Strong & Weak futures
This is list of 10 strong futures:
This is list of 10 strong futures:
Sesa Goa, DCHL, Yes Bank, Bank Of India, Jindal Steel, PTC, Canara Bank, Dena Bank, Nagarjuna Const & Sun TV.
And this is list of 10 Weak futures:
RCom, Bharti Airtel, Idea, MTNL, Grasim, TV-18, India Cement, Ambuja Cement, Hind Petro & HCL Tech.
Nifty is in Up trend
Nifty is in Up trend
POSITIONAL BUY:
Buy BHARAT IMMUNOLOG (BSE Cash)
Rally is surprising, bulls may hold on gains today.
1 Week: Bullish, as per current indications.
1 Month: Bearish, as per current indications.
3 Months: Surprisingly going down, opposite to bullishness.
1 Year: Bullish, as per current indications.
Buy KG PETROCHEM (BSE Cash)
Bulls may hold on gains today.
1 Week: Bullish, as per current indications.
1 Month: Bullish, as per current indications.
3 Months: Surprisingly going up, opposite to bearishness.
SPOT LEVELS
 | 5141.80 | ( -0.01 %) | -0.35 |  |
| 1 | 2 | 3 | ||
| Resistance | 5163.47 | 5184.78 | 5219.92 | |
| Support | 5107.02 | 5071.88 | 5050.57 | |
 | 17266.63 | ( -0.32 %) | -56.19 | | |
| 1 | 2 | 3 | |||
| Resistance | 17404.93 | 17487.04 | 17626.23 | ||
| Support | 17183.63 | 17044.44 | 16962.33 | ||
FUNDS DATA
| FII trading activity on NSE and BSE in Capital Market Segment(In Rs. Crores) | ||||
| Category | Date | Buy Value | Sell Value | Net Value |
| FII | 17-Oct-2009 | 41.82 | 41.53 | 0.29 |
| FII trading activity on NSE and BSE in Capital Market Segment(In Rs. Crores) | ||||
| Category | Date | Buy Value | Sell Value | Net Value |
| FII | 17-Oct-2009 | 41.82 | 41.53 | 0.29 |
Global Cues & Rupee
The Dow Jones Industrial Average closed at 9,995.91. Down by 67.03 points.
The Broader S&P 500 closed at 1,087.68. Down by 8.88 points.
The Nasdaq Composite Index closed at 2,156.80. Down by 16.49 points.
The partially convertible rupee INR=IN ended at 46.29/30 per dollar on yesterday, weaker than its previous close of 46.225/235.
Interesting findings on web:
The Dow Jones Industrial Average failed to close the week above 10000, as disappointing quarterly reports from International Business Machines, Bank of America and General Electric weighed on stocks.
Stocks were also hurt by a report showing a surprise drop in consumer sentiment.
The Dow fell 67.03 points on Friday, or 0.7%, to 9995.91.
The Standard & Poor's 500-stock index fell 8.88 points, or 0.8%, to 1087.68.
The Nasdaq Composite Index slid 16.49 points, or 0.8%, to 2156.80.
RUSSELL616.18-7.16-1.15%
TRAN4023.15-10.05-0.25%
UTIL382.030.86+0.23%
S&P 100502.89-4.18-0.82%
S&P 400707.87-6.78-0.95%
NYSE7133.96-70.09-0.97%
NAS 1001739.32-14.04-0.
A gauge of consumer sentiment dropped to 69.4 in a mid-October reading from 73.5 at the end of September. Economists surveyed by Reuters had expected the measure to rise to 73.8.
"Because the consumer is such a question mark, the places in this recovery we think are the best opportunities for growth are sectors that are more leveraged to the business end of the economy," said Boston-based David Joy, chief market strategist at RiverSource Investments LLC, which oversees $135 billion. He said that includes technology, industrial, materials and energy companies.
And industrial production rose in September for a third straight month. The gauge rose 0.7 percent; economists surveyed had expected a more modest 0.2-percent increase.
While there remains a flood of doubters to the market's rally, others note stocks typically foreshadow a recovery about six to nine months ahead of an actual turn to the positive for earnings. Analysts still expect profits to decline for the ninth consecutive quarter this time around, but are forecasting a 60% earnings rebound in the fourth quarter.
"And earnings are expected to be up another 20% or more next year," said Kent Engelke, chief economic strategist with Capitol Securities Management. "The market isn't overvalued."
"Some companies aren't seeing that improvement in revenue everyone's looking for, and in the financial sector, credit losses remain a significant problem," said Robert McGee, portfolio manager at CS McKee.
The stock market has essentially been on a tear since bottoming in March, with repeated calls for a big 10% to 15% selloff going unmet.
"The market has had a very strong run off the March lows," said Michael Sheldon, chief market strategist at RDM Financial Group. "But now investors are looking to see if we can get a push higher after the third-quarter results are in, similar to what we saw after first and second-quarter earnings."
