Search panel recommends UK Sinha for SEBI chairmanship

New Delhi: A government search panel is understood to have recommended UTI Mutual Fund chairman UK Sinha as the next Securities and Exchange Board of India (SEBI) chairman, the post which will fall vacant on 17th February, when incumbent CB Bhave’s term ends, reports PTI.

However, no official confirmation could be obtained.

Mr Sinha, who is also mutual fund industry body AMFI’s chairman, was considered to be a front-runner for the post right from the start.

Prior to joining UTI Mutual Fund, Mr Sinha served as joint secretary, capital markets division, in the finance ministry. He is an IAS, belonging to the Bihar cadre.

Besides Mr Sinha, others in the race included corporate affairs secretary R Bandyopadhyay, Department of Disinvestment additional secretary S Pradhan, Madhya Pradesh principal secretary G P Singhal and two managing directors at SBI, SK Bhattacharya and R Sridharan.

On Monday, the search panel interviewed some of those in the race to head market regulator SEBI.

The search panel had expressed the hope that new chairman would be appointed before the post falls vacant.

“The SEBI chairman post would be vacant on 17 February, 2011. Before that we would have the successor,” finance secretary Ashok Chawla, who is part of the panel, had said.

Out of those selected for the final interview, at least two—public sector lender SBI chairman OP Bhatt and Reserve Bank of India deputy governor KC Chakrabarty—expressed their unwillingness for the position, sources said.

The panel, headed by cabinet secretary K M Chandrasekhar, includes financial services secretary R Gopalan and Department of Personnel secretary Shantanu Consul.

Mr Bhave took charge as SEBI chairman on 18th February, 2008 for a three-year term.


Forecast 2011: Oppenheimer is hugely positive on India

New York-headquartered full-service investment company says the Indian equity market is among very few around the world that looks poised to advance on a long-term bull phase over the next 5-10 years

Oppenheimer & Co has in a report dated 7th December made out a very positive case for investments in India’s equity markets. Its key arguments are pretty standard—“demographics, a sound medium- and long-term earnings outlook, a vastly improved policy backdrop and India’s allure at a point in history where its growth premium is most likely bound to reset at higher levels.” Another important factor it says is “the vast under-owned status of Indian equities, both at the domestic and international levels (retail and institutional).”

The US-based investment company, which also has operations in India, believes that “the Indian equity market holds the potential for annualized returns in the vicinity of 12-18% in rupee terms, and 15-21% in US dollar terms over the next 5-10-year horizon.” Oppenheimer supports its forecast, saying it expects an improvement in the inflation scenario (but the report does not state how) leading to a fall in the risk premium, and a revaluation of the rupee versus the dollar. The firm also expects a stable government, with the Congress-led UPA at the helm until 2014, to implement policy reforms.

Among other positives, Oppenheimer mentions India’s lower vulnerability to global economic shocks due to high local demand and low exports. “India is considered primarily a domestic economy—its share in world trade is a measly 1.1%, with exports constituting only 21% of its GDP.” Of course, it is debatable if at 1/5th of the GDP, exports can be considered ‘low’.

Oppenheimer bets on the usual suspects, including favourable demographics, which means a high working age population and declining dependent population. It makes a good point when it says that since there are “limited investment options (globally) for overseas investors”, India, which is one of the few economies growing at sustainable 6%+ levels, makes a good investment bet.

Oppenheimer is counting on the wallet-share shift of the Indian consumer from basic necessities to discretionary items. It cites McKinsey’s estimates which predict that discretionary spending of the Indian consumer is expected to rise to 70% of the total spending by 2025, from 52% in 2005.

Contrary to the general belief that things are going to be tough for banks going forward, Oppenheimer is quite positive on the banking sector. “We expect further loan growth pickup due to the following factors: 1) working capital requirements are likely to rise on the back of increased industrial activity and rising inflation, and 2) capital expenditure related requirements are likely to increase on account of better confidence levels. Better loan growth is likely to be positive for bank margins and asset quality.”

Oppenheimer is also upbeat about the Indian IT industry. “Even though India has a 51% market share of the off-shoring market, there is tremendous headroom for growth as the current off-shoring market is still a small part of the overall outsourcing industry. Significant opportunities exist in core vertical and geographic segments of BFSI and US, and emerging geographies and vertical markets such as Asia Pacific, retail, healthcare and government respectively. Development of these new opportunities can triple the current addressable market, and can lead to Indian IT-BPO revenues of $225 billion by 2020.”

It is also positive on the education sector, citing the large young population as the reason for this. “India ranks second in the world in population. Of India’s population, 44% is below the age of 19, making it the youngest nation in the world. This bodes extremely well for the education sector. Demand for education will continue to increase over the next decade at surprising speed, we think.” It also points out that the education sector is recession-proof.

It must be said that while education remains a foreign investor favourite thematic investment, very few stocks have given any returns. A year ago, Educomp was at Rs730 and it now trades at Rs515. NIIT, which trades at Rs53 now, was at around Rs70+ levels a year ago. Only Everonn Systems seems to have given good returns—the stock was at Rs400 levels a year ago and now trades at Rs600.

On the retail business, Oppenheimer believes that “Indian retailers also need to go through two-three more business cycles, before they achieve meaningful stability.” It remains positive on media companies since low advertising spend as a percentage of GDP means good potential. However, with huge competition, only those players with deep pockets and quality content will survive. It is positive on the auto sector as well, but expects the cost of finance to rise sharply. It believes that domestic players (Maruti, Tata Motors, Mahindra and Hyundai) are better placed than new entrants.

