Finance Ministry and RBI probing money laundering accusations against ICICI Bank, HDFC Bank and Axis Bank

MUMBAI: The Finance Ministry and Reserve Bank of India are investigating allegations of money laundering practices at top private sector lenders ICICI Bank, HDFC Bank and Axis Bank.

Goldman Sachs, meanwhile, said the allegations, if proven, could slow growth for private sector lenders in India.

The probe by the Reserve Bank of India and the government follows an investigation by an independent journalist, who said on Thursday that he had video footage of the lenders' branch employees suggesting to an undercover reporter methods to launder money.

"All government agencies and regulators are working together to probe charges," Rajiv Takru, secretary of financial services, told TV station ET Now on Friday.

ICICI BankBSE -4.64 % Ltd, HDFC Bank LtdBSE -1.63 %, and Axis Bank LtdBSE -1.57 % each said on Thursday they were investigating the allegations but defended their internal controls aimed at preventing money laundering.

"The RBI is collecting information, and the RBI has been in touch with the banks. At the moment, that's all I can say," Urjit Patel, deputy governor of the RBI, told reporters late on Thursday.


Shares of the three lenders fell on Friday, with ICICI Bank down 1.4 per cent, HDFC Bank down 0.6 per cent, and Axis Bank down 1 per cent as of 0349 GMT, under-performing the 0.23 per cent gain in the broader NSE index.

Shares of the three lenders fell briefly on Thursday but recovered to end the session with gains following lower-than-expected core inflation data.

"We think these developments, if they were to be true, could potentially lead to slower growth across private banks' deposits and businesses as RBI may then direct banks to focus on improving risk management rather than expanding," Goldman Sachs wrote in a note late on Thursday.

"It is difficult to ascertain the extent of the slowdown till more clarity on these developments is provided by the banks," it added.
ABDUL WAHEED
PGDM 2nd SEM.

Apple Inc marketing chief Phil Schiller attacked Google Inc's "fragmented" Android software and its biggest adopter, Samsung Electronics, a day before the Korean firm takes the wraps off its latest flagship smartphone in the United States. Schiller, in an interview on the eve of the Galaxy S4's launch in New York, said that Google's own research showed the vast majority of Android users were stuck on older versions of the software, and that Samsung's new phone itself may debut with a year-old operating system that will need updating.
"With their own data, only 16 percent of Android users are on year-old version of the operating system," he said. "Over 50 percent are still on software that is two years old. A really big difference."
Thursday's launch is deemed critical to propelling the Korean firm deeper into Apple's US home turf.
Apple remains the most valuable technology company today, with a $137.1 billion cash pile, or the equivalent of just under the gross domestic product of Hungary.
But Samsung knocked Apple off its perch atop the global smartphone arena in 2012, and continues to chip away at its market share with a combination of aggressive marketing, rapid technology adoption and boundary-pushing designs.
That onslaught, coupled with growing uncertainty about whether the U.S. giant can sustain growth in coming years, has contributed to a 30 percent decline in Apple's stock since its September peak.
Samsung will take the wraps off its Galaxy S4, after a broad marketing campaign that has helped drive pre-launch .

PREETI CHAUHAN
PGDM 2sem

HUL’s real estate the secret behind its healthy state, sale of realty assets fetches co Rs 672 cr in profits

MUMBAI: It could very well be Hindustan Unilever's 36th brand and one of its most profitable. But unlike its nearly three dozen brands, it's not sold in shops. Sale of real estate properties and residential apartments have earned the country's largest consumer goods firm over Rs 672 crore in profits during the last four quarters. That's almost double the profit of one of its core segments — beverages and foods — that house brands such as Knorr soups, Lipton tea and Bru coffee.

HUL's profit from sale of properties in these four quarters is much higher than even the country's largest real estate developer, DLF's, standalone performance. The realty major posted cumulative standalone net profit ofRs 596.35 crore for the same period. While these figures are not comparable as DLF's profits will be net of business expenses, they give a sense of the scale of money made by the consumer goods company from the sale of its property assets.