"Liquidity levels are helping to drive the market higher" said Sheldon. "But I think we'll need to see some better economic news, in terms of employment, along with greater visibility from companies heading into 2010 to help propel stocks even higher."
"The disappointing results from Bank of America and GE do not mean the whole earnings season will go sour, but it is raising a question mark among investors," Cardillo told Reuters.
Tim Knepp, chief investment officer of Genworth Financial Asset Management, said the reports from Bank of America and GE reminded investors that a recovery in the economy will be difficult and that the stock market could be getting too far ahead of the economy.
"They're still talking about a tough environment," he said. "The market is a bit rich."
David Eiswert, of T. Rowe Price Associates, thinks large-cap tech stocks will reign in 2010.
"Mid to long-term, I think tech offers you innovation, it offers you globalization and those are really attractive, and at these valuations of an IBM, of a Google, especially the larger cap names, we think that's what next year's going to be about," Eiswert said on CNBC this week.
"The market is evaluating each bellwether as it comes through and showing its elation or disappointment," said Philip Orlando, who helps oversee $400 billion as chief equity market strategist at Federated Investors Inc. in New York. "Today, you had disappointing earnings from GE and Bank of America and the market responded accordingly."
An analyst at Quantitative Analysis Service said the rally in U.S. stocks will last for another six to nine months, while a strategist at AMP Capital Markets said the S&P 500 may be due for a "stiff" slump as it approaches a resistance level.
The federal budget deficit has surged to an all-time high of $1.42 trillion as the recession caused tax revenues to plunge while the government was spending massive amounts to stabilize the U.S. financial system and jump-start the economy.
The imbalance for the budget year ended Sept. 30 more than tripled last year's record. The Obama administration projects deficits will total $9.1 trillion over the next decade unless corrective action is taken.
As a portion of the economy, the budget deficit stood at 10 percent, the highest since World War II, according to government data released Friday.
One of America's wealthiest men was among six hedge fund managers and corporate executives arrested Friday in a hedge fund insider trading case that prosecutors say generated more than $25 million in illegal profits and should be a wake-up call for Wall Street.
Raj Rajaratnam, a partner in Galleon Management and a portfolio manager for Galleon Group, a hedge fund with up to $7 billion in assets under management, was accused of conspiring with others to trade based on insider information about several publicly traded companies, including Google Inc.
U.S. Attorney Preet Bharara told a news conference it was the largest hedge fund case ever prosecuted and marked the first use of court-authorized wiretaps to capture conversations by suspects in an insider trading case.
Output at America's factories, mines and utilities rises for the third straight month, but some economists say the manufacturing growth that has helped lead the nascent economic recovery may slow as federal stimulus programs are phased out.
Higher output of motor vehicles and parts spurred much of the September increase, due in part to the government's "Cash for Clunkers" auto buying program. But steel and other sectors also posted gains, and General Electric reported separately Friday that its industrial businesses grew in the third quarter.
The Federal Reserve said industrial production rose 0.7 percent last month. That beat the 0.2 percent increase that Wall Street economists expected, according to a survey by Thomson Reuters.
Eight of 10 industry groups in the S&P 500 turned lower today, led by a 2.6 percent drop in financial shares.
IBM, which fell $6.34, or 5%, to $121.64, after company suggested in its third-quarter earnings report that businesses still were reluctant to start spending again.
Bank of America shed 84 cents, or 4.6%, to 17.26.
Bank of America (BAC, Fortune 500) reported a $2.2 billion third-quarter loss as consumer credit problems overshadowed strength in its wealth management business.
The Dow component reported a loss of 26 cents per share versus a profit of 15 cents per share a year ago. Analysts surveyed by Briefing.com expected BofA to report a loss of 21 cents per share.
Consumer credit losses are cutting into its attempts to return to profitability and pay back $45 billion to the government, BofA said. The company has received that money in the aftermath of its purchases of Merrill Lynch and Countrywide in the thick of the financial crisis.
The nation's second-largest bank said it wrote down loans on its books by almost $10 billion during the July-September period, up almost $1 billion from the second quarter. The bank also added $2.1 billion to its reserves to cover bad loans, bringing its provision for credit losses to $11.7 billion. The bank's total allowance for loan and lease losses now totals $35.83 billion.
However, like JPMorgan Chase (JPM, Fortune 500) earlier this week, BofA said that while loan losses and money set aside for loan losses continue to grow, the pace of the growth is slowing.
A variety of bank stocks fell Friday, sending the KBW Bank (BKX) index down by 3.2%.
"All the investment-banking businesses are very strong, but credit problems continue to persist, which is basically the reading you're getting from the whole economy," said Carmine Grigoli, chief investment strategist at Mizuho Securities USA Inc. in New York.
"We would be cautious and underweight the financial sector, including the banks," Bob Doll, vice chairman and chief investment officer of equities at BlackRock Inc., said in an interview with Bloomberg Television. "A slow-growth economy with low nominal growth means some people are not going to be able to pay their bills, and therefore we're going to have some more bad credits down the line." BlackRock oversees $1.37 trillion.
