Credit cards of late have a negative connotation, and are pronounced as complete no-no by many, because of the high interest rates that are charged on late payments/defaults. Don’t let this negativity cloud perception of the product.
You would be surprised to know that, if you are judicious in using this product, you stand to benefit monetarily, and of course it eliminates the need for you to carry cash everywhere.
More often than not the problem is that people do not understand the product well and hence are not able to use it to their advantage.
The credit card company offers you a ‘free credit period’ of around 50-55 days. The misconception most people have is that this free credit period is from the date of purchase. It is actually from the date of billing.
E.g. Mr. Anand billing cycle date is 28th of December to 27th of Jan and his credit free period is 50 days. If his purchase was on 22nd Jan, he would enjoy credit for 25 days. However if he made the same purchase on say 01st Jan, he would enjoy credit free period of 47 days.
So if you plan properly, you can enjoy maximum credit every month, which will help you manage your cash flows effectively, and will also help you earn the extra bit of interest on the cash that you have currently not spent on making the purchase.
In addition to the free credit period, every purchase made on your credit card, earns you reward points which when accumulated to a big amount can be exchanged for a range of items such as electrical appliances, flight tickets, home ware etc.
These rewards will differ from company to company. Also credit card companies offer discounts, promotional offers with respect to shopping, entertainment etc. E.g If you buy petrol from a particular brand of petrol pumps, you get a small percentage of money credited back to your account after a certain number of days.
For the credit card to make money for you, two key things you need to keep in mind
Cost of default: The interest rate on defaults ranges from anywhere between 2%-3.5% per month. So in effect it is a whopping 24%-42% p.a. Also, the interest starts from the date of purchase and not the billing date i.e. you do not get any interest-free credit period and all future purchases also start attracting the interest charges from the date of purchase.
So use the credit card if and only if you’re sure of having the means to pay the bills in time. Also, don’t forget that your credit score will get impacted too which will impact your future borrowing.
Credit Limit: Keep a tab on your credit limit. Overshooting your credit limit will also have dire consequences for you with respect to the interest charged and your credit score.
Widen the usage of your credit card (small and big purchases): You might as well earn bonus points and interest on the cash that you have not currently used, to make the purchase. You can use the credit card to pay monthly rentals, grocery bills, utility bills, gift expenses, subscription expenses etc. So the cash that you have not used to make the purchase will earn interest for you or will be used for fulfilling other immediate needs.
E.g Maitali purchased an electrical appliance for Rs. 28,000 using the credit card she possessed. The purchase was made such that she could enjoy a credit free period of 45 days. The cash that she would have used to purchase this appliance is now lying in her savings account which is earning her an interest of 3.5% p.a. So if she decides to pay the bill after enjoying 40 days of free credit, she earns an interest of Rs. 107 in her savings bank account. Not only that, she has also earned some reward points on the purchase. The other advantage of using the credit card is your payments are recorded which makes it easier for you to keep track of your expenses.
Appropriate use of Bonus points: Use the bonus points that have accumulated on buying necessities (house hold appliances, clothes, groceries etc.) rather than using it on using it on things (luxuries) that aren’t really important to you. Only if the bonus points are used practically, you are actually saving cash because had to now have the bonus points, you would have to anyways spend cash on buying the same.
Credit cards if used prudently will help you in managing your cash flow better, and at the same time, will provide you monetary benefits. That’s because you get interest free money for some period of time and you also earn reward/bonus points on the same.
But if you use it without deliberation, it can prove to be disastrous as interest rates charged on payment delays are very high. Also, your credit rating will take a beating, as banks report these things to the credit rating agencies, which in turn will include it as part of your credit report.
Don’t forget that credit score will not only determine whether you will get a loan but will also determine at what interest.
Let not easy availability of credit and attractive rewards offered fool you into making impulsive purchases. It will prove to be rather costly.
Monday, May 31, 2010
Market insight-Religare
Nifty (5086↑19): Nifty initially remained in a range, the last half an hour pull back has led to a close at day’s high, indicating the Nifty pull back rally is intact.
Nifty immediate support is at 5038-5017 if holds and is able to move decisively above 5097 the intraday bias would be positive and next possible target would be at 5146-5170 levels, these levels would also act as a resistance as it is placed at an important Fibonacci 61.8% retracement levels of its previous fall.
Nifty below 5017 levels would have a negative bias for its intraday trend.
Strategy would be to continue to with restricted stock specific positive trades till the Nifty pull back movement is intact, avoid over leverage.
The nature of current pull back is crucial that would decide whether the Nifty larger degree trend, discussed above, would remain intact or not.
The pull back may move higher up to 5010-5079-5149); time-wise, the pull back would remain intact between 9 June and 2 July ’10 i.e. 38.2-100% of the time taken by the entire pattern formation. On completion of the pullback movement, the Nifty, once again, may resume its downward trend to create new lows.
Nifty immediate support is at 5038-5017 if holds and is able to move decisively above 5097 the intraday bias would be positive and next possible target would be at 5146-5170 levels, these levels would also act as a resistance as it is placed at an important Fibonacci 61.8% retracement levels of its previous fall.
Nifty below 5017 levels would have a negative bias for its intraday trend.
Strategy would be to continue to with restricted stock specific positive trades till the Nifty pull back movement is intact, avoid over leverage.
