Indian biz industry at gunpoint of terror: Experts

36 hours after terrorists struck in the heart of Mumbai in planned and synchronized attacks, its important to understand how these attacks will impact voters' trends ahead of elections next year. What impact will it have on the business climate and will it hit international capital flows? Experts like Vinod Sharma, Political Editor, The Hindustan Times; James Lamont, Bureau Chief-Delhi, The Financial Times; and MJ Akbar, Chairman and Director of Publications, Covert, delve deeper.

  

James Lamont, Bureau Chief-Delhi, The Financial Times, said globally, the attacks are perceived to be targeted at the business interests in the country and Mumbai as a financial centre.

 

India has been suffering from global crisis; and last thing that needed to add to the fire was this attack, which has escalated terror threats in India. “The Taj Hotel in Mumbai is where every big industrialist or cheap executives of any global companies, that has anything to do with India, has possibly stayed in that hotel, so its been seen as an attack on business interest and Mumbai as a financial center. Thus international businesses will now review their India plan,” he added.

 

Vinod Sharma, Political Editor, The Hindustan Times, said, as far as rural India is concerned it's the real India which is the bigger India, so inflation and unemployment will be major issues going forward. But the country should fight unitedly and keep aside their internal differences.

 

India’s economic welfare is more important than fighting terrorism, as the economic crisis is impacting huge masses of people, he said.

 

On similar lines, Lamont said expatriates working in Mumbai will be jittery. However, international agencies around the world will help India, as threat is global, and not just Indian.

 

He feels the security and infrastructure has to be tightened and improved, but whether the city authorities will learn from lessons of these attacks needs to be watched.

 

Meanwhile, Sharma said, terrorist attack is aimed at gathering sustained publicity for long time. Terrorists have targeted landmarks frequented by foreigners; thus capital inflows will be brought to its knees in due time if nothing done.

 

Impact of terror attack on elections:

 

Sharma said terrorism will impact voters’ mind in big cities like Mumbai and Delhi. “Political parties should let voters know that they are serious about fighting terror. Inflation and unemployment will be major issues going forward, but the country should fight unitedly keeping aside their internal differences. India’s economic welfare is more important than fighting terrorism, as the economic crisis is impacting a large mass of people.”

 

This view is also shared by Akbar. He feels the Congress may be headed for a meltdown in Maharashtra. The balance of Congress may change. “I imagine the congress might do better in Orissa, Kerala, but in most sage the congress would loose a distinct 2-3%, which can be a very decisive vote. It will certainly lose in the Hindi heartland and this would have a very big impact on UP, for instance.”

 

He said it is a combination of anti incumbency over ten years, plus rising consolidated anger against completely ineffective government both in the state and in the centers.

                                               

Sharma said, “I don’t think any government which gets elected to power in India or anywhere else in the world to give a 100% guarantee that there shall be no terrorist attacks and if there are any terrorist attacks then there could be conviction which comes only with evidence."

 

The kind of police system that we have inherited in this country and the training of this system which will take enough time, conviction again is a major problem, even if we reduce the political interference element to a large extent, so it’s a battle that the country has to fight unitedly and not fight over so to speak, he added.

 

Om similar lines, Lamont said, the Prime Minister was talking about possible links with neighbors and by that he means Pakistan and Bangladesh, but whether it is an Al-Qaeda attack which has an international network right across the world or this is an attack similar to those attacks on Western Capital is still to be known, but it has escalated the terror threats in India. 

Six hostages killed at Oberoi Trident: NSG

The National Security Guard (NSG) and the Marine Commandos early on Friday rescued 40 guests from The Trident Hotel (formerly known as Oberoi), 36 hours after they were taken hostage by terrorists believed to be affiliated to Lashkar-e-Toiba (LeT).

A heavy exchange of fire between the security personnel and the terrorists was reported soon after the rescue. One terrorist was reportedly killed in the crossfire.

An NSG official said at least six hostages were feared dead.

“Terrorists don’t want to listen to anything. They are not ready to surrender. They are threatening to kill all the hostages,” he said.

At least 100 persons, including a World Bank official, are still suspected to be trapped inside the hotel.

The rescued hostages, many of who are foreign nationals, were swiftly escorted to a private bus, as anxious relatives and family members present outside the hotel heaved a sigh of relief.

