. index futures gained as President Barack Obama’s administration prepared a plan to absorb toxic bank assets and earnings from SAP AG and Yahoo! Inc. exceeded analysts’ estimates.

FDIC May Run `Bad Bank' in Obama Plan to Remove Toxic Assets, Spur Lending The Federal Deposit Insurance Corp. may manage the so-called bad bank that the Obama administration is likely to set up as it tries to break the back of the credit crisis, two people familiar with the matter said.

Wells Fargo Has First Loss Since 2001; Shares Jump as Bank Keeps Dividend Wells Fargo & Co., the second- biggest U.S. home lender, reported its first quarterly loss since 2001 after acquiring Wachovia Corp. The stock rose 17 percent in early trading after the bank maintained its dividend and said it doesn’t need more federal aid.

Wall Street Bonuses Plummeted 44% in 2008, State Comptroller DiNapoli Says Cash bonuses paid to New York City employees of Wall Street firms declined 44 percent last year amid record losses in the securities industry, state Comptroller Thomas DiNapoli reported today.

Immelt Stakes Legacy on GE's Ability to Keep Dividend, Aaa Credit Rating Jeffrey Immelt will know within three months whether his eventual mark on General Electric Co. can include the claim he led it through the deepest economic crisis in a generation with its dividend and Aaa credit rating intact.

Mortgage Applications Tumble the Most in 16 Years as Refinancing Plunges Mortgage applications in the U.S. slumped last week by the most in 16 years as refinancing plunged.

Boeing Reports Loss as Machinists' Strike, Faulty Parts Reduce Production Boeing Co., the second-largest commercial-plane maker and defense contractor, posted a loss in the year’s final three months after a strike shut factories and faulty parts slowed efforts to restart production.

source: Bloomberg

Gold slumps as dollar strengthens

Gold prices drop below $900 mark

After rising for three consecutive sessions, gold prices ended lower on Tuesday, 27 January, 2009 as the dollar strengthened. Gold price also fell due to other lower commodity prices, especially crude oil. But silver prices gained

Generally, a stronger dollar pressures demand for dollar-denominated commodities, such as crude oil and gold, which become more expensive for holders of other currencies and also vice versa. But silver prices dropped.

On Tuesday, Comex Gold for February delivery fell $9.3 (1%) to close at $899.5 an ounce on the New York Mercantile Exchange. Last week, gold prices ended higher by 6.7%. This year gold has gained 2.5% till date. On 17 March, 2008 prices had skyrocketed to a high of $1,034/ounce. But prices have dropped significantly (13%) since then.

On Tuesday, Comex silver futures for March delivery gained 6.5 cents (0.5%) to end at $12.175 an ounce. For 2008, silver had lost 24%.

At the currency market on Friday, the dollar index, which tracks the dollar against a trade-weighted basket of six major currencies, continued to rise even as consumer confidence continued to drop in the country.

The monthly Conference Board index reported today that consumer confidence hit a record low in January as worries worsened about future income. As per the report, the January consumer confidence index fell to 37.7 from an upwardly revised 38.6 in December. Market had expected a January reading of 38.

In 2008, gold prices ended higher by 5.5%. The dollar index had gained 12% that year.

Last year, the weakening dollar and higher global demand for raw materials had led to records for commodities including gold. Gold reached a record in March 2008 as a U.S. housing slump and credit crisis spurred the Federal Reserve to slash borrowing costs. In the last move, the Federal Reserve has cuts its target bank lending rate to 0.25% from 5.25% in September, 2007. The Fed did it in nine steps.

Prior to 2008, gold had witnessed the greatest annual gain in twenty eight years by gaining $200/ounce (31%) in FY 2007 as lower interest rates had sent the dollar tumbling, and crude-oil prices rose to a record. Silver had climbed 16% in FY 2007. In 2006, silver had jumped 46% while gold gained 23%.

At the MCX, gold prices for February delivery closed higher by Rs 23 (0.2%) at Rs 14,095 per 10 grams. Prices rose to a high of Rs 14,214 per 10 grams and fell to a low of Rs 13,956 per 10 grams during the day's trading.

At the MCX, silver prices for March delivery closed Rs 216 (1.1%) higher at Rs 19,476/Kg. Prices opened at Rs 19,339/kg and rose to a high of Rs 19,595/Kg during the day's trading.

source: Capital Market

Crude plunges

Demand concerns continue to weigh on crude prices

Global economic concerns pushed crude prices lower once again on Tuesday, 27 January, 2009. Prices also went lower after traders anticipated that tomorrow's weekly inventory report will once again show buildup in crude inventories for fifth straight week.

On Tuesday, crude-oil futures for light sweet crude for March delivery closed at $41.58/barrel (lower by $4.15 or 9.1%) on the New York Mercantile Exchange. Last week, crude prices ended higher by 9%. Prices had reached a high of $49 earlier during the day today.

Prices reached a high of $147 on 11 July but have dropped almost 65% since then. Year to date, in 2009, crude prices are lower by 18%. On a yearly basis, crude prices are lower by 53%.

At the currency market on Tuesday, the dollar index, which tracks the dollar against a trade-weighted basket of six major currencies, continued to rise even as consumer confidence continued to drop in the country.

The monthly Conference Board index reported today that consumer confidence hit a record low in January as worries worsened about future income. As per the report, the January consumer confidence index fell to 37.7 from an upwardly revised 38.6 in December. Market had expected a January reading of 38.

Against this background, March reformulated gasoline fell 4.46 cents, or 3.9%, to $1.1085 a gallon and March heating oil dropped 5.25 cents, or 3.7%, to $1.3745 a gallon.

February natural-gas futures rose 2.8 cents, or 0.6%, to $4.49 per million British thermal units.

At the MCX, crude oil for February delivery closed at Rs 2,133/barrel, lower by Rs 105 (4.7%) against previous day's close. Natural gas for February delivery closed at Rs 219.1/mmbtu, lower by Rs 2.2/mmbtu (0.99%).