The nature of current pull back is crucial that would decide whether the Nifty larger degree trend, discussed above, would remain intact or not.
The pull back may move higher up to 5010-5079-5149); time-wise, the pull back would remain intact between 9 June and 2 July ’10 i.e. 38.2-100% of the time taken by the entire pattern formation. On completion of the pullback movement, the Nifty, once again, may resume its downward trend to create new lows.
Sunday, May 30, 2010
India's Q4 GDP grows at 8.6% y-o-y-Economic Times
India's economy grew at its fastest pace in six months in the quarter through March 2010, fuelled mainly by government and consumer spending, which is expected to allow policymakers to focus on anchoring inflation that is hovering near 10 percent.
The 8.6 percent expansion in the fourth quarter of the fiscal year 2009/10 was broadly in line with a median forecast of 8.7 percent in a Reuters poll and lifted the annual average growth rate for the full fiscal year to a slightly better-than-expected 7.4 percent.
India's economy had grown 6.7 percent in 2008/09, and the Jan-March 2009/10 growth rate matches the revised data for the second quarter of 2009/10. The data is unlikely to evoke any immediate and aggressive policy response from the central bank, as concerns on Europe's debt crisis are expected to keep its policy on hold for now.
"It would be important to note that this release is a backward looking number and our sense is that policy makers would remain considerate of the external developments and any associated downside risk to overall growth," said Anubhuti Sahay, an economist with Standard Chartered Bank in Mumbai. Indian stocks and the rupee strengthened immediately after the data, while the benchmark bond yield rose 2 basis points from before the release.
The expansion in the March quarter was driven by government spending, manufacturing and services. Revival of growth in farm output after a contraction in the quarter ago underscored the broad-based recovery in Asia's third-largest economy.
Manufacturing output grew 16.3 percent on year in the quarter as consumers bought more cars and other goods, while farm output grew an annual 0.7 percent helped by a good winter harvest. The government expects the economy to grow 8.5 percent in the current fiscal year that started on April 1 on the prospects of a better farm output and a global recovery, and Finance Minister Pranab Mukherjee on Monday said growth would top this estimate.
Among other high growth sectors during the quarter were hotels and transport services which grew by 12.4 percent, while financial services including insurance grew by 7.9 percent.
The arrival of fresh crops helped agriculture grow by 0.2 percent, having dropped significantly in the previous quarter of 2009-10 due to a poor monsoon.
The farm sector, which forms nearly 17 percent of the economy but is dependent on monsoon rains, is expected to do well in 2011 as the weather office has predicted a nortmal monsoon for the country. Prime Minister Manmohan Singh last week said an annual economic growth rate of 10 percent is needed in the medium term to address the problems of poverty and malnutrition.
Even as Singh aims for high economic growth, inflation has come to haunt his government and appears to be undermining its support base. Wholesale prices, the most closely watched inflation gauge in India, rose 9.59 percent in April from a year earlier amid the government officials cliam that headline inflation had peaked.
Headline inflation numbers have been consistently higher than the official forecasts. The wholesale price inflation vaulted above the RBI's end-March 2010 inflation forecast of 8.5 percent in January and crossed the 10-percent mark in February.
Although food price inflation has eased from its peak of 20 percent in December, it is still above 16 percent. Rising cost pressures are also dragging down the pace of manufacturing growth, as evidenced by a second-straight monthly decline in the HSBC Markit Purchasing Managers' Index in April. The rapid acceleration in the world's second-fastest growing major economy after China is boosting consumer demand far ahead of what can be met by existing supply capacity.
Analysts expect monetary policy tightening along the year, as the RBI moves to cool demand through rate hikes until firms crank up their potential output. The central bank has already lifted rates twice by a total of 50 basis points since March and has not ruled out an off-cyle rate rise either.
The 8.6 percent expansion in the fourth quarter of the fiscal year 2009/10 was broadly in line with a median forecast of 8.7 percent in a Reuters poll and lifted the annual average growth rate for the full fiscal year to a slightly better-than-expected 7.4 percent.
India's economy had grown 6.7 percent in 2008/09, and the Jan-March 2009/10 growth rate matches the revised data for the second quarter of 2009/10. The data is unlikely to evoke any immediate and aggressive policy response from the central bank, as concerns on Europe's debt crisis are expected to keep its policy on hold for now.
"It would be important to note that this release is a backward looking number and our sense is that policy makers would remain considerate of the external developments and any associated downside risk to overall growth," said Anubhuti Sahay, an economist with Standard Chartered Bank in Mumbai. Indian stocks and the rupee strengthened immediately after the data, while the benchmark bond yield rose 2 basis points from before the release.
The expansion in the March quarter was driven by government spending, manufacturing and services. Revival of growth in farm output after a contraction in the quarter ago underscored the broad-based recovery in Asia's third-largest economy.
Manufacturing output grew 16.3 percent on year in the quarter as consumers bought more cars and other goods, while farm output grew an annual 0.7 percent helped by a good winter harvest. The government expects the economy to grow 8.5 percent in the current fiscal year that started on April 1 on the prospects of a better farm output and a global recovery, and Finance Minister Pranab Mukherjee on Monday said growth would top this estimate.
Among other high growth sectors during the quarter were hotels and transport services which grew by 12.4 percent, while financial services including insurance grew by 7.9 percent.