GE slid 71 cents, or 4.2%, to 16.08, as the conglomerate posted third-quarter earnings that fell a less-than-feared 42%, though revenue was lighter than expected.
The results from one of the world's largest companies show the spotty strength of the global economy. While "signs of life" are emerging — profits are up for some industrial goods and services — consumers and businesses are still reeling from large numbers of defaults in credit cards and mortgages.
GE's quarterly profit fell to $2.4 billion, or 23 cents per share, hurt by sharply lower earnings at its GE Capital arm, which loans money for businesses ranging from credit cards to shopping centers. A year earlier, the company earned $4.3 billion, or 43 cents a share.
Google (Nasdaq) rose 19.94, or 3.8%, to 549.85, after its third-quarter earnings rose 27% to top Wall Street expectations as the Internet-search company recorded a return to sequential growth in traffic to its advertisers.
"We believe revenue from YouTube, DoubleClick and so forth is still mostly domestic, so the fact that international generated four-fifths of Google's revenue growth implies core search remains the growth engine," wrote analysts from Goldman Sachs in a note.
The Dow's leading advancer on Friday was Boeing, up 1.43, or 2.8%, at 53.19, as the aerospace company reiterated that it expects its long-delayed 787 Dreamliner to take its first flight by year end.
Among the group of companies falling on quarterly reports, steel-structures-maker Valmont Industries shed 8.83, or 10%, to 79.67, after its third-quarter profit rose 9.4%, though revenue fell short of analysts' expectations.
Advanced Micro Devices also posted third-quarter earnings above Wall Street expectations, but fell 45 cents, or 7.3%, to 5.74, as the chip maker's comments about a potential peak in personal-computer production weighed on shares.
Wal-Mart [WMT 51.22 0.27 (+0.53%) ] has thrown the gauntlet in its price war with Amazon [AMZN 95.32 -0.69 (-0.72%) ]: The discount giant slashed its price on new hardcovers, including Sarah Palin's "Going Rogue" and John Grisham's "Ford County," to $10 — and then $9. Amazon matched both price points. Shares of Wal-Mart gained 0.5 percent.
Microsoft [MSFT 26.50 -0.21 (-0.79%) ] was hit by pirates: A week before the official launch of its Windows 7 operating system, bootleg copies of the software were available on the streets of China for less than $3 — a fraction of the list price, $320. Its shares lost 0.8 percent.
MGIC Investment Corp. dropped 12 percent to $6.42. The largest U.S. mortgage insurer posted its ninth straight quarterly loss after a record number of homeowners failed to meet mortgage payments.
Genworth Financial Inc., the life insurer and mortgage guarantor, lost 6.4 percent to $11.23.
Discover Financial Services, the credit-card company that took $1.3 billion from the Treasury's bank rescue fund, lost 6.3 percent after it was cut to "sell" from "hold" by EVA Dimensions.
Harris Corp. advanced 7.2 percent to $39.88 for the second- biggest gain in the S&P 500. The maker of military radios was awarded a $419 million contract for the U.S. Army for multiband radio systems. The initial delivery order under the contract is valued at $165 million, Harris said.
Estée Lauder Cos. rose 5.1 percent to $41.11. The maker of Clinique and Bobbi Brown cosmetics said first-quarter earnings will be significantly higher than previously forecast because of better-than-anticipated sales.
Intercontinental Exchange Inc. gained the most in the S&P 500, adding 7.7 percent to $105.84. The owner of the largest credit-default swap clearinghouse and CME Group Inc. were upgraded to "outperform" from "market perform" at Keefe, Bruyette & Woods Inc.
Alcoa Inc. (NYSE:AA), down 2.37 percent to $14.02
Allegheny Energy Inc. (NYSE:AYE), up 1.58 percent to $26.42
American Eagle Outfitters Inc. (NYSE:AEO), up 0.52 percent to $19.45
Bank of New York Mellon Corp. (NYSE:BK), down 3.16 percent to $27.24
CONSOL Energy Inc. (NYSE:CNX), down 2.78 percent to $49.60
Dick's Sporting Goods (NYSE:DKS), down 2.29 percent to $25.15
H.J.Heinz Co. (NYSE:HNZ), up 0.25 percent to $40.67
Kennametal Inc. (NYSE:KMT), down 2.44 percent to $24.77
Koppers Holdings Inc. (NYSE:KOP), down 5.58 percent to $31.29
Mylan Inc. (Nasdaq:MYL), down 0.54 percent to $16.66
PNC Financial Services Group Inc. (NYSE:PNC), down 2.31 percent to $44.74
PPG Industries Inc. (NYSE:PPG), down 1.32 percent to $61.26
U.S. Steel Corp. (NYSE:X), down 4.93 percent to $43.38
WABTEC Corp. (NYSE:WAB), down 0.46 percent to $39.09
WESCO International Inc. (NYSE:WCC), down 1.78 percent to $28.73
Next week brings a slew of big-name corporate results, including Apple, Coca-Cola, Wells Fargo, Morgan Stanley, American Express and Microsoft.
