General elections a reason for being overweight on India: Credit Suisse

The upcoming general elections sees Credit Suisse optimistic on Indian cyclicals and believes that there are factors that support for an upward movement in HCL Technologies, Wipro, Tata Motors, Reliance, Sesa Sterlite and Cairn Energy

Credit Suisse is overweight on India, with the general election acting as a catalyst according to their latest research report. It stated: “Our overweight call on India is based on the general election acting as a catalyst for a potential inflection point on return on equity (ROE).” It feels that the three consecutive upward revisions in EPS provide support to their bullish call. Credit Suisse prefers cyclicals over defensives. Their top stock picks are HCL Technology, Wipro, Tata Motors, Reliance Industries, Sesa Sterlite and Cairn Energy.

It is bullish on cyclicals, given that the relative valuation gap between cyclicals and defensive is large enough to pick the former. The report stated: “We continue to favour cyclicals over defensives, particularly in India. The cyclicals defensive price-to-book gap in India at -4.2X is the biggest in the region.” The chart below shows the relative valuation gap.

Moreover, it feels that global factors, especially the United States economy will tip the scales in favour of cyclicals over defensives. The report said, “While Indian cyclicals have outperformed defensives by 22% since the lows on 30 April2 013, we believe valuations, EPS revisions and recent rises in US bond yields suggest further cyclicals outperformance.” The chart below shows the potential market bottoming associated with three consecutive “upwards” revisions in EPS.


According to Credit Suisse, it uses the MCSI’s broader definition of cyclicals which includes technology, energy, materials, consumer cyclicals and industrials; defensives include consumer staples, utilities and telecom.

For Moneylife analysis on markets, do check out our the Equities section of the website


Karur Vyasa Bank gets RBI nod to increase FII investment to 40%

RBI allowed Karur Vysya Bank to increase FII investment limit to 40 % from 35%

Private sector lender Karur Vyasa Bank (KVB) has been allowed by the Reserve Bank of India’s (RBI) to increase investment limit to 40% from 35% for foreign institutional investors (FIIs).

However RBI saidt, equity shares held by single FII should not exceed 10% of the paid-up equity capital of the bank and  the investments made should be within the stipulated ceilings.

RBI’s approval to Karur Vysya Bank for raising FIIs investment limit to 40% is subject to the condition that aggregate foreign investment in the bank should not exceed the composite sectoral cap of 49% (49% under automatic route and beyond 49% to 74% under government route).

The present policy of Department of Banking Operations and Development (DBOD) requires RBI’s acknowledgement for acquisition or transfer of shares of 5% and more of a private sector bank by FIIs.

As on September 2013, FII holding in Karur Vysya Bank stood at 24.89%, Domestic Institutional Investor holdings at 13.30%, public holding at 58.75% and Promoter holdings stood at 3.06%.

Karur Vysya Bank closed Friday 1.4% higher at Rs349 on the BSE while the 30-share Sensex ended marginally down at 20,851.


Adarsh Housing Scam: Here is what the probe panel report says

The judicial commission on Adarsh Housing Scam had indicted several bureaucrats and politicians, including four former CMs of Maharashtra. The state government, which earlier rejected the commission report, has now partially accepted it. Here are excerpts from the report

Maharashtra government that was 'forced' to reconsider the judicial panel report on Adarsh Cooperative Housing Society (Adarsh CHS) scam, on Thursday, partially accepted the report and decided to form a committee to decide upon further action.

Last month, the Maharashtra government rejected the report of the judicial commission of inquiry on the Adarsh CHS scam that indicted several politicians, including four former chief ministers of Maharashtra, for blatant violations of statutory provisions. The report of the two-member commission headed by retired High Court Judge JA Patil came down heavily on those in authority, describing the scam as a bad precedent.

The report of the two-member judicial commission had indicted several politicians including four former chief ministers—Ashok Chavan, late Vilasrao Deshmukh, Sushilkumar Shinde and Shivajirao Nilangekar Patil—for blatant violations of statutory provisions. Several bureaucrats were also indicted in the report.

While accepting the judicial commission report in parts, the Prithviraj Chavan-led Congress government accepted quid pro quo allegations against former chief minister Ashok Chavan. On the other hand, it gave a clean chit to former chief ministers, Sushilkumar Shinde and late Vilasrao Deshmukh, and ministers Sunil Tatkare and Rajesh Tope.

Here are excerpts from the Adarsh Report (remember Rs7 crore of public money has been spent for making this report and politicians from Maharashtra have ‘partially’ accepted it):

