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Kotak Mahindra Bank Acquires ING Vysya Bank; Stocks Gain Sharply

The merger deal of ING Vysya Bank and Kotak Mahindra Bank is done and the analysts believe that the valuation of the deal is reasonable. In fact, the share swap ratio is also reasonable. The swap ratio is 725 stocks for 1K Kotak Mahindra Bank stocks. Most significant aspect of this deal is the fifteen per cent dilution for Kotak. Market expected it to be twenty per cent. While Kotak’s stock zoomed by 7 per cent, ING Vysya’s stock rose by 1 per cent.

Market Witnesses Good Time Today

After the news of Kotak Mahindra Bank acquiring ING Vysya Bank went into the market, stock market responded sharply – increasing by 234 basis points by 11.35 am. In fact, the largest gainers are surely the banking stocks. Nifty is increased by two per cent. While BSE Sensex touched record high of 28,321, NSE Nifty touched 8,482.

Remarkable Performance by Banking Stocks

The market responded positively after the news trickled in that acquisition of ING Vysya Bank is done by Kotak Mahindra at good valuation. At 11.33 am, NSE’s Nifty increased by 452 points, which is an increase of 2.56 per cent, and the banking stock index of NSE reached 18,097 (which in itself is a record high). While stocks of the public sector banks increased by 2 to 4 per cent, private bank stocks increased by 3 to 6 per cent.  

Major Acquisition in Retail Sector

Future Consumer Enterprise, led by Kishore Biyani, has revealed that the company has acquired major stake (97.97 per cent) of a renowned supermarket chain majorly based in Bangalore - Nilgiris. Market sources reveal that the deal is done between Rs. 175-200 crore. From now on Nilgiri Dairy Farm will be working as a Future Consumer Enterprise subsidiary. After this acquisition, FCE is now well placed to take on other retail giants belonging to Aditya Birla, especially in South India.

Big Steps by SEBI in Reform

SEBI has approved some significant market reforms. While it amended the current de-listing regulation, it put into place new prohibition of PIT regulations replacing insider trading rules (20 years old). Another important reform initiative cleared is the consent mechanism, according to which entities that violate securities law will be able to settle the issue before enforcement proceedings start. However, SEBI has also made it clear that this arrangement will be available for those offenders who take part in minor violations only.

Dollar Strengthens, Rupee Slumps to 9-months Low

As US Dollar strengthened against Asian currencies, rupee lost its shine and dipped to a nine month low level. Early in the morning today (9:57 am to be precise), Indian Rupee was trading at 62.1850 per US Dollar. However, during the session it dipped to a nine month low of Rs. 62.22 per dollar. Market experts believe that Indian rupee will trade within the range from Rs. 61.90 to Rs. 62.30 per US Dollar.

RBI Warns Banks

Commercial Banks currently are increasing retail credit aggressively. However, apex bank of India has taken note of this trend and asked the banks as well as lenders to monitor the retail borrowers. Deputy Governor of RBI, SS Mundra, has said that in the quest of capitalising retail market (especially 4-wheelers, 2-wheelers, housing, etc.), commercial banks are infusing credit in the market. This is raising RBI’s concern on level of credit absorption.

BPO Chief of Infosys Sacked

Infosys has always stressed upon its Model Code of Conduct (MCC) and this time it was the turn of BPO subsidiary’s CFO Abraham Mathews to feel the heat. He has been sacked by the company for not complying with the MCC. Industry reports point out that Mathews was unable to report financial irregularities at one of the outsourcing centres. However, the concerned CFO was not involved in the concerned financial irregularities personally.

Vice Chairman of Aurobindo Pharma Unhurt after Kidnapping Attempt

K Nityananda Reddy, Vice Chairman of Aurobindo Pharma, faced kidnapping attempt at around 7am in Jubilee Hills of Hyderabad. It is reported that an unidentified person got into Reddy’s car’s rear seat and pointed AK-47 at him to kidnap for ransom. A scuffle took place between the two and the gun went off smashing wind screen of the car. The kidnapper panicked as Reddy’s brother came along for rescue and ran away.    

OECD Revises their India's Growth Projection from 5.7 to 6.6 Per cent

Organisation for Economic Cooperation and Development has revised their earlier forecast about the project growth rate of India in the coming year. The Paris based think tank has revised its earlier estimate of 5.7 per cent to 6.6 per cent for the year 2015. For the year 2016, they expect Indian economy to grow at the rate of 6.8 per cent.

