Market Outlook for 1st Oct 2009

INTRADAY calls for 1st Oct 2009

BUY BHEL-2328 arround 2300 for 2335-2340+ with sl 2285

BUY LT-1689 arround 1675 for 1717+ with sl 1660

BUY DCHL-126 arround 123 for 133+ with sl 120

BUY CorpBank-423 arround 420 for 437+ with sl 415

 

Strong & Weak  futures  
This is list of 10 strong futures:

Orchid Chem, IOB, Uco Bank, Bhushan Steel, Dr.Reddy, Dena Bank, IDBI, Jindal Saw, Ranbaxy & Chennai Petro.

And this is list of 10 Weak futures:

Tulip, TV-18, Suzlon, Idea, Tata Tea, Voltas Ltd, Finance Tech, Aditya Birla, MTNL & BEML.
 Nifty is in Up trend

  

NIFTY FUTURES (F & O):  
Below 5048 level, expect profit booking up to 5013-5015 zone and thereafter slide may continue up to 4980-4982 zone by non-stop.

Hurdle at 5084 level. Above this level, rally may continue up to 5090-5092 zone by non-stop.

Cross above 5123-5125 zone, can take it up to 5156-5158 zone by non-stop. Supply expected at around this zone and have caution.

On Negative Side, rebound expected at around 4925-4927 zone. Stop Loss at 4892-4894 zone.
 
Short-Term Investors: 
Bullish Trend. 3 closes above 4790.00 level, it can zoom up to 5155.00 level by non-stop. 

BSE SENSEX:
Lower opening expected. Recovery should happen. 

Short-Term Investors: 
 Short-Term trend is Bullish and target at around 17671.82 level on upper side.
Maintain a Stop Loss at 16613.22 level for your long positions too.

 

 

POSITIONAL BUY
Buy SAND PLAST (I) (BSE Cash) 
Bulls may lose control today.

1 Week: Surprisingly going up, opposite to bearishness.

1 Month: Surprisingly going up, opposite to bearishness.
 
Buy MAXWELL INDS (BSE Cash) 
Something cooking, but bulls may lose control today.

1 Week: Bullish, as per current indications.

1 Month: Bullish, as per current indications.

3 Months: Surprisingly going up, opposite to bearishness.

1 Year: Surprisingly going up, opposite to bearishness.

 

FII trading activity on NSE and BSE in Capital Market Segment(In Rs. Crores)
Category	Date	Buy Value	Sell Value	Net Value
FII	30-Sep-2009	4281.06	3206.53	1074.53

DII trading activity on NSE and BSE in Capital Market Segment(In Rs. Crores)
Category	Date	Buy Value	Sell Value	Net Value
DII	30-Sep-2009	2109.93	1950.18	159.75

 
Global Cues & Rupee
 
The Dow Jones Industrial Average closed at 9,712.28. Down by 29.92 points.
The Broader S&P 500 closed at 1,057.08. Down by 3.53 points.

The Nasdaq Composite Index closed at 2,122.42. Down by 1.62 points.

Indian currency markets were closed on yesterday for the half-year book closing for fiscal 2009/10.
 
Interesting findings on web:
Stocks inched lower Wednesday, following weaker-than-expected readings on manufacturing and the labor market. But the declines were minimal at the end of an upbeat month and quarter on Wall Street.

Stocks logged their best quarter in 11 years, helped by the weak dollar, despite today's soft landing.

U.S. stocks fell on Wednesday after a surprising contraction in an index of Midwest business activity, but buying of technology bellwethers like Cisco Systems Inc at the end of a strong quarter limited losses.

U.S. stocks fell, trimming the biggest back-to-back quarterly rally for the Standard & Poor's 500 Index since 1975, as an unexpected drop in business activity spurred concern the economy is struggling to recover.

Stocks were volatile throughout the session as investors considered the economic news, a weaker dollar and a 6% spike in oil prices. End-of-quarter portfolio rebalancing on the part of investors and fund managers may have contributed to the volatility.

Dow Jones Industrial Average decreased 29.92 or 0.3% to a close of 9,712.28, S&P 500 Index fell 3.53 or 0.3% to 1,057.08, and Nasdaq Composite Index declined 1.62 or 0.08% to close at 2,122.42.

RUSSELL604.28-6.17-1.01%

TRAN3799.84-26.76-0.7%

UTIL377.23-3.04-0.8%

S&P 100488.35-1.90-0.39%

S&P 400691.02-4.02-0.58%

NYSE6910.88-15.94-0.23%

NAS 1001718.991.32+0.08%

The Dow, which closed at 9712.28 on Wednesday, is now close to breaking above 10,000 for the first time since October 2008. That level has held more psychological than technical significance since the Dow first reached it, in March 1999, but investors will be watching it closely, analysts said.

The S&P 500 lost 0.3 percent to 1,057.08 at 4:06 p.m. in New York. The benchmark gauge of U.S. stocks climbed for a seventh straight month in September, its longest streak in almost three years.

The three popular indexes gained around 15% in the third quarter and several European indexes closed up between 15% and 23%. Australia index surged 20% and the benchmark added 17% in India. The Shanghai index fell 6.1% in the quarter.

The three popular indexes increased in the quarter as investors showed higher appetite for risk. The Dow gained 15% and in the last two quarters added 26.7%. The quarterly performance was the best since the third quarter in 1939 according to the Wall Street Journal.

The S&P 500 index added 15% in the quarter, 3.6% in September and surged 56% since the surge from its low in March. The Nasdaq added 5.6% in the month and 15.7% in the third quarter.

For the quarter indexes in Asia and Europe led the gainers. Indexes in Australia and India led gainers but in China benchmark fell 6.1%. Australia added 20%, its best quarterly performance in 22 years and Japan added 1.8%.

For the third quarter, the Dow rose 15 percent, the S&P 500 gained 15 percent and the Nasdaq climbed 15.7 percent. The Dow's performance marked its biggest quarterly gain since the fourth quarter of 1998.

For the month of September, the Dow rose 2.3 percent, the S&P 500 gained 3.6 percent and the Nasdaq climbed 5.6 percent. These gains ran counter to historic trends showing that September often is a miserable month for stocks.

Wednesday was the last day of the third quarter, during which the Dow, S&P 500 and Nasdaq all gained just over 15%.

In addition, "there's still so much money on the sidelines that equity investors are using any selloffs to get back in," said Jane Caron, chief economic strategist at Dwight Asset Management.

"We're in the faith part of the economic cycle," said Ralph Shive, manager of the $1.3 billion Wasatch-1st Source Income Equity Fund, which has beaten 96 percent of competing funds over the past five years. "All of us to some degree are guessing how strong the recovery is or how long it will take. Market prices have anticipated a decent recovery at this point. At some point we need to see earnings turn."

"You're seeing buyers putting money to work into the end of the quarter," said Michael James, a managing director at Wedbush Morgan Securities in Los Angeles. "The third quarter has been extremely strong and I don't think you're going to see bulls completely walk away from the market knowing the quarter ends today."

