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8/8/2019 BankUnited Lawfully Seized, Fraud in Florida
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Market Commentary Friday, May 22, 2009 15:51 Hrs ISTICICI Bank, L&T rally in volatile marketKeybenchmarkindicesrecoveredafterlasttwodays' lossesonhigherUSindexfuturesandfirmEuropeanmarkets.Butvolatilitywashigh.Bankingandcap italgoodsstocksrose.IndexheavyweightRelianceIndustriessurged.TheBSE30-shareSensexwasprovisionallyup133.38pointsor0.97%,upcloseto260pointsfromtheday'slowandoffcloseto65pointsfromtheday'shigh.
Themarketwasvolatile.AfteraweakopeningtriggeredbylowerAsianstocksandovernightslideinUSstocks,themarketsoonbouncedbackonexpectationsofastrongpushforeconomicreformsbytheCongress-ledUPAgovernment.Itcutgainslater.Themarketslippedintotheredinmid-morningtrade.Themarketcutlossesafterhittingfreshintradaylowinearlyafternoontrade.
ThemarketrecoveredinafternoontradeasEuropeansharesrose.Themarketparedgainaftersurgingtofreshintradayhighinmid-afternoontrade.Volatilitywashighafter14:00IST.
VolatilitymayremainhighoverthenextfewdaysaheadoftheexpiryofMay2009futuresandoptions(F&O)contractnextThursday,28May2009.
AcomfortablevictoryfortheCongress-ledcoalitiongovernmentinelectionhasraised expectationsofastrongpushforeconomicreformsbythegovernment.Investorsareawaitingtheallocationoftheportfolioofkeyministriesinthenewgovernment
Oncetheeconomicgrowthpicksup,therewillbeaneedtorollbackexcessliquidityfromthebankingsystem,theReserveBankofIndia(RBI)governorDSubbarao,saidonFriday,22May2009.Thegovernment'sborrowingprogramhasalreadyexpandedrapidly,hesaidaddingthatthelargegovernmentborrowingisgoingagainsttheReserveBank'seffortsintryingtomaintaininterestrateslow.
Subbaraosaidthatpressuretohavefurtherfiscalstimuluswillpersistandthatthecentralbankwillmanagegovernmentborrowingsusingalltoolsavailable.Subbarao saidthecentralbankcontinuestosupportitsforecastof6%economicgrowthintheyearendingMarch2010.
EuropeansharesroseasminersadvancedtrackinghighermetalpricesontheLondonMetalExchange.KeybenchmarkindicesinFrance,GermanyandUKwereupbybetween0.65%to1.09%.EuropeanstockshaddeclinedsharplyonThursday,21May2009
AsianstocksfellinachoppytradetodayonspeculationtheUSwillloseitstopcreditratingafterawarningonThursday,21May2009,fromratingagencyStandard&Poor'sthatitmaydowngradetheUKgovernment'screditratings.KeybenchmarkindicesinChina,HongKong,Japan,SouthKorea,andIndonesiaweredownbybetween0.41%to1.26%.KeybenchmarkindicesinTaiwanandSingaporerose
bybetween0.28%to1.55%.
TheBankofJapanacknowledgedFridayforthefirsttimeinalmostthreeyearsthattherearesignsofimprovementintheeconomy.Economicconditionshavebeendeteriorating,butexportsandproductionarebeginningtoleveloutagainstthebackdropofprogressininventoryadjustments,bothathomeandabroad,thecentralbanksaidattheconclusionofitstwo-daypolicymeeting.Itaddedthatgovernmentspendingissettoincrease,providingafurtherboost.
Thepaceofdeteriorationineconomicconditionsislikelytomoderategradually,leadingtoalevelingoutoftheeconomy,itsaid,markingachangefromtheBankofJapan'spreviousgloomyassessmentsofcontinuingdeterioration.TheBankofJapankeptthebenchmarkpolicyrateunchangedat0.1%,aswidelyexpected.
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USmarketsfinishedofftheirlowsofthesession,butstillloggedatriple-digitlossesyesterday21May2009astheFed'sloweredoutlookanddisappointingeconomicdatashookinvestorconfidence.TheDowfell129.91points,or1.5%,to8,292.13.TheS&P500indexfell15.14points,or1.7%,to888.33,andtheNasdaqcompositeindexfell32.59points,or1.9%,to1,695.25.
TradingintheUSindexfuturesindicatedDowcouldrise45pointsattheopeningbellonFriday,22May2009.USmarketremainsclosedonMonday,25May2009
USinitialjoblessclaimsdroppedby12,000toaseasonallyadjusted631,000intheweekended16May
2009,slightlyhigherthanexpected.Thepreviousweek'sfigureswererevised higher.
