Indian Equities Go to First From Worst BRIC Market (Update4) Bloomberg.com
By Michael Patterson April 15 (Bloomberg) -- Indian stocks, laggards among the world's biggest emerging-market economies in the first quarter, recovered to post the steepest returns the past month as investors snapped up the cheapest <http://www.bloomberg.com/apps/quote?ticker=SENSEX%3AIND> shares in 13 years. BlackRock Inc. <http://www.bloomberg.com/apps/quote?ticker=BLK%3AUS> , UBS AG <http://www.bloomberg.com/apps/quote?ticker=UBSN%3AVX> and billionaire Wilbur <http://search.bloomberg.com/search?q=Wilbur+Ross&site=wnews&client=wnews&pr oxystylesheet=wnews&output=xml_no_dtd&ie=UTF-8&oe=UTF-8&filter=p&getfields=w nnis&sort=date:D:S:d1> Ross predict more gains as record-low borrowing costs boost consumer spending in the world's second-most populous nation. "We will be looking at more opportunities in India for sure," Ross, chairman of New York-based W.L. Ross & Co., said in an April 8 interview with Bloomberg Television. "Over a long period of time, it will be a very rewarding place, particularly since the market has come off so drastically." The Bombay Stock <http://www.bloomberg.com/apps/quote?ticker=SENSEX%3AIND> Exchange Sensitive Index climbed 38 percent since falling to its lowest level in more than three years on March 9. The advance beat increases among equity benchmark indexes for Brazil <http://www.bloomberg.com/apps/quote?ticker=IBOVV%3AIND> , Russia <http://www.bloomberg.com/apps/quote?ticker=INDEXCF%3AIND> and China <http://www.bloomberg.com/apps/quote?ticker=SHCOMP%3AIND> , the biggest developing economies. Indian shares traded at 9.2 times profit, the cheapest since at least 1996, after the Sensex plunged 45 percent since September, the worst slide among the so-called BRIC nations, according to data compiled by Bloomberg and UBS. The Sensex climbed 2.9 percent today to 11,284.73, the highest closing level in six months. The MSCI Emerging Markets Index dropped 0.2 percent as of 12:30 p.m. in New York. Cars, Credit Zurich-based UBS, Switzerland's largest bank, forecasts the Sensex <http://www.bloomberg.com/apps/quote?ticker=SENSEX%3AIND> will gain 20 percent in the next 12 months as lower interest rates spur demand for credit from ICICI <http://www.bloomberg.com/apps/quote?ticker=ICICCIBC%3AIN> Bank Ltd. and cars made by Maruti Suzuki India <http://www.bloomberg.com/apps/quote?ticker=MSIL%3AIN> Ltd. BlackRock, the biggest publicly traded U.S. money manager, predicts India's market may get a boost from domestic mutual funds that it estimates are holding as much as 20 percent of their assets in cash. Ross, 71, bought a stake in New Delhi-based SpiceJet Ltd. <http://www.bloomberg.com/apps/quote?ticker=SJET%3AIN> in August. He made an unsuccessful bid this month for control of Hyderabad-based software exporter Satyam Computer <http://www.bloomberg.com/apps/quote?ticker=SAY%3AIN> Services Ltd., Chairman Kiran <http://search.bloomberg.com/search?q=Kiran+Karnik&site=wnews&client=wnews&p roxystylesheet=wnews&output=xml_no_dtd&ie=UTF-8&oe=UTF-8&filter=p&getfields= wnnis&sort=date:D:S:d1> Karnik said. Shares of New Delhi-based Maruti <http://www.bloomberg.com/apps/quote?ticker=MSIL%3AIN> Suzuki, India's biggest carmaker, will rally on revived demand for diesel-powered autos, and Mumbai-based ICICI <http://www.bloomberg.com/apps/quote?ticker=ICICIBC%3AIN> , India's second-largest lender, may advance as the economy bottoms in the next six months, Suresh <http://search.bloomberg.com/search?q=Suresh%0AMahadevan&site=wnews&client=w news&proxystylesheet=wnews&output=xml_no_dtd&ie=UTF-8&oe=UTF-8&filter=p&getf ields=wnnis&sort=date:D:S:d1> Mahadevan, UBS's head of India Research, wrote in a March 26 note. He added both stocks to UBS's "model portfolio" for India. ICICI advanced 6.3 percent today, the steepest gain in three weeks. Maruti Suzuki rose 2.9 percent to the highest level since March 2008. Domestic Economy India's gross domestic product, the fourth-largest among developing nations, may grow at a 5.1 percent pace this year, down from 7.3 percent last year, according to the International Monetary Fund. The estimated growth is the second-fastest after China among major economies tracked by the Washington-based IMF. "The global recession shouldn't affect India as much" as other developing countries, Pu <http://search.bloomberg.com/search?q=Pu+Yonghao&site=wnews&client=wnews&pro xystylesheet=wnews&output=xml_no_dtd&ie=UTF-8&oe=UTF-8&filter=p&getfields=wn nis&sort=date:D:S:d1> Yonghao, chief Asian investment strategist at UBS's international and Swiss wealth management unit, which oversaw about $764 billion as of December 2008, said in an April 9 interview on Bloomberg Television from Hong Kong. "It's mostly a domestic economy. That's why we like India." Satyam The Sensex began falling from a record in January 2008 as a 50 percent gain in oil prices helped push inflation to a 16-year high by