The S&P 500 jumped almost 15 percent in the July-September period to give it a two-quarter advance of 34 percent, the biggest since a 42 percent rally in the first half of 1975. The Dow also rose 15 percent over the past three months and gained 29 percent since the end of March, its steepest two-quarter advance since 1986.

The seven-month rally has pushed the S&P 500 up 56 percent from a 12-year low in March and sent its price-to-earnings valuations this month to the highest levels since 2004.

Former Federal Reserve Chairman Alan Greenspan said he sees the U.S. economy slowing next year as the surge in stocks comes to an end. Greenspan said he expects the economy to grow at a 3 percent to 4 percent annual pace in the next sixth months before slowing down. As a result, unemployment isn't likely to decline much from last month's 9.7 percent rate, he said. Even so, he doesn't expect the economy to relapse into recession next year.

"The odds are we flatten out," Greenspan said today in a Bloomberg Television interview, referring to the equity market. "That flattening out will put some sort of dull face on 2010."

The performance of the U.S. economy is probably more sluggish than reflected in stock markets, risking a correction in equities, Nobel Prize-winning economist Michael Spence said.

U.S. stock-market investors have "over processed" the stabilization of growth in the world's largest economy, Spence said in an interview in Kuala Lumpur yesterday. The U.S. economy isn't likely to experience a "double-dip" slowdown even as that remains a risk, said the professor emeritus of management in the Graduate School of Business at Stanford University.

Analysts expect profits in the S&P 500 to drop 22 percent on average in the third quarter before rebounding 63 percent in the final three months of the year, according to estimates compiled by Bloomberg.

"Third quarter data is going to show for many companies enough indications that indeed the economy bottomed in July," said William Greiner, chief investment officer at Scout Investment Advisors in Kansas City, Missouri, which manages $8.5 billion. "It's hard not to be bullish in the face of what I see as 20 to 25 percent earnings growth rates over the next few quarters."

The question now is whether Wall Street can hold on to its gains. The third-quarter rally was fueled, in part, by signs that government efforts to prop up the economy were working, analysts said. But the Federal Reserve is already debating the best strategy for ending its aggressive interventions.

"The question is how long it [the rally] can be sustained and what happens when the government starts to unwind that stimulus," said Matt McCormick, banking analyst at Bahl & Gaynor Investment Counsel.

There is still plenty to worry about: Rising foreclosures loom over a tentative housing recovery, and consumer spending remains weak, analysts said. Also, many on Wall Street expect another brutal earnings season. S&P 500 companies are expected to report a 24.5 percent decline in profits during the third quarter, according to a Thomson Reuters forecast. That would be a slight improvement from the second quarter but still a reflection that corporate balance sheets are weak, analysts said.

Analysts who are generally upbeat about the market's prospects for the fourth quarter say the pattern is likely to hold: Bad news will hit the market, reminding investors of the economy's fragility, and stocks will slide. But within a few days, or even the same day, they'll recover as investors grab hold of the fact that no one expects the recovery, or stocks, to have an unbroken path upward.

"Any legitimate decline in the market is just seen as a buying opportunity," said David Waddell, senior investment strategist and CEO of Waddell & Assoc. "That pattern has continued now ever since the rally began."

Steve Hagenbuckle, managing principal for TerraCap Partners in New York, expects that corporate earnings will likely exceed expectations again for the third quarter and help boost the market.

"The corporate numbers will continue to be met or exceeded so I think we'll continue to run up," he said.

But many investors have doubts. A recent survey by the American Association of Individual Investors found that bearishness among investors stood at 44.5 percent, above the long-term average of 30 percent.

As a result, many investors are still paddling to safer investments. In August, investors funneled $42.9 billion into bond funds and only $3.9 billion into stock funds, according to the Investment Company Institute, the mutual fund trade group.

Some of the hardest-hit stocks in the market's slide that intensified a year ago posted spectacular gains in the third quarter. Financial stocks led the 10 industry groups that make up the S&P 500 index with a gain of 25 percent. Industrials rose about 21 percent, as did materials companies like chemical producers and paper makers.

Some stocks logged enormous advances for the quarter. Newspaper publisher Gannett Inc. surged 250 percent, while Hartford Financial Services Group Inc. jumped 123 percent. There were exceptions. Commercial lender CIT Group Inc. tumbled 43.7 percent as investors worried about its stability. Sprint Nextel Corp. slid 17.9 percent.

The month of September wound up being far better for the market than many people anticipated.

Stocks had tumbled on Sept. 1 as traders worried about what might happen during that month, which has historically been the worst of the year for stocks. But the slide many had feared never materialized.

The S&P 500 index finished this September with a gain of 3.6 percent, far better than the average loss of 1.2 percent it posted in Septembers going back to 1929. It wasn't hard to beat the dismal performance of September last year, when it skidded 9.1 percent as credit markets froze following the collapse of Lehman Brothers Holdings Inc.

Here's a scorecard for the third quarter:

The Standard & Poor's 500 index ended at 1,057.08, up 15% for the quarter after rising 15.2% in the second quarter. Year-to-date the S&P is up 17% -- which normally would be considered a healthy rise, except that the index plummeted 38.5% last year amid the global financial-system meltdown.

The S&P is up 56.2% from its 12-year low on March 9, but it's still down 32.5% from its all-time high of 1,565.15 in October 2007.

--- The technology-heavy Nasdaq composite index surged 15.7% for the quarter, to close at 2,122.42 today, after a 20% gain in the previous quarter. Tech stocks remain a favorite bet of investors who expect the global economy to stay on a recovery track. Cisco Systems rallied 26.2% in the quarter. Apple Inc. jumped 30.1%.

--- Small-company stocks continued to outpace blue chips, as usual in the early stages of a bull market. The Russell 2,000 small-stock index rallied 18.9% in the quarter after rising 20.2% in the second quarter. The Russell index is up 21% for the year.

--- As in the second quarter, financial stocks were the best performers among the 10 broad industry groups in the S&P 500. The financial sector jumped 25.1% in the third quarter after a 35.1% surge in the second quarter, as many bank stocks recovered from severely depressed levels in early March (when some investors were expecting the nationalization of much of the industry).

Industrial stocks were the second-best S&P sector in the third quarter, up 21.2% -- another bet on global growth and rising U.S. exports.

The Chicago PMI fell to 46.1 in September from 50 in August. Economists surveyed by Briefing.com thought it would rise to 52. A reading below 50 signifies contraction in the manufacturing sector.

Another report showed that employers in the private sector cut 254,000 jobs from their payrolls in September after cutting a revised 277,000 jobs in August. Economists expected 200,000 job cuts. The report, from payroll services firm ADP, is a lead up to Thursday's reading on announced jobs cuts and Friday's bigger government employment report.

While the jobs report could be a harbinger of Friday's bigger government jobs report, the manufacturing report is not consistently accurate, Caron said.