Police had to resort to lathi charge to bring the crowd of curious onlookers under control.

The National Security Guard and the Marine Commandos are into the final assault against terrorists at the Oberoi hotel. The assault team has sanitised parts of the Oberoi Trident.

Another NSG official informed CNN-IBN that room intervention operation was underway at the Oberoi, where two more floors are yet to be sanitised.

“A room intervention drill entry is made in every room, following which we check each and every thing without any collateral damage. It takes about four to five minutes,” he explained.

"Final assault is yet to happen," he added.

Meanwhile, Army sources claim that the terrorists were provided commando training by Pakistan Army. They also suggested that the terrorists were provided boats and other logistical support by the Mumbai underworld.

Terror strikes to hit long-term FIIs funding: Nirmal Jain

Growth in gross domestic product, or GDP, for Q2 FY09 has come in at 7.6% as compared to 9.3% YoY, and 7.9% QoQ. A CNBC-TV18 poll had estimated it at 7.25%.

 

Commenting on similar lines,

Nirmal Jain, Chairman and Managing Director, India Infoline, said the market has already factored in a lower gross domestic product or GDP, growth for Q3 and Q4 FY09. “However, the current numbers are better than street expectations.”

 

He said there is no immediate impact of terror attack, but in the long run FIIs will react. “Given the terror attacks, we need tough government measures to assure investors, as FIIs won't put in money in India easily, despite good economic data.”

 

He feels hotels, airlines and tourism are likely to be in for a few tough quarters.

 

Here is a verbatim transcript of the exclusive interview with Nirmal Jain on CNBC-TV18. Also watch the accompanying video.

 

Q: 7.6% is not a bad number for Q2 but we haven’t had any great reaction from the market. Do you think the market is overwrought about Q3 and Q4?

 

A: The market reaction is not there, because the market sees by whatever is happening in Mumbai and the terrorist attack on the city. If you look at the last two days Asian markets and the US markets, they have done well, but Indian markets have been flat. Primarily, this underperformance is cognizance of what is happening in the business capital of the country and at this point in time market volumes are low and 7.6% in Q2 is fine. But, the market probably has factored in declining Q3 and Q4 and this always comes in the lag effect, as one probably would expect much fluent growth in Q3 and Q4. The market is slightly positive than what was expected, so I don’t think there is much of a reaction to this.

 

Q: What about the events of the past few days? Do think there might be any long-term impact for our market or as in the past we will manage to put it behind us?

 

A: There will be some impact, in fact India’s business is conducted in Mumbai and Mumbai’s business is conducted in Taj and Oberoi, so we might be naïve to assume that there will be no impact. But we have seen in the past in China there were events like Tiananmen Square, investors even left it behind after sometime. So if the government is able to come and demonstrate that we can tighten our security, we can make the city much safer, then probably investor will look back at this country. There will be definitely some impact in this country for next two to three quarters, because most of the foreigners, who come for Foreign Direct Investment (FDI) or Foreign Institutional Investor (FIIs) investment or even for conferences, they stay in these hotels and such negative publicity in terms of all the international newspapers headlines are about Mumbai.

 

There will be some impact and impact wouldn’t be felt in copule of days, but next couple of quarters you will see that impact becomes visible in the foreign investment in the country. Markets won’t react, foreigners won’t react by putting in more money so easily, positive news can come in the form of much better agricultural production, may be oil price cut, inflation numbers coming down, Reserve Bank of India (RBI) bringing down interest rates. So even all these positive news will not attract much of foreign capital as it otherwise would have in the next few quarters.  

 

Q: What do you do with the whole infrastructure space with the specific relevance to the kind of growth we have seen and the talk that there has been of some kind of an infrastructure spend or stimulus for the sector?

 

A: I think the government is facing elections in next few months and also the entire focus politically will be on the terrorist, and they would not like to lose much vote to opposition based on all the developments. So, infrastructure will take backseat for sometime. A lot of spending would come from public sector and government on infrastructure ought to have come in next few quarters, but that probably won’t happen. So, one will wait for elections to get over and new government to come in before we look forward to flow of investment in the infrastructure sector.