The CBOE Volatility Index, widely considered the best gauge of fear in the market, continued to slide, ending the week below 21.
Oil,Gold & Currencies:
U.S. light crude oil for November delivery rose 95 cents to $78.53 a barrel on the New York Mercantile Exchange.
COMEX gold for December delivery rose 90 cents to $1,051.50 an ounce.
The dollar gained versus the euro and the yen, turning positive after its recent across-the-board weakness versus a basket of currencies.
The dollar dropped the most against the euro in more than a month and reached a 14-month low on speculation the Federal Reserve will trail other central banks in boosting interest rates.
Sterling rose against all of its major rivals this week on signs the Bank of England may suspend quantitative easing, reducing concern it's flooding the market with new currency. The dollar slid as minutes of the Fed's September meeting showed some policy makers were open to boosting purchases of mortgage- backed securities. The greenback may extend its decline when the central bank releases its Beige Book business survey next week.
"There's no good news for the dollar," said Dale Thomas, head of currencies in London at Insight Investment Management, which oversees about $121 billion. "The underlying trend is still for a gradual recovery of the global economy and a weak dollar." The dollar will remain a "funding currency" for investors to buy higher-yielding assets as U.S. borrowing costs stay low, Thomas said.
The dollar fell 1.2 percent this week to $1.4905 per euro, from $1.4732 on Oct. 9, in the biggest drop since a 1.9 percent decline during the week ended Sept. 11. The U.S. currency touched $1.4968 on Oct. 15, the weakest level since Aug. 13, 2008. The yen declined 1.2 percent to 90.89 versus the dollar, from 89.78, in its biggest decline since Aug. 7. Japan's currency depreciated 2.3 percent to 135.48 per euro, compared with 132.25 a week earlier.
Weaker Yen
The yen fell against all of its 16 most-traded counterparts tracked by Bloomberg on speculation Japanese investors will send money overseas for higher returns and the government won't support a strong currency.
Finance Minister Hirohisa Fujii told reporters in Osaka on Oct. 15 that governments are responsible for ensuring the stability of their currencies, which "need to reflect the strength" of economies.
"The shift in Japanese currency policy has broken the relationship between the yen and risk, but the boost to sentiment already looks to be fading," Todd Elmer, a currency strategist at Citigroup Inc. in New York, wrote in a research note this week. "The erosion of support from official rhetoric on the exchange rate should leave the yen more vulnerable to negative underlying fundamentals and a potential acceleration in capital outflows."
The Australian dollar rose 1.5 percent this week and touched 92.70 U.S. cents yesterday, the strongest level since August 2008, after Reserve Bank Governor Glenn Stevens said on Oct. 15 he can't be "too timid" in tightening policy.
Australia's Rate
Stevens became the first Group of 20 central banker to increase borrowing costs when he unexpectedly boosted the overnight cash target last week by a quarter-percentage point to 3.25 percent from a half-century low. The target rate compares with 0.1 percent in Japan and zero to 0.25 percent in the U.S.
Banks including Barclays Capital, BNP Paribas SA, Morgan Stanley and St. George Bank Ltd. signaled the Australian currency may rise to parity with the U.S. dollar.
Sterling climbed 3.2 percent to $1.6356 in its biggest advance since May 22 after the Financial Times reported this week that Bank of England Markets Director Paul Fisher said policy makers would be more likely to suspend asset purchases. Rising asset prices and improved confidence may signal the program is working, Bank of England Deputy Governor Charles Bean said this week.
The pound is "undervalued" as the currency market is underestimating the potential for rate increases by the Bank of England, according to Deutsche Bank AG, the world's biggest currency trader.
'Economic Slack'
The dollar declined versus the euro this week as minutes from the Federal Open Market Committee's Sept. 22-23 meeting showed some policy makers thought an increase in purchases of mortgage-backed securities might "reduce economic slack more quickly." Fed Vice Chairman Donald Kohn said this week that slow growth warrants very low interest rates for an "extended period."
The central bank will release its Beige Book business survey on Oct. 21.
The euro's appreciation against the dollar will be discussed at a meeting of euro-area finance ministers in Luxembourg on Oct. 19, said Luxembourg's Jean-Claude Juncker, who heads the so-called eurogroup and also serves as his nation's prime minister.
"We'll tell you after the meeting if there's something new to be said, a kind of extension to the normal poem," Juncker said yesterday. "But I guess the poem will stay as the poem was," adding that "we don't like excessive volatility in exchange rates and disorderly movements."
The dollar's "trough" will be "slightly deeper" than previously estimated, Goldman Sachs Group Inc. said in a research report this week, forecasting it will depreciate to $1.55 versus the euro in three and six months before recovering to $1.35 in a year. That compares with previous forecasts of $1.45 in three and six months.
Bonds:
Treasury prices rallied, lowering the yield on the 10-year note to 3.41% from 3.46% late Thursday. Treasury prices and yields move in opposite directions.