The Indian unit of the Anglo-Dutch MNC is now looking to realise over Rs 300 crore through sale of more than 55 high-end apartments in prime localities of Mumbai, Kolkata and a land parcel in Hyderabad by June-end. These include apartments in south Mumbai's plush Nepean Sea Road, Altamount Road, Cuffe Parade, Malabar Hill and Colaba as well as in western suburb of Bandra.


Deals Likely by June-End

"As part of normal business process, we continuously review our assets, including real estate, to unlock business value from idle assets," said a HULBSE 0.59 % spokesman. However, he declined to offer comment specifically on the company's future real estate monetisation plans.

While there are sceptics who are surprised by the company's move to sell 55 apartments at one go, property consultants expect a good response to these propositions.

"Irrespective of how the real estate market is doing, properties of corporate entities usually get good response and leads to faster conclusion. Prospective buyers are keen on these transactions as titles are clean and there are no legal issues. These properties are in prime localities and mostly well maintained," said Vijay Ahuja, a Mumbai-based property consultant dealing in premium apartments.

According to consultants, the deals are likely to be concluded by June-end and the proceeds are expected to reflect in HUL's financial performance for the quarter ended September.

On Tuesday, shares of Hindustan UnileverBSE 0.59 % closed at Rs 444.10 on the Bombay Stock Exchange, up 1.2% over Monday's close.

A company insider said HUL's increased activity on the real estate front was due to two reasons.

First, in the last five years, many HUL executives who were staying in companyowned flats have gradually moved into either their own homes or to rented apartments as these work out to be relatively cheaper than company accommodation that attract higher taxes.

"Most employees now prefer to get direct house rent allowance credit than receiving perquisite in the form of rent-free accommodation," said a property broker who has assisted a few multinationals in selling their apartments Second, the company shifted its headquarters to Andheri from south Mumbai in 2010. This has allowed the company to offload or lease several properties including Lever House, its erstwhile headquarters, and Gulita, its sea-facing property in Worli that used to house the training centre and private residences of senior executives. The company assigned leasehold rights of the Gulita to Piramal Realty forRs 452.5 crore.
ABDUL WAHEED
PGDM 2ND SEMESTER
IIMT COLLEGE OF MANAGEMENT

IT stocks reflect overconfidence about strong US recovery Investors seem to be setting themselves up for disappointment after the sharp rally in IT stocks this year Mobis Philipose Mail Me Comment E-mail Print First Published: Wed, Mar 13 2013. 11 42 AM IST IT shares have rallied since January, thanks to a relatively decent earnings season, positive post-results commentary from companies and encouraging news flow. Photo: Mint IT shares have rallied since January, thanks to a relatively decent earnings season, positive post-results commentary from companies and encouraging news flow. Photo: Mint Also Read Pidilite sticks to outperformance Maruti rides on the falling yen Outlook to brighten for power sector lenders Pantaloons: reducing debt Updated: Wed, Mar 13 2013. 08 30 PM IST The National Stock Exchange’s CNX IT index and shares of Tata Consultancy Services Ltd (TCS) have both declined by around 3% in the past three trading sessions. But they continue to trade around 20% higher compared with their valuations two months ago and need to correct more. Investors appear perturbed (although not enough) by TCS’s comments in an analysts’ briefing last Friday that it expects fiscal 2013-14 to be moderately better than the current fiscal. TCS is likely to end the current year with growth of between 13% and 14% in dollar terms. The company’s shares, meanwhile, trade at 20 times estimated earnings for FY14, and are factoring in substantially higher growth rates. photo Analysts at Nomura Research point out that the outlook for the current quarter should disappoint the Street as well: “The management expects FY13 dollar revenue growth to be in line with earlier indications of 14% or the top-end of Nasscom’s initial forecast. This effectively implies sequential growth of 3.5% in the fourth quarter in our view, which is similar to the 3.3% (2.7% in constant currency terms) growth in the December quarter. We believe this would be negative for the stock as the Street has been building in a better 4Q, with dollar revenue growth in excess of 4% quarter-on-quarter.” IT shares have rallied since January, thanks to a relatively decent earnings season, positive post-results commentary from companies and encouraging news flow. Last week, for instance, the US labour department announced that the number of Americans filing new claims for unemployment benefits fell for the second straight week, against Street expectations of a rise. Of course, it remains to be seen if the trend is sustained. But these initial signs of increased hiring augur well for the outsourcing industry. What about the fiscal tightening measures of the US government? According to an analyst, given the fact that Indian IT companies have barely any exposure to government projects, the impact will be minimal. Having said all that, IT stocks have run ahead of fundamentals. True, some stocks such as TCS are more richly valued than others, while others may be still reasonable. But on the whole, investors seem to be setting themselves up for disappointment after the sharp rally this year. Comment