Mumbai terror to impact capital flows: Mark Konyn

Mark Konyn, CEO, RCM, a company of Allianz Global Investors, said investor sentiment will be hit in the short-term because of the Mumbai terror strikes. "Since foreigners have been targeted, it might have a dampening effect on tourism. The overall perception towards India will be hit and international capital flows will be under significant pressure."

 

Here is a verbatim transcript of the exclusive interview with Mark Konyn on CNBC-TV18. Also watch the accompanying video.

 

Q: Give us a word on the kind of terror attacks you have been hearing of and reading about in Mumbai and whether you think that is going to make any medium-term impact or long-term impact on FII sentiment?

 

A: Certainly, and the world has been shocked by the images that we have been getting out of Mumbai.

 

Typically, when we have seen similar outrages in other parts of the world, it does immediately hit investor sentiment but depending on how quickly things get back to normal, it proves to be typically quite short lived.

 

The worrying aspect here is that uncharacteristically these attacks and outrages have been targeted directly at foreigners and venue sites which are frequented by foreigners in Mumbai. So, I think that is one aspect that foreign visitors and travellers will be looking at.

 

It may have a dampening effect in terms of how quickly international investors come back into the market. Of course, most international investors have pulled back significantly this year in any event with some USD 13.5 billion or so already withdrawn from the Indian market.

 

Q: Relatively speaking, in a world which is just basically trying to get back on its feet in terms of liquidity, do you think it puts India to relative disadvantage or do you think that would be overstating the case?

 

A: It clearly is not going to help overall perception and risk appetite, but it is difficult to assess in these types of situations. However, in any event, international capital flows, we are talking about the equity markets, are already under significant pressure. We have got the threat of deflation now as a result of all this deleverage which is at play in global markets.

 

We have seen central banks internationally trying to throw a lot of money at the problem, trying to improve liquidity, certainly take positions from the government’s perspective to improve solvency and the net effect is quite marginal. This is because of the tremendous amount of leverage that was built up in the financial system particularly in the United States; it is starting to unwind. So as liquidity looks like it is improving, corporations, individuals, financial institutions, in particular, are taking the opportunity to try and draw down some of that debt and reduce their obligations.

 

The net result is that we are not seeing any flow through in terms of confidence, in terms of the way the banks are lending to each other and to end-users and the way in which credit markets are behaving generally.

 

So without that improvement, international capital flows are going to be pretty scarce over the next six months, we would estimate. Thus, in that environment, emerging markets generally don’t perform well and as we know, the Indian economy has been quite extensively dependent at the margin on international fund flow.

 

So, clearly they are going to be lacking anyway. To what extent this outrage that we have seen over the last few days in India has an impact that remains to be seen but one would expect it not really to disrupt the picture too significantly and certainly not longer-term. We wouldn’t expect to see any disruption. The issue really remains how quickly can the world economy get back on its feet.

GMR Infrastructure plummets 5.2%

GMR Infrastructure had touched an intraday high of Rs 54.95

and an intraday low of Rs 51.50. At 12:22 pm, the share was quoting at Rs 51.90, down Rs 2.9, or 5.29%.
 
It was trading with volumes of 373,797 shares. On Wednesday the share closed up at Rs 54.80.

Share Price Movement During The Last 12 Months
Period	Price	Latest Price	Gain/Loss (Rs.)	% Gain/Loss
3-Days	53.00	51.90	-1.10	-2.08
5-Days	54.70	51.90	-2.80	-5.12
7-Days	53.40	51.90	-1.50	-2.81
15-Days	69.85	51.90	-17.95	-25.70
1-Month	49.50	51.90	2.40	4.85
3-Month	101.10	51.90	-49.20	-48.66
6-Month	134.00	51.90	-82.10	-61.27
9-Month	182.90	51.90	-131.00	-71.62
1-Year	242.60	51.90	-190.70	-78.61

 

 

 

 

 

 

 

 

 

 

Currently -80.68% below the 52-week high of 268.70

Currently 13.82% above the 52-week low of 45.60

Aban Offshore declines 4.3%

Aban Offshore had touched an intraday high of Rs 706.40 and an intraday low of Rs 667. At 12:27 pm, the share was quoting at Rs 675.90, down Rs 30.5, or 4.32%.

It was trading with volumes of 46,489 shares. On wednesday the share closed down 0.18% or Rs 1.25 at Rs 706.40.