The arrival of fresh crops helped agriculture grow by 0.2 percent, having dropped significantly in the previous quarter of 2009-10 due to a poor monsoon.
The farm sector, which forms nearly 17 percent of the economy but is dependent on monsoon rains, is expected to do well in 2011 as the weather office has predicted a nortmal monsoon for the country. Prime Minister Manmohan Singh last week said an annual economic growth rate of 10 percent is needed in the medium term to address the problems of poverty and malnutrition.
Even as Singh aims for high economic growth, inflation has come to haunt his government and appears to be undermining its support base. Wholesale prices, the most closely watched inflation gauge in India, rose 9.59 percent in April from a year earlier amid the government officials cliam that headline inflation had peaked.
Headline inflation numbers have been consistently higher than the official forecasts. The wholesale price inflation vaulted above the RBI's end-March 2010 inflation forecast of 8.5 percent in January and crossed the 10-percent mark in February.
Although food price inflation has eased from its peak of 20 percent in December, it is still above 16 percent. Rising cost pressures are also dragging down the pace of manufacturing growth, as evidenced by a second-straight monthly decline in the HSBC Markit Purchasing Managers' Index in April. The rapid acceleration in the world's second-fastest growing major economy after China is boosting consumer demand far ahead of what can be met by existing supply capacity.
Analysts expect monetary policy tightening along the year, as the RBI moves to cool demand through rate hikes until firms crank up their potential output. The central bank has already lifted rates twice by a total of 50 basis points since March and has not ruled out an off-cyle rate rise either.
Thursday, May 27, 2010
Ambani's Pact-Inside Story-Economic times
On May 26, an Airbus ACJ 320 with the call sign ‘VT-IAH’ touched down at New Delhi’s Indira Gandhi International Airport from Mumbai. Another flight, a Falcon 2000 that answered to the call sign ‘VT-AAT’, landed two minutes later. The pilots of both the jets informed their billionaire owners that they have landed safely. Outside, the day was just beginning, but the mercury in Delhi had already climbed to 38 degrees.
Mukesh Ambani, the owner-passenger from the first plane, walked out of the airport in his characteristic brisk style, his mind preoccupied with the packed schedule for the day. On top of his priority list was a meeting of the Prime Minister’s Council on Trade and Industry.
At the airport, Mukesh ran into Angarai Sethuraman, head of corporate affairs at the Anil Dhirubhai Ambani Group (ADAG) and a close aide to Anil Ambani. He was there to receive the owner-passenger of the second jet: Anil Ambani.
Suddenly, Sethuraman was face-to-face with his old boss.
Mukesh, chairman of India’s largest private sector company, Reliance Industries (RIL), calmly walked up to Sethuraman, shook hands and asked him warmly, “How are you, Sethu?”
That small gesture travelled quickly through the political and business circles of the Capital, where the news on Monday that the Ambani brothers have decided to end their six-year-long acrimonious battle and to “collaborate” had been received with surprise bordering on scepticism.
Even though the brothers lived and worked in Mumbai, many of their battles were fought in the power corridor of Luyten’s Delhi. The Capital’s decision makers and influencers knew the bitter saga closely. It had divided them, put them in awkward spots, and in many cases, rewarded them handsomely. The fault lines of the battle divided the loyalties of New Delhi, whose importance was understood early and well by the Reliance patriarch, the late Dhirubhai Hirachand Ambani.
So the city had to see for itself if there was actually a thaw in hostilities. By warmly greeting a man who had been a key figure in the rival camp’s New Delhi affairs, Mukesh Ambani sent a clear signal—he meant to stick to the agreement in spirit.
Exactly a week earlier, on May 19, Kokilaben Ambani, Dhirubhai’s widow and mother of the warring brothers, had returned after a visit to the famous Shiva temple at Kedarnath in the Himalayan foothills.
“This has gone too far now. The two of you have to resolve the differences,” Kokilaben is believed to have told younger son Anil, according to insiders who have heard accounts of the conversation. Anil had accompanied her on the pilgrimage along with his sister Deepti Salgaonkar.
But Kokilaben had been there before and almost done that. Five years ago, she had stepped in and drew up a settlement between her two sons, who lived in reasonable harmony while her husband was alive, and had a bitter fallout soon after his death. The agreement, dividing the companies Dhirubhai Ambani had assiduously built between his two sons, was signed on June 18, 2005. Six months before that Mukesh Ambani had, during a TV interview, admitted to “ownership issues” that were in the “private domain”. That was the first public admission of disharmony that had been brewing behind the scenes since the death of Dhirubhai.
While Kokilaben had made several attempts to resolve the differences between her sons, she hadn’t been successful. The two brothers had plunged headlong into running the businesses that they had inherited, and in an era that saw unparalleled growth in the Indian economy, multiplied wealth for their shareholders and themselves.
But they had also allowed an apparatus of hostility to grow around them. Vast public relations (PR) teams ran down the other group’s companies. Executives who successfully managed media and public opinion grew in clout within the group. It was a race that neither would win. When a dispute over gas supply arose between Mukesh Ambani’s Reliance Industries and Anil Ambani’s Reliance Natural Resources it spiralled into a no-holds-barred battle that shook even the government at the Centre. The Supreme Court settled the legal war finally early this month and effectively nullified the part of the family settlement between the brothers that referred to supplying gas from Mukesh’s Krishna-Godavari basin block to Anil’s power projects at a discount.
