Sensex tops 12k mark as global markets rally

The rally in emerging markets, especially Russia and China, last week was reflected in Indian markets on Monday, which reopened after a four-day recess. Equity markets jumped to their highest level since October 2008.

The 30-share Sensex of the Bombay Stock Exchange (BSE) topped the psychological 12,000-level to end the trading session at 12,134.75 points, gaining 731.50 points or 6.41%. The Sensex was the highest gainer among all Asian markets. Similarly, the broader S&P CNX Nifty of the National Stock Exchange (NSE) surged by 180.05 points, or 5.18%, to close the day at 3,654 points.

The rally was part of the extended gains witnessed in Asian markets, which moved up in response to data released by China revealing its industrial output had expanded for the first time in nine months.

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Final fall for a poster boy of Indian Information Technology

On Wednesday,Satyam Computer Services Ltd founder chairman B Ramalinga Raju acknowledged that the company had massaged its balance sheet to show an inflated accrual of Rs 9,440 crore over the years.Moreover,he confessed in a letter to the board and market regulator Sebi, that to cover his tracks, he had cajoled one of India’s largest IT companies into a plan to buy out of two infrastructure and real estate firms run by his sons at a cost of Rs 8,000 crore($1.6billion).

As markets regulator Sebi ordered a probe into a scandal that chairman CB Bhave described as“horrifying”,Satyam’s shares fell to a low of Rs 39.95 on the BSE, while its ADRs turned into penny stock, slipping below a dollar to 85 cents, a drop of 91% since last night. The ministry of corporate affairs is mulling reference of the case to the Serious Fraud Investigation Office after a report from the registrar of companies,Hyderabad.

In its wake,Indian investors are now left wondering whether the fabled run of India’s IT sector is over. For corporates across sectors, the big fallout would be on valuations abroad, while family-run enterprises could now find themselves field in gun comfortable questions on corporate governance.

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Satyam poised for management change, Rajus’ stake goes down

Satyam Computer Services is no won the block with promoters confirming to BSE that there has been a dilution of their 8.6% stake in the company and three more independent directors quitting its board. The company has appointed DSP Merrill Lynch to present an action plan for“ for increasing shareholders’ value” at the rescheduled board meeting on January 10.

The possible change in management was welcomed by the market, with the company’s shares on the Bombay Stock Exchange closing up 9.41% at Rs 148.25.

In its filing to BSE, Satyam said, “the company has received a communication from the promoters that all their shares in the company held by SRSR Holding Pvt Ltd were pledged with institutional lenders over a period of time since September 2006.

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Marketts end 2 day rally, Sensex dips 513 points

Key equity indices snapped their two-day gains and ended in the negative terrain on Wednesday. Intense selling pressure, coupled with weak global cues and sustained selling by foreign funds, forced the market to remain under pressure throughout the day.

The 30-share Sensex of the Bombay Stock Exchange (BSE) plunged by 513.49 points, or 4.81%, and closed the day at 10,169.90 points.

Earlier in the day, the Sensex opened with a negative gap and touched an intra-day high of 10,484.45 points and fell to a low of 10,128.22 points. The broader Nifty of the National Stock Exchange (NSE) also lost 169.75 points or 5.25%, ending at 3,065.15 points.

Amitabh Chakraborty, president-equity at Religare Securities Ltd, said, “Japanese and Korean markets were down significantly. This spooked the sentiment further. The dollar has strengthened against all major currencies but the euro is down sharply.” Intense selling was witnessed in metals, realty and banking sector stocks, which were the worst hit among the BSE sectoral indices.

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Half the stocks going below book value

With the markets seeing consistent selling by overseas investors and the benchmark indices taking a tumble, many stocks have retreated,and are now quoting below their book value.A study by FE indicates that as many as 49% stocks from the 2,699 listed companies traded below their book value at the end of September, sharply down from the 22% on January8, this year.

And this is not just about a large sample size,including many trashy companies and penny stocks.Around 7% companies on the BSE 500 were quoting below their book value in January and now the share has swollen to 20%. Clearly,the pounding has been severe as the Sensex has fallen by 38.39%(-8,012.90 points)to 12,860.43 on September 30,from the peak of 20,873.33 on January 8,2008.

Out of 2,699 quoted companies, 1,319(49%) quoted below of their book value as on Sep30.But on January 8,the number was 584(22%).