What to expect:
MONDAY: Housing-market index; Earnings from Hasbro, Apple, Texas Instruments and Boston Scientific
TUESDAY: Housing starts; producer prices; Madoff sons hearing; report on college pricing; Fed's Plosser speaks; Earnings from Caterpillar, Coca-Cola, DuPont, Pfizer, United Technologies, Lockheed Martin, Regions Financial, SanDisk, Seagate, Yahoo
WEDNESDAY: Weekly mortgage apps; weekly crude inventories; Fed's beige book; Fed's Rosengren speaks; Earnings from Boeing, Eli Lilly, Wells Fargo, Altria, AMR, Continental, Morgan Stanley, USBancorp and eBay
THURSDAY: Weekly jobless claims; leading indicators; Fed's Rosengren, Lockhart and Dudley speak; Earnings from AT&T, Bristol-Myers, McDonald's, Merck, MMM, Travelers, UPS, Schering-Plough, Xerox, Amazon, AmEx, Braodcom and Capital One
FRIDAY: Fed chief Bernanke speaks; existing-home sales; Fed's Kohn speaks; Earnings from Microsoft, Honeywell and Ingersoll-Rand
Galleon Insider Case Ushers in Wiretaps for Finance Prosecution
U.S. prosecutors who used wiretaps to make their insider trading case against billionaire Raj Rajaratnam, founder of hedge fund firm Galleon Group, said they will use similar tactics to fight future crimes on Wall Street.
U.S. Attorney Preet Bharara in Manhattan said yesterday that the Justice Department will employ the same kind of electronic surveillance traditionally reserved for organized crime, drug syndicates and terrorism prosecutions. Bharara, whose office has jurisdiction over the headquarters of some of the world's biggest financial firms, said investigators relied on wiretaps to build a case against Rajaratnam and former directors at a Bear Stearns Cos. hedge fund.
"What's very unusual is that the case is built on wiretaps," said Robert Mintz, a former prosecutor and partner in the Newark, New Jersey, office of the law firm McCarter & English. "You need very specific and timely evidence of criminal activity before a judge is going to let you go up on a wiretap."
Rajaratnam, 52, faces 13 fraud and conspiracy counts, many of which carry 20-year maximum sentences. Under federal sentencing guidelines, he faces 10 years in prison if convicted at trial, Assistant U.S. Attorney Josh Klein said in court yesterday. Galleon Partners, based in Manhattan, has offices in London, Singapore, Mumbai, and Menlo Park, California.
$20 Million Scheme
Also arrested in the alleged $20 million scheme were Rajiv Goel, who worked at Intel Capital as a director in strategic investments, Anil Kumar, who worked as a director at McKinsey & Co., and IBM Corp. executive Robert Moffat. The former officials at Bear Stearns Asset Management are Danielle Chiesi and Mark Kurland, who were affiliated with the firm's New Castle Partners, which managed about $1 billion. Prosecutors called it the biggest insider trading case involving hedge funds.
"The defendants operated in a world of, you scratch my back, I'll scratch your back," Bharara said at a press conference yesterday. "Greed, sometimes, is not good."
He said the prosecution is the first time wiretaps have been used to target insider trading, calling the case "unprecedented."
Galleon, which started as a hedge fund firm focusing on technology and health-care stocks, grew to more than $5 billion in 2001 from its start in January 1997. Rajaratnam founded Galleon with three other colleagues from Needham & Co., an investment bank that focused on technology and health-care companies.
Oversaw $2.6 Billion
Galleon Management, the company's advisory business, oversaw more than $2.6 billion at the end of March, mostly on behalf of hedge funds, according to regulatory filings it submitted to the U.S. Securities and Exchange Commission at the time. Rajaratnam held a 50 percent to 75 percent controlling stake, according to the documents.
At yesterday's court hearing, U.S. Magistrate Judge Douglas Eaton in Manhattan set Rajaratnam's bail at $100 million, to be secured by $20 million in assets and guaranteed by his wife and four others. Rajaratnam, who gave up his passport, may not travel more than 110 miles from New York City.
Klein asked Eaton to hold Rajaratnam in jail pending his trial. He said the hedge fund manager had "enormous incentive" to flee to his native Sri Lanka or elsewhere. The prosecutor said there's additional evidence, there may be more charges against Rajaratnam and that the case is "overwhelming."
Rajaratnam told court officials after his arrest that he was worth $200 million, Klein said in court, adding that the hedge fund founder is a billionaire.
Misconstruing Evidence
Defense attorney Jim Walden said prosecutors are misconstruing the evidence against Rajaratnam and that the case isn't as strong as they allege.
"This is a simple insider trading case," Walden said.
The other defendants arrested in New York were also freed after posting bonds between $2 million and $5 million. Goel was arrested in California, the government said.
Alan Kaufman, the attorney for Chiesi, 43, said in an interview that his client was "shocked" at her arrest yesterday and will plead innocent. Kurland's attorney, Lawrence Iason, and Moffett's lawyer, Kerry Lawrence, also said their clients aren't guilty.