Kokilaben seized the opportunity and summoned her two sons when she got back from the Kedarnath trip. Enough was enough.
PEACE IN SEA WIND
Mukesh and Anil, the world’s richest brothers, met their mother in her 10th floor residence at Sea Wind, a 12-storey building in Mumbai’s tony Cuff Parade neighbourhood that is the Ambani family home. Even though the brothers have fallen out, they live in the same house, on different floors.
A few kilometres away, on Napeansea Road, the world’s most expensive residential building, named ‘Antilla’, is coming up at a cost of $2 billion. Upon completion, Mukesh Ambani will move into the 570-ft tower. Kokilaben was firm with her demand and persuasive in her logic. If Mukesh was going to produce gas, why not give it to Anil, than anybody else? Now if Anil was getting assured gas supply for his power plant till 2022, why not make some concessions in the original non-compete agreement and allow Mukesh to enter telecom and power, if he so desired. The discussion started thus, and made significant headway. There were two meetings, between May 20 and May 23, in which the broad contours of the agreement were thrashed out, says a person familiar with the negotiations.
But just why was this latest attempt at peace-making suddenly making progress when both parties had refused to budge an inch during similar efforts in the past? Even in June last year, after the Bombay High Court pronounced its verdict in the gas dispute, Anil had met his elder brother in the latter’s Maker Chambers offices in Nariman Point. But precious little came out of those talks.
The answer perhaps lies in the long-drawn-out legal battle over gas that had just concluded. The two groups had been consumed by the dispute that dragged on for four years. It strained their relations with senior politicians. It cost both sides a bomb—every day of Supreme Court hearing amounted to more than Rs 1 crore in lawyers’ fee and other infrastructure costs. The case took away much time and attention, the opportunity cost of which would be millions of dollars. Above all, it had been exhausting, mentally and physically
While the two brothers were spending resources fighting each other, other groups were gaining from the cold war. The spouses of the two brothers are not known to be best friends, but their children get along fine.
Blood, after all, is thicker than gas.
The Sea Wind meetings then were about a way out of the morass for both the brothers. Kokilaben was striking the iron when it was unbearably hot: The non-compete agreement would be scrapped and the brothers would collaborate.
Yet, it was not just a simple matter that a mother could settle between her sons. At stake were the fortunes of two of the world’s largest business houses. And each brother had to take his war cabinet into confidence.
Mukesh Ambani called Manoj Modi and Anand Jain; Anil Ambani called Satish Seth and Amitabh Jhunjhunwala. They were briefed about what transpired at Sea Wind.
The next Sunday, May 23, then would be the red-letter day. Early that day, Anil Ambani summoned his closest executives for a “review meeting”. Just before 2 pm, he took out a crumbled sheet of paper from his pocket and handed it to the group. “This is a statement we are sending out today,” he said. One after the other, the executives read the statement in silence. The game had changed. Not entirely, however. Now on, it would be a tightrope walk. If you faltered in figuring what has changed and what hasn’t, it could cost you dearly. “We have a lot of work at hand,” the younger Ambani said, according to one of the people present. “Enforcing peace takes a lot of work.”
His older brother had a similar message for his people when he briefed them about the details.
Tony Jesudasan, chief propagandist of the Anil Ambani side, dialled Niira Radia, his counterpart on the other side. The two generals who managed public perception could not smoke the piece pipe because Radia was in the US and wasn’t available immediately. Jesudasan then called Manoj Warrier, Radia’s close associate and CEO of a company that handles PR for all RIL group companies. “This is an opportunity to work together and also an opportunity to stop working against each other,” Jesudasan told Warrier, who agreed. Like Jesudasan, Warrier too had been asked to come to work on a Sunday.
The same statement went out from both groups to the media. By evening, the news had spread. Corporate tycoons across India called their associates to discuss the development and learn further details.
On Monday, the morning of May 24, the Sensex rose 280 points in opening trade. Shareholders had little doubt about the benefits of the decision. Several central ministers, including Pranab Mukherjee, Kamal Nath and Praful Patel, called Kokilaben to congratulate her on the settlement.
RIL’s group president for corporate affairs, V Balasubramaniam, called up several politicians and said: “Now, we are one house again.”
For Balasubramaniam—Balu as he is known in Delhi’s power corridors—it was a personal moment too. ADAG’s Sethuraman is his nephew, but the two had stopped speaking to each other when they moved to different camps after the group split.
The uncle and nephew too can make up now, just like the brothers.
Post script
At the height of the battle between the two brothers, a key aide of Mukesh Ambani had met with a few journalists in his office. As he was impressing upon them how the ADA group was supposedly squandering away opportunities that were handed to them on a platter, at one point, he was overcome with emotion. He pointed to the large portrait of Dhirubhai Ambani in the room and said, with emotion in his voice: “In logon ne hamare papa ke naam barbaad kar diya hai.”
(These people have ruined our father’s reputation.) The Ambani turf war was as much about emotion as it was about enterprise. But in the end, the rage appears to have dissipated. The top executives on both sides, some of whom were uncomfortable fighting former colleagues, are happy to give peace a chance. They can how go back to their first love, making money, rather than draft affidavits for courts and brief the media about the alleged wrongdoings of the other group.