August, prompting the central bank to raise its benchmark repurchase rate three times to a seven-year high of 9 percent. The selloff accelerated in September as New York-based Lehman Brothers Holdings <http://www.bloomberg.com/apps/quote?ticker=LEHQ%3AUS> Inc.'s bankruptcy froze global credit markets and sparked an exodus from emerging-market assets. Investor confidence eroded further on concern that India's budget deficit, which the Planning Commission estimates exceeded 6 percent in the year ended March 31, may make it more expensive for companies to borrow. The January disclosure by Satyam's former Chairman Ramalinga Raju that he inflated earnings and assets by $1 billion spurred speculation that more Indian companies may have reported inaccurate financial statements. The Indian equity index climbed 0.6 percent during the first quarter, while China's Shanghai Composite index added 30 percent, Russia's Micex rose 25 percent and Brazil's Bovespa increased 9 percent. The Sensex's latest rally may fizzle as investors sell shares ahead of general elections in the world's largest democracy, scheduled for April 16 to May 13, according to RCM's Michael <http://search.bloomberg.com/search?q=Michael+Konstantinov&site=wnews&client =wnews&proxystylesheet=wnews&output=xml_no_dtd&ie=UTF-8&oe=UTF-8&filter=p&ge tfields=wnnis&sort=date:D:S:d1> Konstantinov. Singh Party "The elections put a lot of uncertainty" on government efforts to combat the economic slowdown, said Konstantinov, who oversees about $5 billion as the Frankfurt-based chief investment officer for emerging-market equities at RCM, a division of Allianz Global Investors. "We'll wait for the outcome before we put more money there." Prime Minister Manmohan <http://search.bloomberg.com/search?q=Manmohan+Singh&site=wnews&client=wnews &proxystylesheet=wnews&output=xml_no_dtd&ie=UTF-8&oe=UTF-8&filter=p&getfield s=wnnis&sort=date:D:S:d1> Singh's Congress Party-led United Progressive Alliance is competing with the main opposition Bharatiya Janata Party-led National Democratic Alliance and a group of communist and regional parties known as the third front. The elections may result with no existing political alliance able to form a government, according to a Star News- Nielsen poll conducted from March 26 to April 3. Even if political deadlock hampers government efforts to bolster the economy, the lowest inflation in two decades means the central bank will reduce borrowing costs after five cuts since mid-October sent the repurchase rate to 5 percent, according to UBS's Pu <http://search.bloomberg.com/search?q=Pu&site=wnews&client=wnews&proxystyles heet=wnews&output=xml_no_dtd&ie=UTF-8&oe=UTF-8&filter=p&getfields=wnnis&sort =date:D:S:d1> . That may help bolster consumption, which accounts for about 60 percent of the economy. Valuations After the past month's rally, the Sensex is valued at 11.6 times its companies' reported earnings <http://www.bloomberg.com/apps/quote?ticker=SENSEX%3AIND> , near the lowest relative to the MSCI emerging <http://www.bloomberg.com/apps/quote?ticker=MXEF%3AIND> markets index since May 2004, according to Bloomberg data. Earnings at Indian companies will drop about 16 percent in 2009, compared with a 25 percent decline for emerging markets as a whole, New York-based Morgan Stanley <http://www.bloomberg.com/apps/quote?ticker=MS%3AUS> estimates. Brazil's Bovespa <http://www.bloomberg.com/apps/quote?ticker=IBOV%3AIND> index is valued at 14.4 times reported earnings after climbing 23 percent the past month, while the Shanghai <http://www.bloomberg.com/apps/quote?ticker=SHCOMP%3AIND> Composite trades for 21 times profit after a 20 percent rally. The Micex <http://www.bloomberg.com/apps/quote?ticker=INDEXCF%3AIND> index of Russian stocks, up 32 percent, is valued at 4.7 times earnings. "Investors have been quite negative on the market" in India, said Dhiren <http://search.bloomberg.com/search?q=Dhiren+Shah&site=wnews&client=wnews&pr oxystylesheet=wnews&output=xml_no_dtd&ie=UTF-8&oe=UTF-8&filter=p&getfields=w nnis&sort=date:D:S:d1> Shah, an emerging-markets money manager at New York-based BlackRock, which oversees about $1.3 trillion worldwide. "We still remain quite positive." To contact the reporter on this story: Michael <http://search.bloomberg.com/search?q=Michael+Patterson&site=wnews&client=wn ews&proxystylesheet=wnews&output=xml_no_dtd&ie=UTF-8&oe=UTF-8&filter=p&getfi elds=wnnis&sort=date:D:S:d1> Patterson in London at [email protected] Last Updated: April 15, 2009 13:32 EDT Regards, Millet Bobin Relationship Manager ____________________________________________________________________________ _______________ Are you keeping your money idle in your savings account? <http://www.quantumamc.com/liquidfund/21aug08_web.html> Click here for a better option Mutual Funds are subject to market risks. Please read the offer document carefully before investing. 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