Adani gets Major Boost from SBI

Adani Enterprises got a boost on November 17, 2014 from the largest commercial bank in India, State Bank of India. For building a coal mine, port, and rail project the infrastructure conglomerate has signed a MoU with SBI, according to which the bank will provide a $1 billion loan to one of the fastest growing enterprises in India. The concerned projects are expected to be completed by 2017-end. Currently, founder of Adani Enterprises – Gautam Adani – is among the high level delegation of the India PM in Australia’s Brisbane.

Will Aditya Birla Group Sell Stake at Less Bid?

Aditya Birla group is trying to woo private equity firms so that it can sell 10 per cent stake each of the new company – which will comprise renowned brand companies like More and Pantaloons. Each stake will be provided to two equity companies for US$ 400 million, having US$ 2 billion valuation. While L Capital has offered final bid, which is reported to be less than $200 million, another firm called IFC is still in talks with the group. Temasek hasn’t put their bid till date. It is rumoured that holding company is not happy with the bids.

Robust Growth in Advertisement Spending

Professionals of media and advertising agency expect that the quarter ending in December 2014 could see 10 to 15 per cent growth. The main drivers of ad spending is coming from ecommerce sites, which are on the verge of a revolution in India. Interestingly, ad spending saw significant increase due to assembly election in Haryana and Maharashtra.

Rs 9,700 Crore Acquisition by JSW Energy

Sajjan Jindal’s JSW Energy has bought 2 hydro power plants of Jaiprakash Power Ventures. Combined capacity of these power plants (Himachal Pradesh’s 300-MW Baspa-II hydroelectric and 1,091-Mw Karcham Wangtoo plants) is 1,391 MW. These plants have been acquired by JSW Energy by spending Rs 9,700 crore. However, some analysts believe that JSW Energy spent 700 crore more than their estimates.

India Inc Recovered Partially

Indian industries seem to have recovered during the quarter of July-September, but only partially. While they have achieved to overcome profit growth issue, the problems facing them currently is the issue of sales growth. On a year-on-year basis, net profit increased by 41.8 per cent, which is the fastest in the last three years. However, gloomy aspect is growth rate of annual sales decreased to 5.9 per cent.

Trade Deficit Soars

Year-on-year merchandise export has decreased from October 2013’s US$27.48 billion to October 2014’s US$26.09 billion, a dip of 5 per cent. However, import has increased from October 2013’s US$38.07 billion to US$39.45 billion of October 2014. This caused Trade Deficit of India to increase from US$10.59 billion to US$13.35 billion during October 2013-October 2014.

Gain for Tata Motors

Consolidated operating profit margins of Tata Motors improved significantly (by 60 basis points or 15.8 per cent) in the quarter ranging from July to September 2014. This growth has good effect on Tata motors stock at NSE, which traded 2 per cent higher. 190 basis points of EBITDA margin expansion has been reported by Jaguar Land Rover, which means a growth by 19.4 per cent. The major reasons behind robust performance of JLR include robust market mix of products, especially in the emerging markets.

RBI Governor Raghuram Rajan asks micro-lenders not to make fortune out of poor

RBI Governor Raghuram Rajan asked micor-lenders not to make huge profit while lending money to the poorest of poor. They must opt a reasonable profit just to sustain their business, he added. Rajan in a micro finance event condemned the idea of of the fortune at the bottom of the pyramid given by Prahalad and Stuart L Hart in business journal 'Strategy+Business' in 2004. As per Rajan, who is also a renowned economist, one should not make fortune at the bottom of the pyramid.

31 percent rise in SBI's net profit

The State Bank of India (SBI) reported 31 percent rise in its net profit in the September quarter. The profit is at Rs 3,100 crore against Rs 2,375 crore in the same period last year. The interest income of the SBI grew by 9.85 percent from Rs 33,922 crore to Rs Rs 37,263 crore in the same quarter. Whereas there is a rise of 8.36 percent in the net interest income that grew from Rs 12,251 crore to Rs 13,275 crore.

Vaidehi Reddy wins Google Doodle competition

Out of one million entries from all across India, fifteen-year-old Vaidehi Reddy won the ‘Doodle 4 Google’ design competition. Her doodle was also featured on the homepage of Google India to mark Children’s Day (November 14). With a title “Natural and Cultural Paradise — Assam” Vaidehi's doddle displayed the culture and bio diversity of Assam. She is class IX student of the Army Public School, Pune and was confident that her design would be shortlisted. She had shown a rhino, tiger, Bihu dancer, bamboo, traditional hat and legendary tea gardens of Assam.