USregulatorsonThursdayshutdownBankUnitedFSB,anailingFloridalender,inthelargestAmericanbankfailurethisyear.TheFederalDepositInsuranceCorporation(FDIC)saidthebank'sassetshadbeenacquiredbyanewlycharteredfederalsavingsbank,BankUnited.BankUnited,thesuccessorinstitution,willbethelargestindependentbankinFlorida,aswasitspredecessor(BankUnited,FSB),FDICsaidinastatement.
BankUnited,FSBisthe34thFDIC-insuredinstitutiontofailintheUnitedStatesthisyear,andthethirdinFlorida.ThelastbanktobeclosedinthestatewasRiversideBankoftheGulfCoast,CapeCoralon13February2009.BankUnitedisthesecondbiggestUSbankfailureduringthecurrentfinancialcrisistriggeredbyahomemortgagemeltdown,afterthecollapselastJulyofIndymac,aCaliforniamortgagebank.
Closerhome,foreigninstitutionalinvestorshaveturnedsellersafterrecentaggressivebuyinginIndianstocks.AspertheprovisionalfiguresonNSEforeigninstitutionalinvestorssoldsharesworthRs2.14croreyesterdayaftersellingRs234.10croreonWednesday.Domesticfundsso ldsharesworthRs371.48croreyesterday.
FIIinflowinMay2009totaledRs15134.70crore(till20May2009)whiletheirinflowincalendaryear2009totaledRs15491.20crore.
Inpoliticalnews,PrimeMinisterManmohanSinghwillbesworninforasecondtermalongwith19otherministers,includingPranabMukherjeeandP.Chidambaram,attheRashtrapatiBhavanonFridayevening,thePrimeMinister'sOffice(PMO)hasannounced.
ThetwononCongressleaderstofindacabinetberthareNationalistCongressParty(NCP)chiefSharadPawarandTrinamoolCongressleaderMamataBanerjee.
BesidesMukherjeeandChidambaram,theCongressministerswhowilltakeoathareA.K.Antony,S.M.Krishna,GhulamNabiAzad,SushilKumarShinde,M.VeerappaMoily,S.JaipalReddy,KamalNath,VayalarRavi,MeiraKumar,MurliDeora,KapilSibal,AmbikaSoni,B.K.Handique,AnandSharmaandC.P.Joshi.
Thiswillbefollowedbyanexpansionofthecouncilofministers,includingministersofstateaswellasthosejuniorministerswhowillholdindependentchargeoftheirportfolios,inthenextfewdays,thePMOsaidinastatement.
DMKonThursdaysaidithasdecidednotjointhetheCongress-ledUPAgovernmentbutthepartywillprovidesupportthegovernmentfromoutside.ThisafterthetalksbetweenDMKandCongressoverministerialberthforDMKbrokedown
AmajorirritantwastheCongressrefusaltopartwithinfrastructureministriesandinsteadofferingtheDMKportfoliosofLabour,FoodProcessingandTextiles.Thesouthernallydeclareditwouldextend'outsidesupport'tothenewgovernment,preferringtositoutoftheMinistrytoacceptingthesamenumberofberthsithadlasttime.TheannouncementcameafterthreeroundsoftalksbetweenleadersofthetwopartiesandatelephonicconversationbetweenPrimeMinisterManmohanSinghandMr.Karunanidhi.
Announcingthebreakdownoftalks,DMKleaderT.R.BaalusaidtheCongressformulawasunacceptabletohisparty.TheCongressremainedoutwardlyunfazedbytheDMKdecision.TheDMKwantedfive
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CabinetberthstoaccommodatethetwooutgoingUnionMinisters,A.RajaandMr.Baalu,besidesMr.Karunanidhi'stwochildren,M.K.AzhagiriandKanimozhi,andhisgrand-nephewDayanidhiMaran.Also,theDMKwantedfourMinistriesofState.CrowdingtheMinistrywithmembersofonefamilywasunacceptabletotheCongressandthisisanissuethatithastakenupwiththeNationalistCongressParty(NCP)also.
Meanwhile,acomfortablevictoryfortheCongress-ledcoalitiongovernmentinelectionhasraisedexpectationsofastrongpushforeconomicreformsbythegovernment.DrManmohanSinghwhowillbesworninasthePrimeMinistertodayhasreportedpreparedthebroadcontoursofaneconomicrevivalplantobetakenupsoonafterthenewgovernmentisformed,reportssuggest.Whilerecommendationsto
revivegrowthandeasethecreditsqueezearelikelytofindaplaceintheplan,taxproposa lsareexpectedtobetakenupasbudgetrecommendations.