IT stocks reflect overconfidence about strong US recovery

Investors seem to be setting themselves up for disappointment after the sharp rally in IT stocks this year

Mobis Philipose

First Published: Wed, Mar 13 2013. 11 42 AM IST

IT shares have rallied since January, thanks to a relatively decent earnings season, positive post-results commentary from companies and encouraging news flow. Photo: Mint

Also Read

• Pidilite sticks to outperformance
• Maruti rides on the falling yen
• Outlook to brighten for power sector lenders
• Pantaloons: reducing debt

Updated: Wed, Mar 13 2013. 08 30 PM IST

The National Stock Exchange’s CNX IT index and shares of Tata Consultancy Services Ltd (TCS) have both declined by around 3% in the past three trading sessions. But they continue to trade around 20% higher compared with their valuations two months ago and need to correct more.

Investors appear perturbed (although not enough) by TCS’s comments in an analysts’ briefing last Friday that it expects fiscal 2013-14 to be moderately better than the current fiscal. TCS is likely to end the current year with growth of between 13% and 14% in dollar terms. The company’s shares, meanwhile, trade at 20 times estimated earnings for FY14, and are factoring in substantially higher growth rates.

Analysts at Nomura Research point out that the outlook for the current quarter should disappoint the Street as well: “The management expects FY13 dollar revenue growth to be in line with earlier indications of 14% or the top-end of Nasscom’s initial forecast. This effectively implies sequential growth of 3.5% in the fourth quarter in our view, which is similar to the 3.3% (2.7% in constant currency terms) growth in the December quarter. We believe this would be negative for the stock as the Street has been building in a better 4Q, with dollar revenue growth in excess of 4% quarter-on-quarter.”

IT shares have rallied since January, thanks to a relatively decent earnings season, positive post-results commentary from companies and encouraging news flow. Last week, for instance, the US labour department announced that the number of Americans filing new claims for unemployment benefits fell for the second straight week, against Street expectations of a rise. Of course, it remains to be seen if the trend is sustained. But these initial signs of increased hiring augur well for the outsourcing industry. What about the fiscal tightening measures of the US government? According to an analyst, given the fact that Indian IT companies have barely any exposure to government projects, the impact will be minimal.

Having said all that, IT stocks have run ahead of fundamentals. True, some stocks such as TCS are more richly valued than others, while others may be still reasonable. But on the whole, investors seem to be setting themselves up for disappointment after the sharp rally this year.

IT shares have rallied since January, thanks to a relatively decent earnings season, positive post-results commentary from companies and encouraging news flow. Photo: Mint

Also Read

• Pidilite sticks to outperformance
• Maruti rides on the falling yen
• Outlook to brighten for power sector lenders
• Pantaloons: reducing debt

Updated: Wed, Mar 13 2013. 08 30 PM IST

The National Stock Exchange’s CNX IT index and shares of Tata Consultancy Services Ltd (TCS) have both declined by around 3% in the past three trading sessions. But they continue to trade around 20% higher compared with their valuations two months ago and need to correct more.

Investors appear perturbed (although not enough) by TCS’s comments in an analysts’ briefing last Friday that it expects fiscal 2013-14 to be moderately better than the current fiscal. TCS is likely to end the current year with growth of between 13% and 14% in dollar terms. The company’s shares, meanwhile, trade at 20 times estimated earnings for FY14, and are factoring in substantially higher growth rates.