Share Price Movement During The Last 12 Months
Period	Price	Latest Price	Gain/Loss (Rs.)	% Gain/Loss
3-Days	759.65	675.90	-83.75	-11.02
5-Days	746.35	675.90	-70.45	-9.44
7-Days	782.00	675.90	-106.10	-13.57
15-Days	974.15	675.90	-298.25	-30.62
1-Month	652.85	675.90	23.05	3.53
3-Month	2143.35	675.90	-1,467.45	-68.47
6-Month	3883.50	675.90	-3,207.60	-82.60
9-Month	3826.30	675.90	-3,150.40	-82.34
1-Year	4775.20	675.90	-4,099.30	-85.85

 

 

 

 

 

 

 

 

 

Currently -87.48% below the 52-week high of 5,400.00

Currently 10.8% above the 52-week low of 610.00

Buy JMC Project, target of Rs 97: KRChoksey

KRChoksey Research has maintained its buy rating on JMC Projects (India) with a target of Rs 97 in its November 17, 2008 research report. "Company’s sales increased by 76.4% y-o-y to Rs 325.5 crore. The PAT was flat at Rs 6.8 crores. We have reduced our sales estimates for FY09, as there is no visibility of fresh order inflows. However, we anticipate order execution will be at expected pace. The EBITDA margins have been revised downward, mainly due to an increasing trend in construction expenses."

"Interest cost estimates have been revised upwards due to an increase in interest cost during the quarter. It will impact the PAT margins of the company by 27bps. We have given additional liquidity discount of 10% to company’s multiples. We therefore downgrade our target price to Rs 97, maintaining a BUY rating, with an upside potential of 51.5%," says KRChoksey's research report.

Buy Axis Bank on declines: Baliga

Ambareesh Baliga of Karvy Stock Broking is of the view that one can buy Axis Bank on declines.

Baliga told CNBC-TV18, "In Axis Bank one should look at lower level and buy more because I don’t see an issue here; people believe that there could be an issue with the SME sector where Axis Bank has an exposure but clearly looking at the performance, which it has given in the past I don’t see the NPA’s rising much more from here and there could be possibly a rise of 0.2 or 0.3% but there is already there in the price to a very large extent, so if it falls about 5% to 8% from here you should try and average out and look at the next up move, which possibly is around 9-12 months away."

Buy HDIL at lower levels: Bose

Technical Analyst, Rajat K Bose is of the view that one can buy HDIL at lower levels.

Bose told CNBC-TV18, "Among all the real estate stocks, HDIL stands as the best bet there. You can buy at lower levels expecting a bounce. But other than that if you take Unitech for instance my feeling is that Unitech still has far more downside in the sense that if it were to break Rs 39 levels, then it can break the earlier low and the projections that can be made on the charts, is actually suggesting that somewhere between Rs 20-50, this sock might find a bottom, although that might sound a bit scary but that is the kind of technical projection you can make."

He further added, "If I have to trade real estate stocks at all, then I would rather prefer HDIL because that has the best possibility of giving a bounce on the upside. Although currently I would not be looking at it may be intra-day there would be a good bounce in HDIL today, but as I said that may be I would be looking at them towards the end of the week or may be early next week, then they might offer even better opportunities."

Disclosure: It is safe to assume that analyst and his clients may have an investment interest in the above stock/sector.

Buy HCC, target of Rs 60: Motilal Oswal

Motilal Oswal has maintained its buy rating on Hindustan Construction Company (HCC) with a target of Rs 60 in its November 12, 2008 research report. "We expect HCC to report net profit of Rs 844 million in FY09 (a downgrade of 21%) and Rs 1.1 billion in FY10 (a downgrade of 37%), largely driven by slower execution and increased interest costs. This translates to an EPS of Rs 3.3/sh in FY09 (up 19% YoY) and Rs 4.4/sh in FY10 (up 34% YoY)."

"Based on SOTP valuation, we arrive at a price target of Rs 60/sh comprising: core business at Rs 35/sh (8x FY10E), Lavasa at Rs 20/sh (50% discount to NAV), Vikhroli Corporate Park Rs 5/sh (25% discount to NAV). HCC is trading at reported PER of 15.2x FY09E and 11.3x FY10E. Maintain Buy," says Motilal Oswal's research report.