Thetelecomministryhasprioritisedthemuchdelayedauctionof3GairwavesandWiMAXspectrum.Ithasalsoprioritisedintroductionofanewspectrumpolicy.
Thepe troleumministryhasreportedlypreparedadraftCabinetnoteonapartialdecontrolofpetrolanddieselpricesafterwhichtheywillbelinkedtointernationalmovements.
Thenewgovernmentisalsolikelytopursuedisinvestmentofstate-runundertakings,reportssuggest.Thedisinvestmentdepartmentunderthefinanceministryisreportedlyworkingonexpandingthelistofcompaniesinwhichthegovernmentcouldreduceitsstake.Amongthese arePowerGridCorporation,CochinShipyard,andRashtriyaIspatNigam.
Financialsectorreformsarelikelytogetapushinthecomingdays,whichwererelegatedtothebackseatduetopersistentoppositionfromtheLeftparties.
TheCongressparty-ledcoalitionhasthesupportof322lawmakers,PrimeMinister-electManmohanSinghsaidonWednesday,20May2009,givingitaclearmajorityinanewgovernment.Congresssaidithassupportof274membersofthe15thLokSabha.Inaddition,theBahujanSamajParty,theSamajwadiPartyandtheRashtriyaJanataDalsentlettersofsupportforaManmohanSingh-ledgovernmentdirectlytothePresident,takingthesupportbaseto322.DrSinghwasrenominatedasCongressParliamentaryPartyleaderonTuesday(19May2009).
TheCongress-ledUPAdefiedpredictionsofatightelectionandwasonlyabout11seatsshortofan
majorityfromthe543sea tsatstake intherecentlyconcludedLokSabhaelection.Congress' alliancetook261seats,sweepingasideitsnearestrival,theblocledbytheHindu-nationalistBharatiyaJanataParty(BJP),whichwononly159combined.Congress,whichalonewon205seats,needsahandfulofpartnerstoreachthe272seatsneededtotakepower,andisexpectedtoseekthesupportofmoresmallerpartiesorindependents.
Meanwhile,thestockmarketwillkeepacloseeyeontheallocationofportfoliosinthenewgovernment.Itremainstobeseenwhogetthekeyministriesviz.power,transpo rtandeducationsectors.AnalystssaygrowthinthesethreesectorsarekeyforIndiatoachievestrongeconomicgrowth.Ifthoseseenasstrongperformersaregivenchargeofthesethreeministries,themarketmayextendgains.
Asperreports,Congress'sstrongshowinginelectionmeansreformerswillalmostcertainlybenamedtokeyministerialportfoliosviz.finance,trade,defenceandforeignaffairs.
VeteranCongressleaderPranabMukherjeeisthefrontrunnerforthepostofthefinanceminister.Aspermarkettalks,PChidambaramcouldretainhishomeportfolio.AnotherseniorleaderMurliDeoramayretainhisoldportfolioviz.petroleum.AndAKAntonyisalsolikelytoretaindefenseportfolio.JairamRameshmaybecomePowerminister
TrinamoolCongress(TC)leaderMamataBanerjeeislikelytobemadeRailwayMinister
Aspertheprovisionalfigures,theBSE30-shareSensexwasup133.38pointsor0.97%to13,869.92.TheSensexrose200.39pointsattheday'shighof13,936.93inlatetrade.Attheday'slowof13,611.30,theSensexfell125.24pointsinearlyafternoontrade.
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TheS&PCNXNiftywasup22.25pointsor0.53%to4,233.15aspertheprovisionalfigures.
BSEclockedaturnoverofRs7086crorelowerthanRs7,996.10croreonThursday21May2009.
Themarketbreadth,indicatingtheoverallhealthofthemarket,wasstrong.OnBSE,2,102sharesroseascomparedwith618thatfell.Atotalof46sharesremainedunchanged.
Fromthe30shareSensexpack,14stocksfellwhilerestgained.
TheBSEMid-Capindexwasup1.73%andtheBSESmall-Capindexwasup3.28%.Boththeindices
outperformedtheSensex.
India'slargestprivatesectorfirmbymarketcapitalisationandoilrefinerRelianceIndustries(RIL)rose3.22%.Analystsexpectstronggrowthinbottomlineincomingquartersfromsaleofgaswhichitstartedpumpinglastmonthfromitsdeep-seafieldofftheeastcoast.
India'sbiggeststate-runoilexplorationfirmbyrevenueOil&NaturalGasCorporation(ONGC)fell3.41%onprofittakingafterthestockrose8.41%yesterday,21May2009.OilpricessankThursday,retreatingfromsix-monthhighsreachedintheprevioussession,asallthreemajorUSstockindexesfellhardandtheUSdollargainedground.LightsweetcrudeforJulydeliveryfell99cents,or1.6%,tosettleat$61.05abarrelThursday.Thefallincrudeoilpriceswouldresultinlowerrealizationsfromcrudesalesforoilexplorationfirms.