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Sensex plunges 506 points: rupee breaches 47 a dollar

The rupee slipped below 47 to a dollar-a two-year low and the BSE Sensex plunged to its lowest level in two months, closing out at 12,595.75, as Indian markets fell in tandem with their Asian and European peers on Monday. FIIs pulled out $149.8 million in equities from domestic markets.

Real estate and banking stocks led the rout with ICICI Bank dropping 12% to its lowest in more than two years. IT stocks also plunged on fears that the global financial crisis will reduce software spends.

The Sensex fell 506.43 points, or 3.9%, to 12,595.75, the steepest since July 29. All but one of the 30 stocks in the benchmark index declined as it touched a one and a half year low of 12,402.84 points during the session.The S&P CNX Nifty of the NSE slid 135.20 points, or 3.4%,to 3,850.05.

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Trickles of woes, torrents of panic

India's equity markets continued to move in inverse proportion to crude prices, which touched a historic $144 a barrel on Tuesday, as the calendar year passed into the second half on Tuesday. Extending the losses for a third consecutive session, key Indian share indices breached psychological levels on Tuesday as investors started dumping more stocks.

The sharp fall in the stock market, combined with high crude prices and a record monthly trade deficit, took the rupee down to a 15-month low on Tuesday. The local currency ended at 43.34/36 a dollar, taking its fall this year to more than 9%. It briefly fell to a low of 43.50, it weakest since April 2,2007.

The 30-share Sensex of the Bombay stock Exchange (BSE), after witnessing subdued opening,turned south wards with weak opening in the European markets to end the day with a loss of 499.92 points, or 3.71%, to end below 13k-mark at 12,961.68 points.

The broader S&P CNX Nifty of the National Stock Exchange (NSE) posted a loss of 143.80 points or 3.56% breaking the 4k level to close at3,896.75 points.

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Idea Changes Spice Life

One of the early starters in the GSM mobile space but restricted to regional operations, the B K Modi-controlled Spice Communications on Wednesday was acquired by Idea Cellular of the AV Birla group for Rs 2,716 crore.The acquisition price is almost Rs 665 crore more than the market price. The closing price of the share was Rs 72.15 on the Bombay Stock Exchange on Wednesday. The Spice Communications scrip surged by 33% after the announcement. The company has a market capitalisation of Rs 4,9991 crore. Idea Cellular's scrip gained a 2.09% on the BSE, to close at Rs 102.05.

The development signifies that in the booming telecom sector there's no room for companies with limited operations,restricted to a few circles. Spice operates in Punjab and Karnataka circles.

Idea has acquired the Modi family's stake of 40.8% in Spice at Rs 77.30 a share, much above the expected Rs 62 a share.Idea said it would merge Spice with itself through a share swap where Spice shareholders would get 49 Idea shares for every 100 Spice shares held. It will also pay an additionalRs544croretoModi as non-compete fee.

The acquisition of Spice would give Idea straightaway two existing circles of Punjab and Karnataka with a subscriber base of 4.4 million.Currently, Idea is present in 11 circles and has a user base of over 26 million. It has licences for there mining circles.

Further, Idea along with Telecom Malaysia International (TMI), which holds 39.5% stake in Spice, would make an open offer for additional 20% stake in Spice at the same price at which Idea has bought the Modi family's share.

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Idea may meet Modi's Rs 60 price

With the AV Birla group’s Idea Cellular entering into a fresh round of negotiations with Spice Communication chairman BK Modi over the valuation of his stake in Spice Telecom, a buyout deal is expected to be sealed at Rs 1,700 crore.

“Idea is now willing to pay a premium of 10-15% over the current share price of Spice Communication, taking the valuation of Modi’s 40.8% stake in the company to Rs 1,700 crore from the earlier Rs 1,500 crore,” said a source close to the development.

The revised valuation matches Modi’s earlier quote of Rs 60 a share, the deal-making price he had originally in mind, according to the source.

Indeed, Modi told media persons at the Spice Communication AGM last week that he was willing to exit at this price.

Spice Communication stock closed 4.14% up at Rs 55.40 on the BSE on Tuesday. At this level, the company had a market capitalisation of Rs 3,822.18, while Modi’s stake was valued at 1,559 crore. Idea’s shares fell for the second consecutive day, down 1.90% on Tuesday to close at Rs 99.65.

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