There are some, particularly business houses who had faced the might of the undivided Ambanis, who would love to see the brothers resume fighting. For now that seems unlikely, though that could change as both enter sectors where they had been barred by the now-scrapped non-compete agreements.
An official at the PMO, who met both the brothers on Wednesday, remarked how unusually relaxed they both appeared. It will be important for them to remain calm through a number of inevitable misunderstandings that will occur given the nature of their businesses, temperament of their key executives and the incessant media attention their affairs attract.
As for now, the Ambani patriarch’s larger vision prevails: Ambani ka sapna, sab ka apna apna.
Mukesh Ambani, the owner-passenger from the first plane, walked out of the airport in his characteristic brisk style, his mind preoccupied with the packed schedule for the day. On top of his priority list was a meeting of the Prime Minister’s Council on Trade and Industry.
At the airport, Mukesh ran into Angarai Sethuraman, head of corporate affairs at the Anil Dhirubhai Ambani Group (ADAG) and a close aide to Anil Ambani. He was there to receive the owner-passenger of the second jet: Anil Ambani.
Suddenly, Sethuraman was face-to-face with his old boss.
Mukesh, chairman of India’s largest private sector company, Reliance Industries (RIL), calmly walked up to Sethuraman, shook hands and asked him warmly, “How are you, Sethu?”
That small gesture travelled quickly through the political and business circles of the Capital, where the news on Monday that the Ambani brothers have decided to end their six-year-long acrimonious battle and to “collaborate” had been received with surprise bordering on scepticism.
Even though the brothers lived and worked in Mumbai, many of their battles were fought in the power corridor of Luyten’s Delhi. The Capital’s decision makers and influencers knew the bitter saga closely. It had divided them, put them in awkward spots, and in many cases, rewarded them handsomely. The fault lines of the battle divided the loyalties of New Delhi, whose importance was understood early and well by the Reliance patriarch, the late Dhirubhai Hirachand Ambani.
So the city had to see for itself if there was actually a thaw in hostilities. By warmly greeting a man who had been a key figure in the rival camp’s New Delhi affairs, Mukesh Ambani sent a clear signal—he meant to stick to the agreement in spirit.
Exactly a week earlier, on May 19, Kokilaben Ambani, Dhirubhai’s widow and mother of the warring brothers, had returned after a visit to the famous Shiva temple at Kedarnath in the Himalayan foothills.
“This has gone too far now. The two of you have to resolve the differences,” Kokilaben is believed to have told younger son Anil, according to insiders who have heard accounts of the conversation. Anil had accompanied her on the pilgrimage along with his sister Deepti Salgaonkar.
But Kokilaben had been there before and almost done that. Five years ago, she had stepped in and drew up a settlement between her two sons, who lived in reasonable harmony while her husband was alive, and had a bitter fallout soon after his death. The agreement, dividing the companies Dhirubhai Ambani had assiduously built between his two sons, was signed on June 18, 2005. Six months before that Mukesh Ambani had, during a TV interview, admitted to “ownership issues” that were in the “private domain”. That was the first public admission of disharmony that had been brewing behind the scenes since the death of Dhirubhai.
While Kokilaben had made several attempts to resolve the differences between her sons, she hadn’t been successful. The two brothers had plunged headlong into running the businesses that they had inherited, and in an era that saw unparalleled growth in the Indian economy, multiplied wealth for their shareholders and themselves.
But they had also allowed an apparatus of hostility to grow around them. Vast public relations (PR) teams ran down the other group’s companies. Executives who successfully managed media and public opinion grew in clout within the group. It was a race that neither would win. When a dispute over gas supply arose between Mukesh Ambani’s Reliance Industries and Anil Ambani’s Reliance Natural Resources it spiralled into a no-holds-barred battle that shook even the government at the Centre. The Supreme Court settled the legal war finally early this month and effectively nullified the part of the family settlement between the brothers that referred to supplying gas from Mukesh’s Krishna-Godavari basin block to Anil’s power projects at a discount.
Kokilaben seized the opportunity and summoned her two sons when she got back from the Kedarnath trip. Enough was enough.
PEACE IN SEA WIND
Mukesh and Anil, the world’s richest brothers, met their mother in her 10th floor residence at Sea Wind, a 12-storey building in Mumbai’s tony Cuff Parade neighbourhood that is the Ambani family home. Even though the brothers have fallen out, they live in the same house, on different floors.
A few kilometres away, on Napeansea Road, the world’s most expensive residential building, named ‘Antilla’, is coming up at a cost of $2 billion. Upon completion, Mukesh Ambani will move into the 570-ft tower. Kokilaben was firm with her demand and persuasive in her logic. If Mukesh was going to produce gas, why not give it to Anil, than anybody else? Now if Anil was getting assured gas supply for his power plant till 2022, why not make some concessions in the original non-compete agreement and allow Mukesh to enter telecom and power, if he so desired. The discussion started thus, and made significant headway. There were two meetings, between May 20 and May 23, in which the broad contours of the agreement were thrashed out, says a person familiar with the negotiations.
But just why was this latest attempt at peace-making suddenly making progress when both parties had refused to budge an inch during similar efforts in the past? Even in June last year, after the Bombay High Court pronounced its verdict in the gas dispute, Anil had met his elder brother in the latter’s Maker Chambers offices in Nariman Point. But precious little came out of those talks.