"We've seen a spate of reports over the last few weeks that have been disappointing relative to consensus, but it's been nothing that really alters the economic outlook," Caron said.

She said that rather than suggesting that the recovery is losing steam, the reports suggest that after months of improving data, economists have started boosting estimates.

A third report showed GDP shrank at a 0.7% annual rate in the second quarter versus the initially reported 1% and the 1.2% rate forecast by economists.

CIT Group (CIT, Fortune 500) sank 45% on worries that it may not be able to avoid bankruptcy after all.

On Wednesday, the Wall Street Journal said that CIT was negotiating a deal with its creditors that would give control of the company to bondholders and wipe out common shareholders. That sent shares tumbling.

Among other movers, shares of Discovery Laboratories (DSCO) surged 22.5% on renewed hopes that its treatment for certain respiratory illnesses affecting premature infants might get approval. The drug, Surfaxin, has already been rejected four times by the FDA. But on Wednesday, Discovery said that the FDA has agreed to its proposed plan for addressing those concerns.

Boeing (BA, Fortune 500), Caterpillar (CAT, Fortune 500), JPMorgan Chase (JPM, Fortune 500), Chevron (CVX, Fortune 500) and Exxon Mobil (XOM, Fortune 500) were among the Dow's losers. Chevron and Exxon dipped despite a rise in oil prices.

Walt Disney Co., JPMorgan Chase & Co. and General Electric Co. dropped at least 1.7 percent to lead declines in 21 of the 30 stocks in the Dow Jones Industrial Average.

Disney, the largest theme-park operator, fell 1.7 percent to $27.46. JPMorgan, the biggest U.S. bank by market value, slid 2.4 percent to $43.82. GE, the world's biggest provider of power-generation equipment and services, lost 1.7 percent to $16.42.

Darden Restaurants, Inc led the decliners in the S&P 500 index with a loss of 5.6% followed by losses in Convergys Corp of 4.7%, in MeadWestvaco Corporation of 4.1%, in Genworth Financial of 3.9% and in WellPoint Inc of 1.9%.

Moody's Corp. tumbled 1.7 percent to $20.46. Former compliance executive Scott McCleskey told the House Committee on Oversight and Government Reform that Moody's executives ignored his warnings that ratings on municipal bonds weren't updated at regular intervals. Another former employee at the firm, Eric Kolchinsky, said Moody's violated securities laws by providing "incorrect" ratings.

McGraw-Hill Cos., owner of Standard & Poor's ratings service, slipped 3.7 percent to $25.14.

Saks Inc. dropped 4.9 percent to $6.82. The luxury retail chain plans to offer as much as $100 million in shares, using the proceeds to reduce debt, according to a regulatory filing.

Ameriprise Financial Inc. gained 12 percent to $36.33 for the biggest gain in the S&P 500. The Minneapolis-based wealth management and insurance firm agreed to buy the Columbia stock and bond funds from Bank of America for as much as $1.2 billion in cash.

Bank of America [BAC  16.92    -0.24  (-1.4%)   ] shares skidded 1.4 percent.

Goldman Sachs [GS  184.20    0.62  (+0.34%)   ] ticked higher after two brokerage firms — Bernstein and KBW — raised their outlooks for the Wall Street titan.

Hewlett-Packard [HPQ  47.21    -0.23  (-0.48%)   ] shares slipped after the Wall Street Journal reported the company may combine its printer and PC divisions.

Overall, techs fared better today than other sectors, with Cisco and IBM gaining.

In the pharma sector, Johnson & Johnson [JNJ  60.89    -0.04  (-0.07%)   ] and Boston Scientific [BSX  10.59    -0.09  (-0.84%)   ] have settled a patent infringement lawsuit over heart stents, with Boston Scientific paying J&J $716.3 million.

Nike Inc. jumped 7.7 percent to $64.70. The world's largest athletic-shoe maker posted first-quarter profit that exceeded analysts' estimates as it cut marketing and personnel costs and prices improved.

Jabil Circuit Inc. climbed 9.2 percent to $13.41. The electronic-parts maker forecast first-quarter earnings excluding some items of at least 24 cents a share, topping the average estimate of 16 cents from analysts in a Bloomberg survey.

Huntington Bancshares Incorporated of 7.1%.

All 10 of the main industry groups in the S&P 500 advanced in the third quarter, led by a 25 percent rally in financial shares and 21 percent gains in industrial companies and commodity producers.

Gannett Co., the nation's largest newspaper publisher, posted the steepest advance in the index, more than tripling in the quarter. Hartford Financial Services Group Inc., Wynn Resorts Ltd. and Tenet Healthcare Corp. more than doubled.

Bank of America (BAC, Fortune 500) said after the close that CEO and president Ken Lewis is retiring on Dec. 31 after 40 years with the company.

Also after the close, General Motors said it is shutting down its Saturn division after a deal to sell it to Penske Automotive Group (PAG, Fortune 500) fell apart.

A national ISM manufacturing gauge to be released tomorrow is projected to show improvement for a ninth straight month in September. Other regional gauges rose for the month. The Federal Reserve Bank of Philadelphia's economic gauge climbed to the highest since June 2007, and the New York Fed's increased to an almost two-year high.

Alcoa will be the first company in the Dow average to release third-quarter earnings next week, set for Oct. 7.

The next test for the market comes at the very start of the fourth quarter, with the release of the Institute for Supply Management report on manufacturing during September, and the government's jobs report for the month on Friday.

The market could have trouble continuing its advance if economic reports don't boost optimism.

October tends to be a better month on average for the market, but it still strikes fear in many trading rooms since it's home to the crashes of 1929 and 1987. Last year, it also saw the Dow plunge 1,874.19 points, or 18.2 percent, in just one week.

VIX25.610.42+1.67%.

Oil,Gold & Currencies:

U.S. light crude oil for October delivery rose $3.90 to settle at $70.61 a barrel on the New York Mercantile Exchange after the government reported a surprise drop in inventories.

COMEX gold for December delivery rose $14.90 to settle at $1009.30 an ounce. Gold closed at a record high of $1,020.20 two weeks ago.

The dollar fell versus the euro and yen, resuming the selloff that has pushed the U.S. currency to one-year lows against a basket of currencies over the last few weeks.

The dollar declined against the euro for a second day as growing evidence of the global economic recovery stokes demand for higher-yielding assets.

The greenback extended a two-quarter slide against Europe's single currency as a report showed China's manufacturing grew for a fourth month. The yen retreated against the euro after the International Monetary Fund cut its forecast for writedowns on loans and investments and as Japan's former top currency official said there are few reasons for the yen to rise further.

"China is showing steady signs of growth, boosting demand for assets in emerging markets and weighing on the dollar," said Toshiya Yamauchi, a Tokyo-based manager of the foreign- exchange margin trading department at Ueda Harlow Ltd. "The dollar will continue to be sold for a while."