"Anil Kumar is as shocked as everyone else who knows him to see his name in this complaint," his lawyer, Charles Clayman, said in a statement. "He emphatically denies these charges."
According to prosecutors, tips to Rajaratnam came from insiders and others at hedge funds, investor relations firms, and companies including Intel, IBM, McKinsey, and companies whose shares were traded in the alleged scheme.
Bharara said the investigation was continuing.
Plane Ticket
Rajaratnam and his firm earned from $17 million to $18 million from the fraud, Bharara said. In recent days, he may have been aware he was under investigation, the government said. According to one of two criminal complaints filed yesterday in Manhattan federal court, Rajaratnam told an acquaintance that he believed a former Galleon employee was wearing a "wire." Rajaratnam bought a plane ticket on Oct. 14 for travel to London yesterday, according to the complaint.
"Galleon was shocked to learn today that Raj Rajaratnam was arrested this morning at his apartment," the firm said yesterday in a statement. "We intend to cooperate fully with the relevant authorities. Galleon continues to operate and is highly liquid."
The SEC yesterday sued Rajaratnam for allegedly engaging in insider trading. Rajaratnam didn't deserve his reputation for "genius trading strategies" or "astute study of company fundamentals or marketplace trends," according to the SEC complaint.
Master of the Rolodex
"Rajaratnam is not a master of the universe, but rather a master of the Rolodex," Robert Khuzami, director of enforcement at the SEC, said at the press conference. "He cultivated a network of high-ranking corporate executives and insiders, and then tapped into this ring to obtain confidential details about quarterly earnings and takeover activity."
Rajaratnam, a graduate of the University of Pennsylvania's Wharton School, was identified this year by Forbes as the 559th richest person in the world, with a net worth of $1.3 billion.
Rajaratnam lives in New York City, as do Chiesi, 43, and Kurland, 60. Goel, 51, lives in Los Altos, California, and appeared in court yesterday in California. A message left for Goel at his home wasn't returned. Kumar is 51 and lives in Santa Clara, California. Moffat, 53, lives in Ridgefield, Connecticut.
Arrested
The six defendants are charged with using insider information in two overlapping schemes to trade in shares of companies including Google Inc., Polycom Inc., Hilton Hotels Corp. and Advanced Micro Devices Inc., according to the complaints.
Prosecutors said they've been investigating the case since at least November 2007, when a person they don't name in the complaint began meeting with agents of the Federal Bureau of Investigation. The person, who the government said has pleaded guilty and is cooperating with authorities, used inside information to trade securities and had tipped Rajaratnam since 2006, prosecutors said.
The person, who had sought a job at Galleon in 2005, helped federal investigators by "making consensual recordings of four telephone conversations" with Rajaratnam, according to court papers.
Authorities said they have other taped conversations of the billionaire as well. On March 7, 2008, the government got court approval to intercept communications on a cell phone he used, according to the complaints. Prosecutors said they've also been listening to two of Chiesi's telephone lines since August 2008.
Wiretaps
"There are numerous conversations that are recorded that very clearly depict the fact that this defendant engaged in a veritable smorgasbord of insider trading activities," Klein said in court. He added that Rajaratnam instructed colleagues to create e-mails designed to hide his source of information and "would make trades intended to mask his illegal activity."
Prosecutors say Rajaratnam traded in 2006 and 2007 on leaks from insiders at Polycom, Moody's Investors Services Inc. and Market Street Partners. A Moody's analyst offered news about Hilton, and the Market Street Partners source provided tips about Google, prosecutors said. Rajaratnam earned $12.7 million on the leaks and gave a confidential government informant inside information on other companies in return, they said.
Goel, who had been working in the treasury of Intel, passed along news about Clearwire Corp. that he learned from investments made by Intel, and Rajaratnam earned about $579,000 in profits, prosecutors said.
In return, "Rajaratnam placed profitable trades for the benefit of Goel in a personal brokerage account maintained by Goel at Charles Schwab," Bharara said in a statement.
Secret Tips
In another alleged scheme, Chiesi got secret tips from an unidentified person at Akamai Technologies Inc. and from Moffat, who allegedly passed along information about IBM, Sun Microsystems Inc., and Advanced Micro Devices, according to one of the criminal complaints. Chiesi gave the tips to Kurland and the two traded on the information, according to the government.
These tips generated others, prosecutors said, as Chiesi passed them onto to Rajaratnam, who in turn gave Chiesi inside information about AMD and other companies, according to the government.
The complaint quotes conversations between Chiesi and Rajaratnam, including a July 24, 2008, discussion that they allegedly had after she spoke to the person at Akamai. That day, Akamai stock had closed at $32.18.
"Akamai," Chiesi told Rajaratnam, according to the complaint. "They're gonna guide down. I just got a call from my guy."
Martha Stewart
After Chiesi said that the company would bring the stock down to $25 a share, Rajaratnam replied that he would be "radio silent" and asked when Akamai would report, according to the complaint.