The answer perhaps lies in the long-drawn-out legal battle over gas that had just concluded. The two groups had been consumed by the dispute that dragged on for four years. It strained their relations with senior politicians. It cost both sides a bomb—every day of Supreme Court hearing amounted to more than Rs 1 crore in lawyers’ fee and other infrastructure costs. The case took away much time and attention, the opportunity cost of which would be millions of dollars. Above all, it had been exhausting, mentally and physically
While the two brothers were spending resources fighting each other, other groups were gaining from the cold war. The spouses of the two brothers are not known to be best friends, but their children get along fine.
Blood, after all, is thicker than gas.
The Sea Wind meetings then were about a way out of the morass for both the brothers. Kokilaben was striking the iron when it was unbearably hot: The non-compete agreement would be scrapped and the brothers would collaborate.
Yet, it was not just a simple matter that a mother could settle between her sons. At stake were the fortunes of two of the world’s largest business houses. And each brother had to take his war cabinet into confidence.
Mukesh Ambani called Manoj Modi and Anand Jain; Anil Ambani called Satish Seth and Amitabh Jhunjhunwala. They were briefed about what transpired at Sea Wind.
The next Sunday, May 23, then would be the red-letter day. Early that day, Anil Ambani summoned his closest executives for a “review meeting”. Just before 2 pm, he took out a crumbled sheet of paper from his pocket and handed it to the group. “This is a statement we are sending out today,” he said. One after the other, the executives read the statement in silence. The game had changed. Not entirely, however. Now on, it would be a tightrope walk. If you faltered in figuring what has changed and what hasn’t, it could cost you dearly. “We have a lot of work at hand,” the younger Ambani said, according to one of the people present. “Enforcing peace takes a lot of work.”
His older brother had a similar message for his people when he briefed them about the details.
Tony Jesudasan, chief propagandist of the Anil Ambani side, dialled Niira Radia, his counterpart on the other side. The two generals who managed public perception could not smoke the piece pipe because Radia was in the US and wasn’t available immediately. Jesudasan then called Manoj Warrier, Radia’s close associate and CEO of a company that handles PR for all RIL group companies. “This is an opportunity to work together and also an opportunity to stop working against each other,” Jesudasan told Warrier, who agreed. Like Jesudasan, Warrier too had been asked to come to work on a Sunday.
The same statement went out from both groups to the media. By evening, the news had spread. Corporate tycoons across India called their associates to discuss the development and learn further details.
On Monday, the morning of May 24, the Sensex rose 280 points in opening trade. Shareholders had little doubt about the benefits of the decision. Several central ministers, including Pranab Mukherjee, Kamal Nath and Praful Patel, called Kokilaben to congratulate her on the settlement.
RIL’s group president for corporate affairs, V Balasubramaniam, called up several politicians and said: “Now, we are one house again.”
For Balasubramaniam—Balu as he is known in Delhi’s power corridors—it was a personal moment too. ADAG’s Sethuraman is his nephew, but the two had stopped speaking to each other when they moved to different camps after the group split.
The uncle and nephew too can make up now, just like the brothers.
Post script
At the height of the battle between the two brothers, a key aide of Mukesh Ambani had met with a few journalists in his office. As he was impressing upon them how the ADA group was supposedly squandering away opportunities that were handed to them on a platter, at one point, he was overcome with emotion. He pointed to the large portrait of Dhirubhai Ambani in the room and said, with emotion in his voice: “In logon ne hamare papa ke naam barbaad kar diya hai.”
(These people have ruined our father’s reputation.) The Ambani turf war was as much about emotion as it was about enterprise. But in the end, the rage appears to have dissipated. The top executives on both sides, some of whom were uncomfortable fighting former colleagues, are happy to give peace a chance. They can how go back to their first love, making money, rather than draft affidavits for courts and brief the media about the alleged wrongdoings of the other group.
There are some, particularly business houses who had faced the might of the undivided Ambanis, who would love to see the brothers resume fighting. For now that seems unlikely, though that could change as both enter sectors where they had been barred by the now-scrapped non-compete agreements.
An official at the PMO, who met both the brothers on Wednesday, remarked how unusually relaxed they both appeared. It will be important for them to remain calm through a number of inevitable misunderstandings that will occur given the nature of their businesses, temperament of their key executives and the incessant media attention their affairs attract.
As for now, the Ambani patriarch’s larger vision prevails: Ambani ka sapna, sab ka apna apna.
Market Insight
Nifty(5003↑85.70): Nifty pull back remain intact for second trading session. Today, Nifty decisively crossed 4947, the first confirmation level, the second confirmation level is placed at 5029. The Nifty move above 5029 would confirm the completion of wave-e of an “Expanding Triangle” pattern and the current upward move would be a pull back as against the larger degree fall from 5399 to 4786.
The “Expanding Triangle” pattern indicates pull back would be slow and time consuming, price wise Nifty would rise up to 38.2%-50%-61.8% retracement levels of the “Expanding Triangle” and time wise the Nifty pull back could remain intact between 38.2% and 100% of the time taken by the “Expanding Triangle”.