The dollar traded at $1.4647 per euro at 10:05 a.m. in Tokyo from $1.4640 in New York yesterday. The euro was at 131.44 yen from 131.33 yen. The dollar bought 89.76 yen from 89.70. It fell as low as 88.24 on Sept. 28, the weakest level since January.

The Dollar Index, which IntercontinentalExchange Inc. uses to track the U.S. currency versus six counterparts including the euro and yen, fell 0.1 percent to 76.648 today.

China's Purchasing Managers' Index gained to 54.3 in September from 54.0 in August, the Federation of Logistics and Purchasing reported today in Beijing. Economists in a Bloomberg News survey estimated the reading would be 55.0.

Tankan Survey

The Bank of Japan's Tankan survey today showed an index of confidence among large manufacturers improved to minus 33 from minus 48 in June, matching the median estimate of economists in a Bloomberg News survey. A negative number means pessimists outnumber optimists.

The dollar's share of global currency reserves fell in the second quarter to 62.8 percent, from 65 percent in the first three months of the year, an IMF report showed yesterday. The euro's share rose to 27.5 percent from 25.9 percent.

The IMF cut its projection for global writedowns on loans and investments by 15 percent to $3.4 trillion, citing in its semiannual report improvements in credit markets and signs of economic growth.

Tight credit, low inflation and slack demand for labor and products mean the Federal Reserve can keep interest rates at around zero "for an extended period," Fed Vice Chairman Donald Kohn said in Washington yesterday.

The yen dropped against 14 of its 16 major counterparts as Makoto Utsumi, a former top currency official at Japan's Finance Ministry, said the yen may weaken to around 100 against the dollar.

Weaker Yen

"There aren't really any particular reasons for the yen to strengthen," Utsumi, 75, who led Japan's currency policy from 1989 to 1991 as vice finance minister for international affairs, said in an interview in Tokyo Sept. 29. "I don't expect the currency to extend its recent gains."

The yen rose to an eight-month high this week after Finance Minister Hirohisa Fujii said he opposes currency intervention in principle, spurring speculation the government won't step into the currency market. The yen will probably trade between 90 and 95 and may approach 100 in a few months, Utsumi said.

Bonds:

Treasury prices slumped, raising the yield on the benchmark 10-year note to 3.30% from 3.29% late Tuesday. Treasury prices and yields move in opposite directions.

What to expect:

THURSDAY: Personal income/spending; jobless claims; ISM manufacturing index; pending-home sales; construction spending; auto sales; Fed's Bernanke, Pianalto, Lockhart speak

FRIDAY: Sept jobs report; factory orders; Calif. IOUs mature

Asia:

Asian stocks fell, led by companies reliant on exports, after an unexpected drop in Chicago business activity raised concern the U.S. economic recovery will falter.

Honda Motor Co., which gets 45 percent of its sales in North America, sank 2.4 percent in Tokyo, while Samsung Electronics Co., Asia's biggest maker of chips and flat screens, lost 1.8 percent in Seoul. Advantest Corp., the world's largest maker of memory-chip testers, slumped 4.8 percent after Credit Suisse Group AG cut its rating on the stock.

The MSCI Asia Pacific Index declined 0.7 percent to 117.19 as of 10:46 a.m. in Tokyo. The gauge has surged 66 percent from a five-year low on March 9 as stimulus measures around the world dragged economies out of recession.

"The recovery is slowing and the global economy is coming to a turning point," said Mitsushige Akino, who manages the equivalent of $666 million at Tokyo-based Ichiyoshi Investment Management Co. in Japan.

Japan's Nikkei 225 Stock Average sank 0.9 percent, while South Korea's Kospi Index lost 0.7 percent. Australia's S&P/ASX 200 Index added 0.1 percent. Markets in Hong Kong and China are closed for holidays.

Futures on the Standard & Poor's 500 Index dropped 0.1 percent. The gauge fell 0.3 percent yesterday after the Institute for Supply Management-Chicago Inc. said its business barometer decreased to 46.1 in September, while economists had projected the gauge would rise. ADP Employer Services said in a separate report that U.S. companies cut payrolls by 254,000 jobs last month, more than economists' estimates.

Biggest Market

Honda Motor Co., which gets 45 percent of its sales in North America, sank 2.4 percent in Tokyo. Nissan Motor Co., which counts North America as its biggest market, retreated 1 percent to 601 yen.

Canon Inc., which makes digital cameras and office equipment, dropped 2.5 percent to 3,540 yen. Samsung lost 1.8 percent to 800,000 won.

The climb in Asian equities in the past seven months has been fueled by better-than-estimated economic and earnings reports. Australian retail sales climbed 0.9 percent in August, the first gain in three months, the country's statistics bureau reported yesterday.

Confidence among Japan's largest manufacturers increased for a second-straight quarter, rising to minus 33 from minus 48 in June, the Bank of Japan's Tankan survey showed today. The number matched economists' estimates. Japan said in Tokyo today. A negative figure means pessimists outnumber optimists.

Rising Valuations

The MSCI index gained 14 percent last quarter, less than the previous three months' 28 percent advance, as concerns emerged the stock rally may have overvalued company earnings prospects. The average price of the gauge's shares rose to 1.6 times book value on Sept. 17, up from 1 at the measure's five- year low on March 9.

The index added 4.1 percent in September, a seventh monthly advance that was its longest stretch of gains since the 10 months ended July 2007.

Advantest slumped 4.8 percent to 2,370 yen. The company was cut to "underperform" from "neutral" at Credit Suisse. 

Nikkei 225 9,990.03     -143.20 ( - 1.41%). (08.36 AM IST)

Japan's Nikkei average fell 1.4 percent, with exporters such as Advantest Corp (6857.T) sagging on concerns that the yen's recent strength may eat into their overseas profits. There was limited impact from the Bank of Japan's quarterly tankan business sentiment survey, which showed that business morale improved further from a record low hit earlier this year, a result in line with market expectations.

The Nikkei fell 143.20 points to 9,990.03 .N225. It fell as low as 9,987.35, dipping close to a two-month low of 9971.05 hit earlier this week.

The broader Topix fell 1.6 percent to 895.44 , which was its lowest in 10 weeks. 

Stock markets in Shanghai, Hong Kong and elsewhere in the greater China region were closed for National Day. 

Innovation Works may invest in Chongqing.

17 wind farms to be built in Yunnan.

Everbright Securities to launch new energy industry fund.

Orient Group to issue RMB 1.5 bln in corporate bonds.

Hualu Hengsheng Chemical to raise up to RMB 2.5 bln.

Sunshine City to buy 2 property firms for RMB 30 mln.

China's software industry sees 21% growth in revenue in Jan-Aug.

Hunan Tianrun Chemical to buy into tobacco firm in Hunan.

Jilin Yatai to invest RMB 2.3 bln in cement and property projects.

Sinopec, PetroChina buy land in Beijing for gas stations.