  • Adarsh portrays a “shameless tale of blatant violation of statutory provisions, rules and regulations. It reflects greed, nepotism and favouritism’’ (Adarsh Report)
  • Adarsh Cooperative Housing Society (CHS) was floated in 1994 by RC Thakur, an officer with Defence Estates Office, as the chief promoter and Brig Wanchoo (retd) in 1994 as the secretary.
  • The Society was meant to be for serving and retired defence officers who have not been able to procure a shelter despite full length of service to the motherland.
  • The 8,300sq mtrs of land lying adjacent to Oyster and Dolphin buildings was chosen for the Adarsh CHS but it fell in the Coastal Regulation Zone (CRZ) and no building is allowed to be constructed 500 metres from the high tide line. Hence, the proposal was rejected by the Collector in 1994 and then in 1998 too. Both Thakur and Wanchoo continued to persist – even wrote a letter to Narayan Rane, the then chief minister – for shelter to members who have dedicated their lives to the service of the motherland. They failed.
  • One Captain Kala introduces Thakur to Kanhayalal Gidwani, who was a Congress person and had great influence over its leaders. Thakur and Wanchoo requested Gidwani to represent the case to get the required permission for the “welfare of the defence personnel”.
  • Gidwani wanted to have his pound of flesh so made Thakur and Wanchoo make a formal declaration in 1999 that he (Gidwani) would carry out the assignment on a condition that 30 flats should be at his (Gidwani’s) disposal. The duo agreed for hook or crook they wanted Adarsh to be built
  • Twelve letters written by Gidwani to various government authorities including chief minister Vilasrao Deshmukh in 2000 made the same appeal–to look into the genuineness of the case and the sacrifice made by military officers to their motherland.
  • The office bearers of the Society also tried to ask the Ministry of Environment and Forests (MoEF) to change the CRZ to II level from I so that they could get clearance for the building, but failed in their attempts.
  • Thereafter, the Society members wrote to the then Minister of Revenue, Ashok Chavan and suggested that another alternate land measuring 3,854 sq mtrs should be considered but it is in physical possession of military authorities. They appealed that it should be taken back from the defence authorities. The letter also proposed that the state government had proposed to widen the Cuffe Parade Road and join it to 60 mtrs wide road known as Colaba-Uran Road. Since that did not come through due to ban in reclamation land, this could be adjusted by making changes in the DP plan and added to the land for making Adarsh CHS.
  • The then Chief Minister Vilasrao Deshmukh showed great enthusiasm and asked for the file and wrote “please call for the proposal and put it up immediately”. That began a trail of permissions to be sought from different authorities.
  • Besides the Collector who cleared it, Col SS Jog on behalf of the GOC-IN-C wrote that the said land falls out of the defence boundary and therefore, decision may be taken for the housing welfare of the military personnel. Collector Debashis Chakrobarty submitted his report stating that the proposed society is for 40 top grade officers of the army, navy and defence estate personnel. As far as taking the land which was dedicated to road widening, a clearance should be taken from Mumbai Metropolitan Region Development Authority (MMRDA).
  • On 2 June 2000, a letter was written to the then Revenue Minister Ashok Chavan requesting him to consider 40% civilians as members for the Adarsh CHS, thus making it 19 members from the civilian side and 31 members from the defence.
  • MMRDA also gave a nod to the reduction of the Captain Prakash Pethe Marg and the state government changed the zoning from road to partial residential.
  • The greed was not over though. In 2003, Gidwani proposed that the Adarsh Society be given additional floor space index (FSI) from the nearby BEST depot also, besides eating up a part of the Pethe Marg. And the reason? Thakur wrote to the then revenue minister that since the civil members have risen from20 to 71, which has been approved by the state government, additional FSI should be granted to ensure decent housing for these members. This meant swallowing a part of the 2,669 odd sq mtrs additional space from the BEST land which was reserved for bus depot in the DP. Adarsh CHS was permitted to use 700-odd sq mtrs for commercial use and so a part of the Bus Depot reservation was changed to residential use.
  • The Report remarks: “It was also noticed that some persons, for instance a driver in a remote place at Nagpur who had never been to Mumbai or an ordinary vegetable vendor sitting on the side of the road making a modest earning all of a sudden goes for buying a flat in Adarsh CHS although he has no intention of leaving his place of occupation or residence”.
  • Adarsh CHS enjoyed political patronage of four former chief ministers, late Vilasrao Deshmukh, Sushilkumar Shinde, Ashok Chavan and Shivajirao Nilengakar Patil as well as two ministers of state Sunil Tatkare and Rajesh Tope.

The complete report can be downloaded from



Vaibhav Dhoka

3 years ago

Where we are heading if we have government that approves CORRUPTION and shields GUILTY?What kind of signal we are passing to next generation.?All in governance are there to loot NATION.This is because we have never ending trail of judiciary.This system is used by mighty to prolong and to remain in power as ever.

Gopalakrishnan T V

3 years ago

The politicians and bureaucrats jointly loot the national wealth taking advantage of the positions they occupy. Now the attempt is to trap only Bureaucrats and allow politicians to escape from follow up measures if any. The corruption is designed by Bureaucrats and they take extra pains to ensure that when ever policies are framed on any issue,there is scope for making money and this has been going on for decades unquestioned. Now the media is alert and keeping a watch on the atrocities committed on both intelligent and gullible public alike,people come to know how the society's wealth is looted in the cover of democracy. Money Life has been playing a very active and vigilant role deserving all support and appreciation.

Yerram Raju Behara

3 years ago

It is a shame on democracy. The Congress governments are unable to see the writing on the wall. Once they are kicked in the bourses ere long, it will be no holds barred to put several politicians who are fraudulent and who perpetrated fraud would all be counting the bars in the jails.

nagesh kini

3 years ago

There is more than meets the eye.
Just because Rahul/Sonia now disappoved that the CM came out in a 'selective acceptance' leaving out the NCP Ministers of the UDD because their party blackmailed him. The Governor on the Govt. advice has withheld his approval for CBI procecution of Ashok Chavan.
Instead of any knock on the knuckles for the guilty babus att their allotments need to be cancelled and the building converted into a Miltary Hospital.


3 years ago

India's ruling criminals are adept at protecting their own. They have had sisty six years of practice!

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