"Just keep shorting every day," Chiesi responded, prosecutors said. "We got a lot of days."
The complaint also quotes from a conversation on or about August 27, 2008, between Chiesi and a co-conspirator not named as a defendant.
"You just gotta trust me on this," Chiesi is quoted as saying. "Here's how scared I am about what I'm gonna tell you on AMD." Chiesi and the co-conspirator talk a little more, prosecutors said, and Chiesi states, "I swear to you in front of god, you put me in jail if you talk." Later, the government said, she's quoted as saying "I'm dead if this leaks. I really am … and my career is over. I'll be like Martha f---ing Stewart."
McKinsey
Kumar gave Rajaratnam tips about a McKinsey's clients, and Moffat tipped Chiesi about an AMD venture in Abu Dhabi in which IBM participated, the complaints alleged.
Yolande Daeninck, a spokeswoman for McKinsey, said the firm is "distressed" by Kumar's arrest. Chuck Mulloy, an Intel spokesman, said the company is investigating and has put Goel on leave. Moody's said in a statement that it's cooperating with prosecutors. A call to the main number of Market Street Partners, a San Francisco investor relations firm, wasn't returned. IBM spokesmen Ian Colley and Ed Barbini didn't respond to messages seeking comment.
The cases are U.S. v. Rajaratnam, 09-02306, and U.S. v. Chiesi, 09-mag-02307, U.S. District Court for the Southern District of New York (Manhattan).
GE's Investors Fret Over Firm's Real Estate Holdings
General Electric's $84 billion real estate portfolio remains a worry for investors, who wonder if the conglomerate will have to take big write-downs to reflect the lower value of real estate debt and equity holdings.
The GE Real Estate unit was the only GE Capital business to post a loss in the latest quarter.
VIX Posts Longest Losing Streak in 4 Years as Dow Tops 10,000
The benchmark index for U.S. stock options fell for a 10th day, the longest streak since May 2005, as better-than-estimated earnings reports pushed the Dow Jones Industrial Average above 10,000 for the first time in a year.
The VIX, as the Chicago Board Options Exchange Volatility Index is known, decreased 7.3 percent this week to 21.43 today, the lowest since September 2008. The index measures the cost of using options as insurance against declines in the Standard & Poor's 500 Index, which rose 1.5 percent after JPMorgan Chase & Co. and Intel Corp. results beat analysts' projections.
"When you have the market moving up at a gradual pace that's the perfect recipe for a falling VIX," said Jeremy Wien, a VIX options trader at Societe Generale SA in New York. "People are definitely a lot less fearful than they were a few weeks ago and the fear that we'll tank or that the rally is a complete illusion is subsiding after most of the earnings results were positive."
The VIX has dropped 74 percent since closing at a record 80.86 in November. It remains above its average of about 20 over its 19-year history. VIX futures expiring in November gained 1.6 percent to 25.30 today while December contracts advanced 1.2 percent to 26.05.
The Dow average rose 1.3 percent to 9,995.91 during the week and closed as high as 10,062.94 on Oct. 15, surpassing the five-digit milestone that it first exceeded in 1999. JPMorgan increased 0.5 percent during the week after reporting its highest profit since 2007. Intel advanced after its sales forecast surpassed estimates.
The VIX never exceeded 50 before Lehman's collapse in September. It topped 40 after WorldCom Inc.'s 2002 bankruptcy, the Sept. 11 terrorist attacks, Long-Term Capital Management's collapse in 1998 and the Asian financial crisis in 1997.
In Europe, the benchmark gauge of stock-market volatility fell 4.1 percent this week to 25.20 and its Oct. 15 close of 24.78 was the lowest since September 2008. The VStoxx Index measures the cost of protecting against a decline in shares on the Dow Jones Euro Stoxx 50 Index, which rose 0.4 percent for the week.
California bank becomes 99th to fail in U.S. in 2009
California regulators on Friday closed the San Joaquin Bank of Bakersfield, which became the 99th U.S. bank to fail in 2009.
Low Stimulus Bidding Could Put Construction Jobs at Risk
Contractors may be bidding themselves out of business for highway and infrastructure projects included in the U.S. economic stimulus plan, as they low-ball their proposals in hopes of winning much-needed work.
Dallas Fed chief says local firms likely to reap globalization benefits
World trade has plummeted during the worst recession since the Great Depression, but increased global economic integration isn't on its way out, said Federal Reserve Bank of Dallas President Richard Fisher.
"Globalization is proceeding," Fisher said at a Friday conference on the global economy at Southern Methodist University. "That's the good news. And nobody is in a better position to exploit it and make it work to the benefit of their stakeholders than Dallas-based businesses."
Fisher attributed recent trade declines to the painful economic recession in the U.S. and elsewhere, as well as to a drying up of trade financing during the recent credit crunch.
World trade volume is expected to fall nearly 12 percent in 2009, according to a recent report by the International Monetary Fund.