Baosteel records sound August profit from stainless steel division.

PetroChina, Shenhua sign strategic agreement.

Newegg to launch US IPO, eyes China expansion.

Ford to build new assembly plant in Chongqing.

China Resources Land buys parcel in Nanjing.

Comtec Solar to IPO in Hong Kong this month.

China's luxury consumption to hit US$5 bln this year.       

Clean tech venture investment keeps recovering: survey

Spurred by government economic stimulus plans, global clean technology venture investment continued recovering in the third quarter of this year and has become the leading sector in venture capital funding, said a new survey released on Wednesday.

    According to preliminary results from Clean tech Group, a market research firm headquarters in San Francisco and accounting firm Deloitte, clean technology venture investments in North America, Europe, China and India totaled 1.59 billion U.S. dollars across 134 companies in the quarter.

    That was a 10-percent increase from the previous quarter though down 42 percent compared with the same period a year earlier.

    "The billions in government funding being allocated globally in clean technology have begun emboldening private capital, which has in turn helped propel clean technology to the leading venture investment sector, now eclipsing biotech and information technology," Dallas Kachan, managing director of Clean tech Group, said in a statement.

    "The extension of tax credits for renewable-based power generation along with government stimulus and regulatory requirements to meet renewable portfolio standards are helping to drive continued investment on the part of venture capitals and utilities into the clean tech sector," said Scott Smith, U.S. leader of Deloitte's clean tech practice.

BofA CEO Ken Lewis to Step Down By the End of This Year

Bank of America's CEO Ken Lewis, the embattled head of the nation's biggest bank, told the board he plans to step down by the end of the year.

Lewis wasn't asked to step down and the decision was not the result of any regulatory action, sources told CNBC. No successor has been named yet.

The Charlotte, North Carolina-based Bank of America's board will continue evaluating potential successors, a company announcement said.

BofA stock [BAC  16.92    -0.24  (-1.4%)   ] moved higher in after-hours trading.

Lewis, 62, ran Bank of America for nearly a decade, succeeding his mentor Hugh McColl in 2001.

After being named to the top spot, he proceeded to build one of the nation's largest financial services companies through aggressive acquisitions.

But in the last year, Lewis was the subject of rising political criticism, along with federal and state investigations into the bank's acquisition of Merrill Lynch in late 2008 and early 2009.

He had previously announced hopes of retiring after the bank repaid $45 billion in government assistance, or when he hit the company's mandatory retirement age of 65.

BofA's shareholders voted in April to oust Lewis as chairman after months of mounting criticism of his stewardship of the bank.

"It's a good thing for the company to make a clean break and move forward," Walter Todd, portfolio manager at Greenwood Capital Associates, told Reuters. "Ken Lewis has been overly targeted in terms of how things played out. But the fact is, perception is reality in these situations."

But not everything saw the resignation as a positive.

"For Bank of America this is bad," well-known banking analyst Dick Bove of Rochdale Securities told CNBC. "Lewis was a phenominally good CEO, made a series of very strong positive decisions, including buying Merrill Lynch. I think it is a definite loss to Bank of America."

Bove said he thought the leading candidate to succeed Lewis would be Brian Moynihan, currently head of BofA's consumer and small-business banking.

Other possible successors include Thomas Montag, head of Global Markets; Barbara DeSoer,  Bank of America Home Loans; Sallie Krawcheck, president of Global Wealth; Joe Price, CFO, and Greg Curl, chief risk officer.

Two board members are also possible contenders: Charles Gifford, 66, Bank of Boston's former CEO, and William Boardman, 67, retired Banc One executive.

Market Insider: Bernanke And Data Will Be Key

Thursday's economic reports should paint a fairly current picture of the state of manufacturing, housing, and the consumer, all key pillars of the economy.

Friday's September jobs report is still the big number of the week, but after a disappointing Chicago Purchasing Managers Index Wednesday, investors will pay close attention to the national ISM manufacturing data Thursday. September ISM is expected to come in at about 54, and score its second consecutive month above 50. August was at 52.9, and a reading above 50 is seen as a sign of growth. 

Stocks slumped on Wednesday's purchasing managers report. The Dow was down more than 100 before finishing the day off just 29 at 9712. The S&P 500 was at 1057, down 3. The S&P and Dow both had gains of nearly 15 percent for the third quarter.

Also on Thursday's list is the closely watched weekly jobless claims report, which has been trending lower. That report, as well as August's personal income, are reported at 8:30 a.m. September ISM is released at 10 a.m., as are construction spending and pending home sales.

Monthly auto sales for September are released throughout the day and could be telling because they lack the boost from the government's "cash for clunkers" program seen in August sales.

Another big event Thursday will be Fed Chairman Ben Bernanke's testimony before the House Financial Services Committee, starting at 9 a.m.

Economic data in the past week has included some disappointing reports, below economists' expectations. "It doesn't mean we're double dipping. We're barely growing. The quarter we're concluding did exceed 3 percent overall growth," said Steven Wieting, an economist with Citigroup.

The final read on second quarter GDP was also reported Wednesday and came in at negative 0.7 percent, revised from minus 1 percent.

Wieting said he expects ISM of 54, but he wouldn't be surprised to see it dip in coming months. He said a lot of the manufacturing activity was ramped up by the auto industry's return to production. "When you look at industries away from vehicles, it's been a slower, steadier improvement," he said.

"Folks have focused on a slower rate of decline. Now that we're growing some, they're focusing on rates of growth. Peak acceleration in some of this data has already happened," he said.

"I think we're looking to see lower fourth quarter than third quarter but growth nonetheless,'" he said. Wieting expects third quarter GDP of 3.25 and fourth quarter of 2 percent. First quarter will improve again to 2.7 percent. "It could probably strengthen throughout 2010," he said.

Wieting expects weekly jobless claims of 520,000, down from 530,000 the week earlier. He said employment data is all moving in the right direction but the unemployment rate should stay high for a long period of time. He expects non farm payrolls to decline by 175,000 and an unemployment rate of 9.8 percent, when jobs data is reported Friday.

Whither Stocks

Traders have been debating whether the stock market is getting tired after a 50 percent run since March 9. Cowen's John O'Donoghue said he wouldn't be surprised to see the market pull back, but the decline could be tempered. "If the stock market takes a swoon here, I would think over time there's a cushioning effect from this cash," he said. Traders have been talking about the record levels of cash in money market mutual funds, totaling about $3.5 trillion.

For now, the stock market is focused on the economic data. "That ultimately will drive us directionally until we get the micro effect of all the earnings coming in," he said.

"You've got a ton of cash on the sidelines. You've got valuations that are stretched....You've got earnings coming up which I think will be important," he said. At the same time, "people are confused about how the country gets out of this mess."

Long-term Treasurys came under slight selling pressure Wednesday, after the weak regional manufacturing news. The 10-year fell, as its yield rose to 3.31 percent. The two-year note's yield slid to 0.96 percent from 1 percent.