Analysts at Nomura Research point out that the outlook for the current quarter should disappoint the Street as well: “The management expects FY13 dollar revenue growth to be in line with earlier indications of 14% or the top-end of Nasscom’s initial forecast. This effectively implies sequential growth of 3.5% in the fourth quarter in our view, which is similar to the 3.3% (2.7% in constant currency terms) growth in the December quarter. We believe this would be negative for the stock as the Street has been building in a better 4Q, with dollar revenue growth in excess of 4% quarter-on-quarter.”

IT shares have rallied since January, thanks to a relatively decent earnings season, positive post-results commentary from companies and encouraging news flow. Last week, for instance, the US labour department announced that the number of Americans filing new claims for unemployment benefits fell for the second straight week, against Street expectations of a rise. Of course, it remains to be seen if the trend is sustained. But these initial signs of increased hiring augur well for the outsourcing industry. What about the fiscal tightening measures of the US government? According to an analyst, given the fact that Indian IT companies have barely any exposure to government projects, the impact will be minimal.

Having said all that, IT stocks have run ahead of fundamentals. True, some stocks such as TCS are more richly valued than others, while others may be still reasonable. But on the whole, investors seem to be setting themselves up for disappointment after the sharp rally this year.

 

 

priya singh pgdm

Dollar hovers near highs, Asian shares steady

MSCI Asia ex-Japan steady, Nikkei opens up; dollar index hovers near 7-month highs after solid retail data

 

The MSCI’s broadest index of Asia-Pacific shares outside Japan inched down 0.1%, weighed by a 0.3% drop in resources-reliant Australian shares which were hit by weaker commodity prices. Photo: AFP

Tokyo: The dollar hovered near a seven-month high against a basket of currencies on Thursday as strong US retail sales data sustained an optimistic growth outlook, while Asian shares steadied after another record Wall Street close.

The MSCI’s broadest index of Asia-Pacific shares outside Japan inched down 0.1%, weighed by a 0.3% drop in resources-reliant Australian shares which were hit by weaker commodity prices.

South Korean shares opened flat ahead of the Bank of Korea policy decision later in the session.

The US government reported retail sales grew 1.1% in February in the fastest rise since September, lifting the dollar index to its highest since 3 August of 83.055 on Wednesday.

The blue chip Dow Jones industrial average marked the index’s longest consecutive winning streak since November 1996 with a record closing high on Wednesday, a ninth straight session of all-time highs.

“The US economy appears to be getting back on track and burning rubber. The rise in the equity market is just one consequence of increase optimism for the US state of affairs,” Neal Gilbert, market strategist at GFT, said in a note to clients.

Japan’s Nikkei stock average opened up 0.8%.

The dollar was trading at ¥96.05, nearing Tuesday’s high of ¥96.71, its peak since August 2009.

The euro was at ¥124.45, retreating from a one-month high of 126.03 reached on Tuesday.

European shares recouped their earlier losses to end flat near 4-1/2-year highs on Wednesday, but the euro took the brunt of the strengthening dollar on a brighter economic outlook in the United States than for the euro zone.

The euro was at $1.2961, after falling to a three-month low of $1.2923 on Wednesday, also weighed by a lukewarm bond auction in Italy.

Italy sold €5.32 billion of new three- and 15-year government bonds, paying the highest yield since last December for the shorter-term debt, in its first bond auction since Fitch cut the country’s credit rating on Rome’s inconclusive elections last month.

Investors will turn to a Spanish bond auction scheduled later in the day, with Madrid offering debt maturing in 2029, 2040 and 2041.

Crude oil eased 0.2% to $92.34 a barrel.

 

TOUHID HUSSAIN 

PGDM 2nd SEM

 

Mutual fund assets slide from their all time highs

Mutual fund assets slide from their all time highs

Equity funds posted the biggest decline in AUMs in 15 months to Rs1.76 trillion, down 7% from January. Photo: Pradeep Gaur/Mint

Also Read

Updated: Wed, Mar 13 2013. 09 19 PM IST

Mumbai: Mutual funds’ assets under management (AUMs) fell by 1.5% to Rs.8.14 trillion in February from a record Rs.8.26 trillion in January, according to data released by the Association of Mutual Funds in India (AMFI) on Wednesday.