Texas exports amounted to $102.6 billion during the first eight months of this year, down about 23 percent from the same period last year, according to WiserTrade, a trade data provider.
Fisher, who was deputy U.S. trade representative in the Clinton administration, also warned that increased trade protectionism would hurt the global economy.
"One cannot be too blunt about the dangers of protectionism," he said. "It is, quite frankly, the crack cocaine of economics: It may provide politicians with a temporary high, yet it is instantly addictive and inevitably proves debilitating and fatal."
Fisher stopped short of directly criticizing the Obama administration's recent decision to slap tariffs on Chinese tire imports.
That move, he said, may have been "an inexpensive way to placate an important constituency and ... there might have been far more expensive alternatives on the table."
Oil rises for seventh day on bullish industrial data
China's western regions get approximately 300 bln yuan of investment
IVENSTMENT VIES
Gammon Infra Projects: Multi-Bagger
GIPL well-placed to benefit from up-tick in infra BOT projects:
Gammon's infra subsidiary, GIPL, currently has four operational projects—three road and one port terminal project. Along with the ten other projects across road, ports and power sectors, GIPL's portfolio is well-diversified across sectors.
With 100km of highways under operation and another 132km under development, along with two large BOT bridge projects, GIPL has the requisite capability to execute large, complex road projects. This should enable it to capitalise on the likely upsurge in NHAI award activity in the next 2-3 quarters.
GIPL has a diversified infrastructure asset portfolio
Gammon India holds 73% stake in its listed infra asset owning subsidiary, Gammon Infra Projects Ltd (GIPL). GIPL currently has a portfolio of 18 projects encompassing roads and bridges, ports and power.
Operational projects
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Rajahmundry Expressway: This is a 4-lane 53 Km stretch on national highway five (part of the Golden Quadrilateral). The project with a total cost of Rs2.56bn achieved commercial operation in September-2007 (70 days ahead of schedule). The concession period of 17.5 years ends in November 2019. SPV's revenue stream consists of a semi-annual annuity of Rs296m. GIPL also has an O&M contract for the road project till the concession expires.
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Andhra Expressway: This is a 4-lane 47 Km stretch on the national highway five was built at a cost of Rs2.48bn. The highway was commissioned in October-2004 (30 days ahead of schedule) and the concession period is 17.5 years. The project was developed on annuity basis with a semi-annual annuity of Rs279m. The O&M contract for the project is with GIPL.
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Mattancherry Bridge: The 2-lane 700 meter long bridge was developed by GIPL's subsidiary Cochin Bridge Infrastructure at a total cost of Rs257m. The construction was completed 10 months ahead of schedule and the bridge has been operational for the past 7.5 years. The bridge was developed on BOT basis and generates revenues through toll and also receives a fixed annual annuity of Rs15.4m.
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Vizag Seaports: GIPL's subsidiary VSPL has developed and manages two multi-purpose berths in the northern arm of the inner harbour at Vishakhapatnam Port. The project developed on BOT basis has a fully mechanised integrated handling system capable to handle up to nine million tonnes of cargo per annum. The berths were commissioned in July-2004 and handled 4.7 million tonnes of cargo in FY09. The concession period is 30 years ending 2031. Through a recent share purchase, GIPL has increased its stake in the project to 73.76%.
Projects under development
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Mumbai-Nasik Expressway: GIPL is developing the 99.5 Km Vadape-Gonde (Mumbai –Nasik) section of NH-3 in 80:20 JV with Sadbhav Engineering. Financial closure for the Rs7.53bn project is complete and commissioning is likely by Dec-09. The concession period of 20 years includes a construction period of 3 years.
Gammon India is the EPC contractor for the project while the O&M contract is with GIPL for the entire concession period.
• Gorakhpur Bypass: GIPL is developing a 32 Km long 4-lane bypass to the Gorakhpur town on NH-28 through its 100% owned subsidiary Gorakhpur Infrastructure Company Ltd. The 20 year concession period for the project includes 2.5 years for construction and ends in April 2027. GIPL is developing the project on BOT-annuity basis with a semi-annual annuity of Rs486m.
The project was expected to be commissioned by October-2009 but has seen delays as NHAI has not provided unencumbered access to the project site. The project is being constructed by Gammon India while the O&M will be done by GIPL for the duration of the concession period.
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Kosi Bridge Project: GIPL through its 100% owned subsidiary is involved in the design, finance, construction and operation of the 1.8 Km long four-lane bridge across river Kosi on NH-57. The project also includes 8.2 Km of access roads and bunds for protection from flood. The project has achieved financial closure and construction is being undertaken by Gammon India. The concession period of 20 years ends April-2027 and includes 3 years for construction.
However the project is unlikely to be completed on schedule by April-2010 as completed construction was washed away in the recent floods in the river. The subsidiary will receive a semi-annual annuity of Rs319m during the operational period. GIPL will also execute the O&M contract for the project during the concession period.
(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.)
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Arvind Parekh
+ 91 98432 32381