John Spinello, head of Treasurys strategy at Jefferies, said traders were watching the Fed speakers Wednesday. "It was not really active until a little later in the day. You had all the Fed people talking. We had month end to deal with though it wasn't huge in Treasurys. It was bigger in mortgages," he said.

Spinello said comments form Fed Vice Chairman Donald Kohn were the important ones Wednesday. He said there was weakness in the shorter end of the curve because of all the hawkish talk out of Fed officials lately. Traders have said Fed Governor Kevin Warsh's comments last week that the Fed could act sooner than expected to drive rates higher was still a factor in market psychology.

"Kohn was probably the most important speaker and I think he was pragmatic. He let everybody know they're going to stay on hold...and they're not going to do anything that could slip up economic growth until they're certain the economy has traction," he said.

In addition to Bernanke's testimony, two Fed officials are talking Thursday. Cleveland Fed President Sandra Pianalto speaks in New York on the economy at 5:30 p.m., and Atlanta Fed President Dennis Lockhart speaks on the economy at the same time in Macon, Ga.

What Else to Watch

CNBC's Charlie Gasparino was first to report that Bank of America CEO Ken Lewis is retiring at year end. The company did not name a successor and that should be a topic of market talk Thursday. Lewis has been under fire by regulators for his role in the Merrill Lynch acquisition. A replacement for Lewis was not named.

Constellation Brands [STZ  15.15    -0.20  (-1.3%)   ] and Accenture [ACN  37.33    0.08  (+0.21%)   ]both report earnings Thursday.

Saturn: Final Orbit

After 20 years, plenty or promise, and plenty of "what ifs", Saturn is approaching the end of the road. The brand GM [GM  0.11    0.005  (+4.76%)   ] created and proudly called "a different kind of car company" is falling victim to the same fate as Oldsmobile -a sister GM brand back in the 90's.

The fact GM and Penske Automotive Group could not finalize their deal is a bit of a surprise.  Largely because Penske was so close to wrapping up the deal.  But when a potential third party supplier of autos told Penske it would not build vehicles for the Saturn brand, Penske told GM he no longer wanted Saturn. And instead of looking for another buyer, GM is simply winding down the brand. Talk about things coming undone quickly.

It's one more un-fulfilled promise for a brand GM once held up as an example of how it could change and take on foreign competitors. 

Just four years after it started in 1990, Saturn sales hit their peak at just over 286,000.   Heck, Saturn dealers were selling more cars on average than dealers of other major brands. The "no haggle" model for buying a car was part of the Saturn appeal. And in 1995 when thousands of Saturn owners met at the Saturn plant in Spring Hill, Tennessee, many of us said, "ahhh, what a great story."

16 years later it's a far different feeling. Yes, Saturn has a great dealer network, loyal owners, and squeaky clean image. None of that matters if you don't have product to push. For years Saturn was a forgotten brand at GM. If I had a dollar for every time a GM or Saturn executive said, "We just need fresh models, then Saturn will come back", I'd be rich enough to buy a Saturn dealership myself.

For all their talk, and occasionally rolling out new Saturn models, GM never gave this brand a chance to truly thrive. In the late 90's they deprived Saturn of new models. Then the company focused marketing dollars on the HUMMER and Chevy brands. Finally, about 5 years ago, GM inally turned on the product pipeline for Saturn. The Sky, Vue, and Aura brought someattention, but little in sales.

While I understand why many will be sad at the death of Saturn, it's probably best for GM to move on and quit wasting time trying to find another buyer for the brand. The promise at GM now is in building off its strengths, not in helping a brand that generated just 4 percent of the GM sales this year.

So long Saturn. You could have been a different kind of car company, if GM would have made some different choices over the last 20 years.

GM to Shut Down Saturn After Penske Walks Away

General Motors will close Saturn and wind down its dealership network after a deal to sell the faltering brand to Penske Automotive Group collapsed, the automaker said Wednesday.

The breakdown of a deal that had been widely expected to close this week will force some 350 Saturn dealerships to close and could cut thousands of auto retail jobs that would have been preserved under a plan by auto magnate Roger Penske.

Shares of Penske Automotive [PAG  19.18    1.32  (+7.39%)   ] were down almost 10 percent Wednesday in aftermarket trade. The breakdown of the deal was announced after the New York Stock Exchange closed.

GM's failure to complete the deal also adds uncertainty to the automaker's production plans as it struggles to regain its footing following a $50-billion taxpayer funded restructuring.

"This is very disappointing news and comes after months of hard work by hundreds of dedicated employees and Saturn retailers who tried to make the new Saturn a reality," GM Chief Executive Fritz Henderson said in a statement.

Penske, 72, had been negotiating to buy the brand under a deal that would have seen GM supply vehicles under contract until the end of 2011, leaving him free to tie up with other manufacturers afterward.

In a statement, Penske said it had negotiated an agreement to source vehicles from another manufacturer after its supply agreement had ended. But it said that deal was rejected by the other automaker's board of directors.

"Without that agreement, the company has determined that the risks and uncertainties related to the availability of future products prohibit the company from moving forward with this transaction," Penske said in the statement.

Penske did not identify the other automaker.

However, people familiar with the discussions said Penske had been in advanced talks with Renault on Saturn. A Renault spokeswoman could not be reached immediately for comment.

GM said it would detail the closure plans for Saturn shortly. Saturn's remaining dealers have already signed wind-down agreements with GM, the automaker said.

GM created the brand in 1983 in a bid to compete with Japanese automakers on quality and service and to provide car buyers with "no-haggle" pricing.

Saturn sales had peaked in 1994 and GM had attempted a turnaround of the brand earlier this decade under then product chief Bob Lutz.

Struggling to regain its financial footing, GM announced in February that it would either spin Saturn off or close the brand. Penske and GM announced a preliminary agreement on Saturn in June after the U.S. automaker filed for bankruptcy.

GM and Saturn had said they expected to complete the deal by the fourth quarter.

Saturn sales have dropped 59 percent through August from a year earlier amid the uncertainty about the brand's future. Its best-selling models are the Vue small SUV and the Aura sedan.

Penske shares were trading at around $17 Wednesday afternoon, down from $19.18 at the close.

Has Michael Vick Re-Signed With Nike?

In 2007, Nike [NKE  64.64    4.55  (+7.57%)   ] terminated Michael Vick's contract after he was indicted on charges of running a dogfighting ring.

On Wednesday, Mike Principe, the managing director of BEST, which represents Vick, announced that Nike was back with Nike. The comments were made at the Relay Sports Symposium in New York -- an event hosted by the SportsBusiness Journal.

On Wednesday night, five hours after the comment was made, a Nike spokesman said that the company would not have any comment on the possible deal with the Philadelphia Eagles backup quarterback at this time.

It is not known how well Vick would be compensated under such a deal, but it likely isn't worth much since the shoe and apparel brand isn't expected to bring any Vick-related products to retail anytime soon.