That is the Nifty pull back could move higher anywhere between 5010-5079-5149 ; time-wise, the pull back would remain intact between 9 June and 2 July ’10 (). On completion of the pullback movement, the Sensex would once again resume its downward trend to create new lows.
Strategy would be to restrict trades to stock specific during the pull back avoid over leverage.
Banking stocks are positive Syndicate Bank, Uco Bank, Dena Bank Infosys and L&T are positive.
The “Expanding Triangle” pattern indicates pull back would be slow and time consuming, price wise Nifty would rise up to 38.2%-50%-61.8% retracement levels of the “Expanding Triangle” and time wise the Nifty pull back could remain intact between 38.2% and 100% of the time taken by the “Expanding Triangle”.
That is the Nifty pull back could move higher anywhere between 5010-5079-5149 ; time-wise, the pull back would remain intact between 9 June and 2 July ’10 (). On completion of the pullback movement, the Sensex would once again resume its downward trend to create new lows.
Strategy would be to restrict trades to stock specific during the pull back avoid over leverage.
Banking stocks are positive Syndicate Bank, Uco Bank, Dena Bank Infosys and L&T are positive.
May-Expiry
The expiry as expected is ahead as nifty's smart and strengthened move and close above 5000 levels clearly gives some confidence to bulls.Market could post some more gains from here and if all goes well bulls may back in action .Dow future suggests a good gap up opening tomorrow as well which could decide the fate of market.
Any breakdown from these levels may take nifty sharply lower but cues from Europe and US are suggesting some upside.Action was back in realty,metals and FMCG today.
Any breakdown from these levels may take nifty sharply lower but cues from Europe and US are suggesting some upside.Action was back in realty,metals and FMCG today.
Wednesday, May 26, 2010
Tuesday, May 25, 2010
Prerequisites for Wealth creation
The most difficult task for any individual today is to choose the right path to fulfill his goals with the availability of end number of instruments; a layman could be over a fix over where to invest and at what time and in which segment?
Investing in a market could be a tedious task but understanding its functioning and behavior could reap tremendous benefits also. The foremost trait and must eligibility to create wealth is the habit and discipline.As said habits and disciplines makes a man and the same holds true for financial planning.
A) Habits: Most of us do not believe in the habit of regular saving as for the young people they believe in expending only but the off late debacle in 2008 has given ample lessons of value investing.
B) Discipline: Since expenses cannot be stopped and life has to move on in order to tackle this, one should have a pool of wealth, which cannot grow until it is not multiplied or earned. To take on liabilities which would arise over a period of time one should have a financial plan and assets which could offset the inflation and expenses over a period of time.
C) Assets: Assets could be in the form of land, property, liquid cash, deposits, shares, mutual funds etc. Acquiring assets is a critical task and one should have the right guidance and wisdom for the same otherwise the strategy could back fire.
D) Goals: One must have a long term and short term goals in written it helps in devising strategies and working in the right direction.
E) Plans: A tedious task is to plan out the investment and make a roadmap for achieving the same. Planning helps in assessing the overall information beforehand and provides an edge for any unforeseen situations.
F) Review: A yearly and a short term review are utmost in order to achieve a goal. One has to assess whether he is going in the right direction or not. If it is otherwise never wait for more, try shifting to the profitable instruments or ventures as nothing is certain today. One has to be vigilant always. Since it is a self goal so don’t depend on others for every action.
G) Financial Guidance: Information today is available everywhere so one could find anything he intends to dos so, if there is a problem in understanding the complete aspects one could take a help of certified financial planners. Beware of an agent who for hefty commissions lures customers.
H) Common sense: The most critical is common sense which is not common at all. Everyone who guides you to something has a vested interest in it so always be extra vigilant while taking advises. Most of the questions are answered on its own if one tries to dig out something. If anyone luring someone it clearly suggests something terrible.
I) Over dependence: We all know knowledge is the key so why take chances, cultivate the habit of acquiring it. Don’t depend on anyone –since it is your money-in the end you can’t blame anyone. knowledge if applicable never fails anyone, a systematic approach towards investing in a disciplined manner can lead s to wonders
The most difficult task for any individual today is to choose the right path to fulfill his goals with the availability of end number of instruments; a layman could be over a fix over where to invest and at what time and in which segment?
Investing in a market could be a tedious task but understanding its functioning and behavior could reap tremendous benefits also. The foremost trait and must eligibility to create wealth is the habit and discipline.As said habits and disciplines makes a man and the same holds true for financial planning.
A) Habits: Most of us do not believe in the habit of regular saving as for the young people they believe in expending only but the off late debacle in 2008 has given ample lessons of value investing.
B) Discipline: Since expenses cannot be stopped and life has to move on in order to tackle this, one should have a pool of wealth, which cannot grow until it is not multiplied or earned. To take on liabilities which would arise over a period of time one should have a financial plan and assets which could offset the inflation and expenses over a period of time.
C) Assets: Assets could be in the form of land, property, liquid cash, deposits, shares, mutual funds etc. Acquiring assets is a critical task and one should have the right guidance and wisdom for the same otherwise the strategy could back fire.
D) Goals: One must have a long term and short term goals in written it helps in devising strategies and working in the right direction.
E) Plans: A tedious task is to plan out the investment and make a roadmap for achieving the same. Planning helps in assessing the overall information beforehand and provides an edge for any unforeseen situations.