Oppenheimer likes the Indian travel market, which it believes “is poised for growth, given a strong domestic economy, the growth in the LCC market and a highly-fragmented lodging industry.” However, Thomas Cook, Taj GVK Hotels, Indian Hotels, Hotel Leela Ventures have given poor annual returns. Only Cox & Kings has given decent returns.

(This article is based on secondary research. The report is for information only. None of the stock information, data and company information presented herein constitutes a recommendation or solicitation of any offer to buy or sell any securities. Investors must do their own research and due diligence before acting on any security. Some of the opinions expressed in this article are the author’s own and may not necessarily represent those of Moneylife.) 


Tuesday Closing Report: Sensex may pause for breath at 19,900

The market, which witnessed a fair deal of volatility today, ended in positive territory for the third day in a row, tracking global cues and on better-than-expected domestic inflation numbers for November.

Trading opened on a positive note on good cues from the global arena. Along with support from the broader indices, the market also witnessed buying in oil & gas, metal and capital goods stocks. However, investors took the opportunity to take profit off the table, pulling down the indices into negative terrain. Choppy trading followed, with the indices staying on both sides of the neutral line.

The market received a push at noon following the announcement of better-than-expected wholesale price index (WPI)-based inflation numbers for November, taking the benchmarks further northwards. Some bit of nervousness resulted in range-bound trading in post-noon trade. The market pared some of its gains after scaling its intraday high, albeit ending in the green.

The Sensex closed the session at 19,799.19, up 107.41 points (0.55%) from its previous close. The benchmark touched an intraday high of 19,836.82 and a low of 19,621.41. The Nifty rose 36.45 points (0.62%) to settle at 5,944.10. The index swung between a high-low of 5,953.95 and 5,888.75 today.

The market breadth was positive. The Sensex had 19 gainers and 11 losers. The Nifty returned with 33 stocks in the advancing list, 16 in the declining list and one stock ended unchanged. The broader market continued to outperform the key barometers as the BSE Mid-cap index surged 1.52% and the BSE Small-cap index gained 1.62%.

Sterlite Industries (up 3.46%), Reliance Infrastructure (up 2.67%), Tata Steel (up 2.33%), Tata Motors (up 2.19%) and State Bank of India (up 1.66%) were the noteworthy gainers on the Sensex today. On the other hand, Hero Honda (down 3.30%), Jindal Steel (down 1.41%), Mahindra & Mahindra (down 1.34%), Hindustan Unilever (down 0.77%) and Maruti Suzuki (down 0.52%) were among the losers.

In the sectoral space, BSE Consumer Durables (up 3.14%), BSE Metal (up 1.60%) and BSE Public Sector Undertaking (up 0.97%), were the top performers. On the other hand, BSE Auto (down 0.20%) ended as the lone loser.

Asian markets ended mostly higher, as China deferred its move to hike interest rates. On Friday, the Chinese central bank raised the reserve requirement ratio by 50 basis points. However, investors were still wary of the government’s next move as part of its policy-tightening measures. Investors are awaiting the outcome of the US Federal Reserve’s policy meeting later in the day.

The Shanghai Composite was up 0.14%, the Hang Seng rose 0.49%, the KLSE Composite gained 0.05%, the Nikkei 225 advanced 0.22%, the Seoul Composite surged 0.62% and the Taiwan Weighted added 0.04%. On the other hand, the Jakarta Composite lost 0.07% and the Straits Times declined 0.17%.

Continuing with its trend towards moderation, the WPI-based inflation declined to 7.48% in November, mainly boosted by lowering of pressure on certain food items. Inflation was at 8.58% in October and was 4.50% in November 2009.

The inflation figure has been revised upwards to 8.93% for September, from the provisional number of 8.62%. This is the fourth consecutive month when the overall inflation has been in the single digits. It had remained over 10% for six months till July.

Markets in the US finished almost flat on Monday, as concerns over growth prospects in China after the steep rise in November inflation, played on investors’ minds and on profit-taking after the recent rise in stocks.  Meanwhile, in the US, the much-debated $858 billion bill to extend tax cuts for two years secured 60 votes in the US Senate, the threshold needed to schedule a final vote. Investors are awaiting the outcome of the Federal Reserve’s policy meeting later today. Marketmen expect little change from the central bank with respect to its near-term outlook for monetary policy or its second round of quantitative easing.

The Dow rose 18.24 points (0.16%) at 11,428.56. The S&P 500 added a mere 0.06 of a point to close at 1,240.46. The Nasdaq shed 12.63 points (0.48%) at 2,624.91.

Foreign institutional investors were net sellers of stocks worth Rs287.77 crore on Monday while domestic institutional investors were net buyers of Rs334.54 crore worth equities on the same day.

ITD Cementation India (up 9.65%) has informed the Bombay Stock Exchange that in a joint venture with its promoter, Italian-Thai Development Public Company Ltd, one of the contracting firms in South East Asia, the company has bagged the letter of acceptance from Delhi Metro Rail Corporation for a Rs228 crore contract.

Ashok Leyland (down 0.87%), the flagship company of the Hinduja Group, has secured an order for 600 vehicles from Karnataka-based VRL Logistics. The order comprises 500 multi-axle vehicles in the 8x2 configuration, a newly-developed, first of its kind for the Indian commercial vehicle industry, along with 100 of the company’s 12-metre buses. The order is cumulatively worth Rs125 crore.

Prism Informatics (up 1.77%) has secured a contract for SAP Support from Nycomed, a global pharmaceutical company based in Germany.  Under this project, the company will be responsible for supporting Nycomed to monitor the operative SAP system on a daily basis in 2011, especially monitoring of interfaces and incident management, which are the key areas of improvement for the pharma major.


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