San Diego Chargers running back LaDainian Tomlinson is the only Nike-endorsed football player that has a signature shoe.

Vick had five signature shoes made for him by Nike, the last one never hit shelves.

Vick has only worn Nike since returning from jail on to the field this year, though his specific choice of shoe has not been steady. Vick has worn at least three different models, including a Tomlinson signature shoe at his first practice back in July.

Despite the controversy surrounding his return, his jersey is currently the fourth best selling jersey in the NFL, according to NFLShop.com

BOJ Tankan: Japan Corp Mood Less Pessimistic

Japanese business confidence improved as expected in the three months to September, the Bank of Japan's closely watched tankan survey showed, as the economy picks up from its worst slump in decades.

The headline index for big manufacturers' sentiment was minus 33 in September, the corporate survey showed on Thursday, improving from minus 48 in the previous quarterly survey in June.

That matched the median market forecast, pulling further away from a record low hit in March in the wake of the global financial crisis.

The index for December was seen at minus 21, showing firms expect conditions to improve further over the next three months but are still pessimistic overall.

A minus figure means pessimists outnumber optimists.

BOJ officials will scrutinize the tankan survey for clues on whether sentiment and spending are improving at small firms as well as larger ones, which will help it decide when to wind up its unconventional corporate fund support.

The survey, which gauges the short-term economic outlook of Japanese businesses, also showed big firms plan to cut their capital spending, a key driver of the economy, by 10.8 percent in the financial year to March 2010.

That is more than the market's median forecast for a 9.5 percent cut.  

The world's second-biggest economy pulled out of recession in April-June but analysts are cautious on the outlook as falling wages and rising jobless hurt already weak domestic demand. 

China Real Estate to Seek $200 Million in US IPO

China Real Estate Information, a  provider of real estate information and consulting services, is planning to raise up to $200 million in a U.S.-listed initial public offering.

The company, a Shanghai-based unit of real estate services company E-House China Holdings, operates a database that held information on about 38,200 developments or buildings and 24,200 parcels of land for development in 56 cities in China as of June 30, according to a prospectus filed with the U.S. Securities and Exchange Commission.

The company plans to buy the online real estate business operated by Sina, a Chinese media company which in turn would acquire a large stake in China Real Estate Information following the IPO. E-House will remain its parent company and controlling shareholder after the offering.

China Real Estate Information revenues rose 61.8 percent to $31.2 million in the first six months of 2009 from the year-earlier period, with net income of $11 million.

The performances by Chinese companies completing U.S.-listed IPOs have been mixed this year. Chinese video game maker Changyou.com [CYOU  35.52    -0.71  (-1.96%)   ] has had the best performance of any new stock in 2009, more than doubling since its April IPO; but rival Shanda Games [SNDA  51.15    -0.03  (-0.06%)   ] has fallen about 6.7 percent since its debut last week.

China Real Estate plans to list its American depositary shares on the NASDAQ Global Market under the symbol "CRIC". No expected timing for the IPO was detailed in the filing.

Australia's Macquarie to Buy Fox-Pitt for $130 Million

Australia's biggest investment bank Macquarie will buy Fox-Pitt Kelton Cochran Caronia Waller for $130 million, in a push to expand its presence in North America and Europe.

As part of the deal, a portion of the cash consideration will be deferred over four years following financial closure, Macquarie said in a statement.

The investment bank will assume $16.7 million of long-term liabilities as part of the deal.

The transaction will take the combined global financial institutions' research offering to 765 stocks globally and double the stock coverage universe in U.S. and European securities, Roy Laidlaw, global head of Macquarie securities group platforms, said.

Macquarie, best known as the world's largest investor in public infrastructure, expects to close the deal by the end of the fourth quarter of 2009.

Macquarie has been trying to increase its presence on Wall Street and has been hiring even as U.S. firms slashed thousands of jobs.

The company said it was not considering any other acquisition now, but will continue to hire in the U.S.

In an interview to Reuters earlier in September, the company's top U.S. executive had said Macquarie will keep its eye open for boutique acquisitions.

The company, which aims to be a profitable traditional investment bank, said it does not plan to apply for becoming a primary dealer to the U.S. Federal Reserve.

A primary dealer is required to make bids or offers in the Fed's open market operations and to take part in U.S. Treasury securities auctions.

The Fed also consults regularly with primary dealers as it gathers market intelligence and needs to be sure it is getting the best possible information.

Warren Buffett Loses $10 Billion But Keeps Runner-Up Ranking in Forbes 400

Warren Buffett tops the list of the biggest losers among America's richest billionaires, with an estimated $10 billion drop in his personal wealth over the past twelve months.  That's the result of Berkshire Hathaway's 20 percent stock decline.

But Buffett's remaining $40 billion is still enough to maintain his number two ranking on the just-released annual Forbes 400 ranking of the country's wealthiest people.

Microsoft founder Bill Gates, Buffett's friend and bridge partner, also kept his #1 position, with an estimated $50 billion.  That's down $7 billion from last year.

They're not alone.  Forbes says the collective net worth of the nation's 400 richest fell from $1.57 trillion to $1.27 trillion over the year.  It's only the fifth time that's happened.

Forbes puts the substantial, but unrealized, losses in perspective by noting that Buffett's personal wealth dropped by $1.1 million an hour over the year.  Gates only lost $800,000 an hour.

It was last year's Forbes 400 ranking that stripped Buffett of his title of the world's richest billionaire, bestowed by the magazine just six months earlier in its March, 2008 ranking of global wealth.

At the time, Buffett joked to us that he passed Gates because he "spends less" and Gates noted that when he and Buffett played golf over the weekend, "He saved money by not buying a golf glove and using Band-Aids instead.  It didn't work too well but he saved a few bucks."

Perhaps Buffett is now looking at ways to save a few more bucks to help him catch up.

Toyota, Ford Could Outsell GM by 2015: AnalystToyota Motor and Ford Motor are likely to outsell General Motors in the U.S. market by 2015 — when industry sales will finally return to levels last seen in 2000, according to an industry forecasting firm.

Faltering Chrysler Group is also expected to lose market share in a recovering market and by 2015 its U.S. sales will be on par with those of surging Hyundai Motor, IHS Global Insight said at a presentation Wednesday.

"The shift in volume from GM and Chrysler to Toyota [TM  78.57    -0.75  (-0.95%)   ], Ford [F  7.21    -0.24  (-3.22%)   ], and other manufacturers will be massive," said George Magliano, an IHS Global Insight analyst.

Toyota already overtook GM in global sales last year. GM emerged from bankruptcy July 10 by selling most of its assets to a group led by the U.S. Treasury, and Chrysler emerged from bankruptcy in June by completing a similar sale process to a group led by Italy's Fiat [FIA  26.4872    0.9872  (+3.87%)   ].

Ford, the only U.S. automaker that has not sought emergency government loans to run operations, has gained market share in recent months at the expense of GM and Chrysler. It currently ranks third in U.S. sales behind GM and Toyota.