The fall in AUMs was attributed to the mark-to-market fall in assets of equity-oriented mutual funds following a 6% decline in the National Stock Exchange’s benchmark CNX Nifty during the month.

“AUM of income funds (mainly short maturity funds) declined owing to tight liquidity conditions prevailing towards the financial year end. The industry saw sharply lower net inflows of Rs.36 billion (Rs.3,600 crore) in the month vis-à-vis Rs.607 billion in the previous month,” credit rating agency Crisil Ltd and AMFI said in a joint press release.

Equity funds posted the biggest decline in AUMs in 15 months to Rs.1.76 trillion, down 7% from January, hurt by mark-to-market losses in their underlying assets. Net outflows from the category slowed to Rs.160 crore in February, the lowest in the past nine months.

India’s key equity indices retreated from their highs in line with global markets on fears that the US central bank may slow or stop its bond buying programme and concerns over political gridlock in Italy and bleak Chinese manufacturing data, coupled with worries over slowing economic growth at home.

Income funds, including long-term and short-term debt funds, fixed-maturity products (FMPs) and ultra short-term debt funds, posted a 1.4% decline in AUMs to Rs.3.93 trillion in February, primarily due to outflows of Rs.5,300 crore.

“Tight liquidity conditions towards the financial year-end saw redemptions from short-maturity debt funds. While FMPs have seen redemptions of Rs.16 billion, these have been balanced by inflows of Rs.21 billion into interval funds,” the press release said.

Liquid and gilt funds attracted net inflows. While liquid funds or money market funds drew inflows of Rs.8,600 crore last month, gilt funds registered net inflows for the sixth consecutive month. Inflows into gilt funds were, however, lower at Rs.400 crore compared with Rs.1,100 crore inflows recorded in January.

“The category has become attractive in the recent months on anticipation of easing of interest rates,” said the press release by AMFI and Crisil.

The Reserve Bank of India cut its key rates by a quarter of a percentage point on 29 January, the first reduction in nine months.

Bond prices and yields move in opposite directions. “A fall in interest rates will result in a rise in bond prices and positively impact gilt fund NAVs (net asset values, or returns),” the release said.

Gold exchange-traded funds saw outflows for the first time since June 2012 and their AUMs declined by 4% to Rs.11,600 crore.

“The mark-to-market losses (as represented by the CRISIL Gold Index) were around 4% amid a weak global trend for gold following increase in risk appetite,” 

 

 

rohit singh pgdm

 

Despite IIP surprise, RBI to cut rates next Tue: Foreign analysts


Analysts at leading foreign brokerages like Credit Suisse and Barclays on Tuesday said the marginal uptick in IIP number and a spike in retail inflation would not deter the RBI from cutting lending rates by 25 basis points at its March 19 policy review.

Credit Suisse director

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Robert Prior-Wandesforde in a note said he still expects the monetary authority to slash the repo or short-term lending rate next Tuesday. "We doubt that either of today's data releases (IIP and retail inflation) will prevent the RBI from cutting the repo (and cash reserve ratio) by another 25 bps March 19, while we are also looking for a 25 bps reduction on May 3," Prior-Wandesforde said.
Explaining the rationale for this optimism, he said the disappointing Q3 GDP data of just 4.5%, and the fact that finance minister P Chidambaram has stuck to his budgetary commitments are likely to carry more weight in the context of a WPI rate, which is trending lower.
While the January industrial production rose 2.4% mainly due to perk up in manufacturing output and enhanced power generation, against 1% a year ago, the retail inflation rose to 10.91% in February from 10.79% in January, dampening markets, which shed 0.41% or 81 points today.
For the April-January period of this fiscal, the IIP print stands at a poor 1%, down from 3.4% a year ago.
However, the RBI mostly bases it inflation reading on the wholesale price numbers, which have been trending down for the past many months now. The latest reading stood at 6.62% in January. The February readings will be out on Thursday.
Joining him, his counterpart at Barclays India said he too expects a 25 bps cut in the repo rate on Tuesday


ARUSI SINGH
 PGDM 2nd Sem