India'slargestcigarettemakerbysalesITCrose0.63%afternetprofitrose9.97%toRs808.99croreon2.88%fallintotalincometoRs3979.66croreinQ4March2009overQ4March2008.Thecompanyannouncedtheresultsduringthemarkethourstoday
India'slargestthermalpowergeneratorbysalesNTPCrose1.88%afternetprofitrose57.77%toRs2113.35croreon8.65%riseintotalincometoRs12,481.51croreinQ4March2009overQ4March2008.Thecompanyannouncedtheresultsduringthemarkethourstoday
CapitalgoodsstocksrosetriggeredbyexpectationsofincreasedinfrastructurespendingbytheCongress-ledUPAgovernmenttoboostgrowth.India'sbiggestengineering&constructionfirmbyrevenueL&Tup4.46%toRs1,298andIndia'sbiggestpowerequipmentmake rbyrevenueBharatHeavyElectricals(Bhel)wasup0.55%toRs1975.05.Othercapitalgoodsstocks,ABB,PrajIndustriesandPunj
Lloydrosebybetween1.93%to13.21%.
BankstocksroseinchoppytradeonhopestheUPAgovernmentwillpursuefinancialsectorreforms.India'slargestprivatesectorbankbynetprofitICICIBankrose4.12%toRs700.ThestockhitahighofRs713andalowofRs655.ItsAmericandepositoryreceipt(ADR)fell1.3%onThursday21May2009.
India'sbiggestbankintermsofbranchnetworkStateBankofIndia(SBI)rose1.09%toRs1,733.ThestockhitahighofRs1,740.90andalowofRs1,678.10.Asperreports,theCongress-ledUPAgovernmentmaygoaheadonaplantomergesixassociatebankswithStateBankofIndiatocreateaIndianbankingbehemoth.Thegovernmentmayalsore-introducetheStateBankofIndia(Amendment)BillthatwillenableCentretoreduceitsstakeinSBIto51%fromcurrent59.41%.
But,India'ssecondlargestprivatesectorbankbyoperatingincomeHDFCBankfell0.17%toRs1,365.ThestockhitahighofRs1,391.45andalowofRs1,345.
India'sbiggestdedicatedhousingfinancefirmbyoperatingincomeHDFCrose0.99%.Asperrecentreports,HDFCislikelytocutdepositratesandfollowitwithacutinlendingrates.
Karnataka Bankgalloped14.59%toafterRelianceMutualFundcollectivelymoppedup3.3%stakeintheprivatesectorbankthroughtwobulkdealsontheBSEonThursday,21May2009
Withadecisivemandate,thereareexpectationsthattheUPAgovernmentmaypursuefinancialsectorreforms.ThereislikelytobesomemovementonpassageoftheBilltoamendtheInsuranceAct,1938.Apartfromraisingtheforeigninvestmentceilingto49%,from26%atpresent,theBillhadproposedtodoawaywiththestipulationonIndianpromotershavingtomandatorilysellapartoftheirholdingsafter10
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yearsofoperation.
TherearetwootherBillsactforprovidingstatutorybackingtothepensionsregulatorandtoamendtheBankingRegulationActwhichhavebeenpendinginParliamentforove rfiveyears,mainlyduetotheoppositionfromtheLeftparties.ButnowtheLeftisnolongeranallyofthere-electedUPA,theBillsmayfinallybeenacted.
ThePensionFundRegulatory&DevelopmentAuthorityBillwillallowtheregulatortoissueregulations,insteadofthepresentsystemwhereithastoenterintoagreementswithserviceproviderssuchasthefundmanagers.Inaddition,itwillalsohelpPFRDAregulatethepensionproductsofferedbylifeinsurancecompanies.ThenewgovernmentmayalsoannouncetaxbenefitsoninvestmentintheNewPensionScheme,whichwillhelpmakeitattractiveforinvestors,reportssuggest
TheamendmentstotheBankingRegulationActwillallowforeigninvestorstoexercisevotingrightsinlinewiththeirshareholding.WhiletheReserveBankofIndiahasconcernsongreaterplayforforeignbanks,itwillhavenorese rvationsingettingmorepowersforregulationofbanksandsupercessionofborads,whichareprovidedforintheBill.
Thegovernmentmayalsore-introducetheMicro-financeDevelopmentandRegulationBill
RedingtonIndiawaslockedatupperlimitof20%atRs195.05afterstandalonenetprofitrose20.23%toRs80.69croreintheyearendedMarch2009overtheyearendedMarch2008.
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