Ford will overtake GM as the leading U.S. automaker in its domestic market in the next several years, Magliano said. Magliano forecasts U.S. industry auto sales are likely to climb back to top 17.3 million units by 2015 — comparable to 2000. The forecasting firm sees 2009 auto sales above 10 million units and 2010 sales between 11 million and 11.5 million units.

He expects Toyota, currently No.1 in U.S. sales, to sell about 3 million vehicles in 2015 for a market share of nearly 17 percent, followed by Ford and GM in the 2.5 million to 3 million unit range.

Chrysler's U.S. sales are forecast at about 1.25 million units in 2015 for a market share of 7.2 percent — down from 11 percent in 2008, IHS Global Insight said.

That would put Chrysler on par with Hyundai in U.S. sales — the best-performing major automaker in the United States this year, the company forecast. Hyundai in 2009 is the only major automaker to increase U.S. sales.

Bernanke Urges 'Strong' Consumer Financial Protection

Federal Reserve Chairman Ben S. Bernanke will tell lawmakers that protecting consumers of financial services is "vitally important," while omitting prior criticism of an Obama administration proposal to shift such powers from the Fed to a new agency.

"It is vitally important that consumers be protected from unfair and deceptive practices in their financial dealings," Bernanke says in testimony obtained by Bloomberg News and prepared for a hearing tomorrow of the House Financial Services Committee. "Strong consumer protection" helps preserve savings and promote confidence in financial firms and markets, he said.

Bernanke doesn't discuss the proposal for a separate agency in the testimony, after saying in July that there would be disadvantages to creating one. That may soften a clash with Representative Barney Frank, the panel's chairman, who said at a hearing earlier today that the Consumer Financial Protection Agency must be created because the Fed and other bank regulators squandered their powers to police lending abuses.

The Federal Reserve had a "lackadaisical record" on consumer protections and will cede its oversight power and funding to the agency, Frank said.

Frank, a Massachusetts Democrat, released a "report card" on Sept. 23 that he said demonstrated the Fed's "poor record" in "using the tools provided by Congress to protect consumers from abusive financial-industry practices."

July Criticism

The hearing with Bernanke is scheduled for 9 a.m. in Washington.

The 55-year-old Fed chief previously testified on potential changes to financial regulation in July, when he said there would be disadvantages to creating a consumer financial- protection agency.

Rules created by the Fed in recent years "benefited from the supervisory and research capabilities" of the central bank, Bernanke said in July.

The Fed chairman comes to Capitol Hill as Congress is preparing the most extensive overhaul of financial regulations since the Great Depression.

Lawmakers have criticized the Fed for falling down on bank supervision and consumer protection, and are aiming to curtail some of the central bank's powers.

In response, Fed officials have stepped up their scrutiny of bank lending, are overhauling their approach to supervision and trying to strengthen their commitment to consumer protection.

Fed Expertise

The Fed announced on Sept. 15 that it would begin looking at consumer compliance in non-bank subsidiaries of bank holding companies. Inside the Fed, Bernanke has also emphasized an integral approach to supervision, drawing on expertise across the Fed's divisions, including Consumer and Community Affairs.

The Fed chairman didn't comment on the economy or interest rates in his prepared remarks. Central bankers left the benchmark lending rate unchanged in a range of zero to 0.25 percent last week and committed to buy the full amount of their $1.25 trillion mortgage-backed securities purchase program.

Lawmakers are weighing measures that would strip the Fed of rule-writing power on consumer financial products and create a new consumer protection agency.

They have also shunned an Obama administration proposal that would give the Fed authority over the capital, liquidity, and risk management practices at systemically important financial institutions.

Fed 'Well Suited'

Instead, Frank said on Sept. 14 legislators will put that authority in a council of regulators.

Bernanke says in tomorrow's prepared testimony that the central bank is "well suited to serve as the consolidated supervisor for those systemically important financial institutions" not already under the Fed's umbrella.

Also in the prepared remarks, Bernanke reiterates his call for other changes to regulation, including finding a way to wind down big financial companies without harming the financial system and allowing the government to "impose losses on shareholders and creditors of the firms."
 

INVESTMENT VIEW
Unity Infra: Grossly Under-Valued

CMP Rs 414.20  
 
At forecast Revenues of Rs 1400 crore and after tax profits of Rs 80 crore for FY10, Unity Infra will turn in an EPS of Rs 62 for the year. With a Book Value of Rs 370 and a PE of 6, this is one of the most uniquely positioned infra entities in the country where a small expansion in PE multiple could lead to a doubling up in the price of the scrip.
 

The current order book stands at over Rs 3000 crore, split over civil construction, water projects, sewage system replenishment and building of roads. Thus, there is earnings visibility for atleast 2 years at the current juncture.

 

With close to Rs 600 bn worth of road contracts being released over the next 9 months, the GOI has made it imperative upon concerns bidding up for roads to increase their capital to atleast double the size of the projects for which they are bidding.

 

Unity Infra, as a first step is coming out with a QIP of Rs 400 crore and following which all bids for road projects will be made in a consortium with international partners. This will help maintain Unity's record of having delivered all construction projects well before the ear-marked construction dates. There certainly will be earnings lumpiness, but the bigger picture is much clearer.

 

Background

 

UIL is focused in areas, such as civil construction and infrastructure development. Their projects include civil construction, transportation engineering and irrigation and water supply projects. UIL is an ISO 9001- 2000, 14001-2004 and OHSAS 18001-2007 certified.

 

UIL has three subsidiaries, namely Unity Realty and Developers, Unity Infrastructure Assets and Unity Middle East (FZE). UIL develops its real estate projects under its wholly owned subsidiary Unity Realty and Developers, which is having ~4.2 million sq ft of real estate projects across Goa (IT Park 7 lakh sq ft project), Pune and Nagpur (~2.7mn sq.

ft. spread over 5 malls and one hotel).

 

UIL has completed a 400 rooms 5- Star hotel in Pune. It holds 19 percent in the hotel project through its subsidiary. UIL has an adequate capacities, state-of-the-art infrastructure, skilled experienced manpower and technical absorption capabilities. During FY09, it has invested Rs 65 crore in new equipment in various parts of India.

 

Some of the key projects completed during FY09 include Bir Hospital, Nepal; District Hospital, Goa; Five Star Hotel, Balewadi, Pune; Office building of CAGI, Delhi; 36 storey Orchid Tower Mumbai Central and Gurudwara building, Nanded in Maharashtra.

(Some forward looking statements on projections, estimates, expectations & outlook are included to enable a better comprehension of the Company prospects. Actual results may, however, differ materially from those stated on account of factors such as changes in government regulations, tax regimes, economic developments within India and the countries within which the Company conducts its business, exchange rate and interest rate movements, impact of competing products and their pricing, product demand and supply constraints.)
 
--
Arvind Parekh
+ 91 98432 32381