F) Review: A yearly and a short term review are utmost in order to achieve a goal. One has to assess whether he is going in the right direction or not. If it is otherwise never wait for more, try shifting to the profitable instruments or ventures as nothing is certain today. One has to be vigilant always. Since it is a self goal so don’t depend on others for every action.
G) Financial Guidance: Information today is available everywhere so one could find anything he intends to dos so, if there is a problem in understanding the complete aspects one could take a help of certified financial planners. Beware of an agent who for hefty commissions lures customers.
H) Common sense: The most critical is common sense which is not common at all. Everyone who guides you to something has a vested interest in it so always be extra vigilant while taking advises. Most of the questions are answered on its own if one tries to dig out something. If anyone luring someone it clearly suggests something terrible.
I) Over dependence: We all know knowledge is the key so why take chances, cultivate the habit of acquiring it. Don’t depend on anyone –since it is your money-in the end you can’t blame anyone. knowledge if applicable never fails anyone, a systematic approach towards investing in a disciplined manner can lead s to wonders
Market Insight
A strong pull back in the US market off late and a green range all trough the world has helped nifty ti open up today.Well on the eve of expiry some shorts may be covered but trend remains questionable.
It would be interesting to see whether nifty would be able to cross 4900-4930-4950 with increased volumes.Expiry would consider some short cover and it would be interesting to see the pullback.
Nifty will open higher and later rise during the day .Support for the day is 4830-4800.
There could be a buying interest in realty and banks for the day.
It would be interesting to see whether nifty would be able to cross 4900-4930-4950 with increased volumes.Expiry would consider some short cover and it would be interesting to see the pullback.
Nifty will open higher and later rise during the day .Support for the day is 4830-4800.
There could be a buying interest in realty and banks for the day.
Market Slipped
Nifty had a deep cut in today's session and a relentless selling in the bourses across the indices in all corners of the world drifted nifty to its Feb 2010 's low and nifty witnessed 4790 levels which are suggesting a difficult times ahead.
Metals,banks,Realty all were hit today though metal was the worst.The downfall had been witnessed with a major volume which has crossed 1.5 lac crore-assumed 2 nd highest turnover so far which further suggests pain.
Buying at these levels could be an uphill task as nifty has shown no sign of strengths.
A gap down opening could be expected tomorrow which could be a crucial test of nifty as bears may take it on the way down to 4650
Metals,banks,Realty all were hit today though metal was the worst.The downfall had been witnessed with a major volume which has crossed 1.5 lac crore-assumed 2 nd highest turnover so far which further suggests pain.
Buying at these levels could be an uphill task as nifty has shown no sign of strengths.
A gap down opening could be expected tomorrow which could be a crucial test of nifty as bears may take it on the way down to 4650
Monday, May 24, 2010
Market Insight
As advised on previous blog any rise in the market would be a sell opportunity.Nifty could not sustain to its high and fell sharply in the close.
Support for the day is 4830 and resistance is 4900 .Indications are very clear that expiry would be in the range of 4800-4880.
Weakness remains in the market which gives a fear of testing 4650 in the June contract.
Support for the day is 4830 and resistance is 4900 .Indications are very clear that expiry would be in the range of 4800-4880.
Weakness remains in the market which gives a fear of testing 4650 in the June contract.
Sunday, May 23, 2010
Market Insight
Market will open 1.5% up and the crucial level to cross is 5000-5020-5050.
This bounce could be a selling opportunity for most of traders as way up and down in nifty does not give any clear signal of bullish market as of now.
Nifty may recover of its 200 DMA but this rebound as per my sense would be a sell and exit opportunity.
This bounce could be a selling opportunity for most of traders as way up and down in nifty does not give any clear signal of bullish market as of now.
Nifty may recover of its 200 DMA but this rebound as per my sense would be a sell and exit opportunity.
Market this week
Trend remains cautious as market trading below 200 DMA.Fight is still on it is difficult to say whether we get out of correction or go further down from here.
Wait and watch would be a better approach in this kind of scenario ,trend is choppy and unclear whether we move higher or take support at these levels.
US markets has managed to close a bit higher but fear on the street is not over yet money on sidelines has not come or probably a deeper dip on the cards.
Wait and watch would be a better approach in this kind of scenario ,trend is choppy and unclear whether we move higher or take support at these levels.
US markets has managed to close a bit higher but fear on the street is not over yet money on sidelines has not come or probably a deeper dip on the cards.
Thursday, May 20, 2010
Market View -21 May-2010
Nifty would open in red at least 1.5-2% following negative cues from US and Asia.
Nifty support is around 4850-4830 levels and resistance at 5001-5025 levels.It would hovers around 4850-to 4896 levels till afternoon session ,European market will decide the trend later on .Closing above 4915 may be expected.Trends remains bearish as 200 DMA support has been tested and market is trading below the range.
Stock specific action could be seen in M&M and can be accumulated at 505 levels for the target of 540 with a stop of 499.
Nifty support is around 4850-4830 levels and resistance at 5001-5025 levels.It would hovers around 4850-to 4896 levels till afternoon session ,European market will decide the trend later on .Closing above 4915 may be expected.Trends remains bearish as 200 DMA support has been tested and market is trading below the range.
Stock specific action could be seen in M&M and can be accumulated at 505 levels for the target of 540 with a stop of 499.
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