Indian investors braced for sharply lower earnings

Indian shares will face strong headwinds this week as investors brace for sharply lower quarterly earnings, which will start flowing in January and an uncertain global environment for capital flows.

The outlook for corporate earnings took a knock on Friday when the government said advance tax collections from companies for the December quarter fell 22 per cent from the same period last year. It was the latest in a series of data that pointed towards a deepening economic gloom.

"This should redouble efforts to tackle the problem more vigorously, but the government's responses have been painstakingly slow and too little," said equity analyst Mehul Patel.

"Neither are companies willing to go the extra mile to lure buyers back."

For more than two weeks it has become evident the government would have to further slash interest rates, cut taxes and increase spending to halt a rapidly slowing economy and revive growth.

The central bank has lowered its main short-term lending rate by 250 basis points since mid-October to 6.5 per cent, but this is still relatively high compared to US rates at 0-0.25 per cent, or Japanese at 0.1 per cent.

"An aggressive monetary policy may be necessary if the global economic dep-ression continues to adversely affect manufacturing," the finance ministry said in a mid-year review report released last week.

"Having run a tight monetary policy during first half 2008-09, there is considerable scope for monetary policy easing over the next six to 12 months to offset the global increase in demand for money that is being transmitted to India," it said.

Foolhardy

The report intensified expectations the central bank would reduce rates by at least 100 basis points, but the Reserve Bank of India (RBI) has given no hint when it would do it.

The RBI is scheduled to review policy only on January 27, but it can intervene early.

"It is desirable to cut the repo and the reverse repo rate, I think, by 100 basis points in my judgement," said Suresh Tendulkar, chairman of the prime minister's Economic Advisory Council.

Patel said falling inflation should give the RBI more reason to cut rates.

Annual inflation dropped to a nine-month low of 6.61 per cent in mid-December, well off a high of 12.9 per cent in early August and analysts are forecasting it will decline to less than three per cent by March.

The top-30 Sensex fell 7.6 per cent last week, its biggest weekly drop in two months, to 9,328.92 as foreign funds turned net sellers of more than $150 million (Dh550.98 million) after buying $365 million earlier in the month.

The fall picked up steam after the government said advance corporate taxes for the December quarter fell to Rs426 billion (Dh32.30 billion) from Rs549 billion in the same period last year.

The Sensex is on course to post a fall of more than 50 per cent in 2008, largely on foreign portfolio outflows of $13.3 billion. In comparison, the index had gained 47 per cent on the back of record foreign investment of $17.4 billion.

Patel said the outlook for 2009 was dismal. "There will be more pain for company earnings," he said.

Part of the problem was because companies such as developers were reluctant to cut prices.

"It's foolhardy to expect falling borrowing costs alone to bring buyers back," Patel said. "Apartment prices had more than quadrupled during the boom over the past three to four years; they will have to come down."

The finance ministry said GDP growth in 2008-09 would slow to about seven per cent from nine per cent in 2007-08, and its adviser Arvind Virmani said the RBI should put more emphasis on growth.

The expectation matches private forecasts but many economists believe expansion will fall to about six per cent in 2009 to 10. The government has announced plans for extra spending of $9 billion to prevent a sharper slowdown, but it knows this will not suffice to undo the damage and another economic stimulus package is needed.

However, Tendulkar said the government needed to see the impact of its first stimulus package announced early in December, before it could consider more.

"We are seeing some teething problems in the implementation of the first package," he said. "The second stimulus package will depend on the response to the first one."

Securities firm Macquarie said in a report last month that unlike China, India had little scope for significantly boosting fiscal spending and so policy reliance would be on aggressive monetary easing.

"India's investment spending will be a serious casualty of the current global crisis, despite the economy's relatively low export-to-GDP ratio."

Cautious optimism in the long-term

The Sensex fell 7% further by 695 points to close at 9,093 on November 28th, 2008 as compared to 9,788 on October 2008 end. The focussed measures taken by the RBI to calm the credit markets along with complementary steps taken by SEBI has finally started showing positive signals in the market. However, the FIIs continued their redemption induced sales putting pressure on the market.

GDP growth has slowed to 7.8% in the first half (April-September) of this fiscal year, which in itself is the highest in the world today after China. However, the recession in several major economies could lead to difficult times for India even though India is in a relatively better position to weather it.

Global rating agency Standard & Poor’s stated that the terrorist attacks in Mumbai were an isolated case and that it does not expect any negative implications on India’s macro economic activities or government’s fiscal position from the attacks. The act will have limited impact on markets. Mainly hospitality, travel and tourism and aviation segments could be affected. The terrorist attack is unlikely to increase India’s geopolitical risk perception such that it can adversely impact India as a growing outsourcing base of goods and services.

Although prospects for corporate results for the quarter ending December 2008 appear grim, things could begin to look up from the January-March 2009 quarter and thereafter, once the liquidity situation improves significantly. Valuations have now come down to appealing levels with Indian markets no longer expensive on an absolute basis. The country’s long-term strength continues to lie in the quality of its entrepreneurs.

While economic news might remain stable to negative in the early part of 2009, markets typically bottom ahead of the economy and earnings bottoming out due to the lead lag nature of the stock market and economy. Easing liquidity, interest rates and lower inflation could be drivers for better market performance in the second half of 2009. A downturn is a precursor to an upturn. A great majority of people across the world are still employed and eventually, with proper proactive fiscal and monetary measures being taken by all the nations in a co-ordinated manner, economic structures will become more stable and strong.

In the downward fall of the market, some scrips have been battered by urgent sellers and these now discount their underlying fair value. For such scrips, the downward risk is limited, while the upside potential is quite phenomenal. No one enjoys a sharp market downturn as at present with economic dislocation, growing panic, mark-to-market losses and other such adversities. Successful investing always requires a long-term perspective and this has never been truer than at this moment in time.

Once the market stabilizes, investors will start rationalizing between good and bad companies. Good quality businesses managed by quality management will be the theme in the coming days. Hence, we are reasonably optimistic about the long-term prospects of such companies.

Global crisis to hit India economy more in 2009

The global downturn will pressurise the Indian economy more next year and the government has to speed up reforms and boost investment to 2008: Year of global financial crisis sustain high growth rates, a report said on Friday.

The report jointly prepared by World Economic Forum and Confederation of Indian Industry also said India could see a sharp outflow of capital, and a fall in share and asset prices due to the global financial crisis.

The report was released ahead of the annual India Economic Summit starting Nov. 16 in New Delhi, where top government officials are expected to interact with heads of global firms.

"India's dependence on capital flows to finance its current account deficit is a macroeconomic risk and the global crisis could generate a sharp increase in capital outflows and a reduction in the availability of finance," it said.

"Clearly, the global economic picture will be harsher next year and there will be greater pressures on Indian economy."

The global credit crisis has rattled Indian markets as foreign investors sold shares worth more than $12.5 billion so far this year while the rupee fell by more than 20 percent.
"It (global crisis) could also weaken the balance sheets of the financial institutions, cause a further fall in share and asset prices, and challenge the macroeconomic situation due to shrinking global growth," WEF said.

Indian policymakers expect a moderation in economic growth to less than 8 percent in the year to March 2009, compared with 9 percent recorded in 2007/08 fiscal year.

Earlier this month, Prime Minister Manmohan Singh cautioned that the global financial crisis could be more severe and prolonged, and the government would take all necessary steps -- monetary and fiscal -- to protect growth.

"A tighter environment may also help speed reforms and encourage greater efficiency," WEF said, adding a great deal of political will and dialogue with different stakeholders would be required to take reforms forward.

"...India's growth is still strong relative to other economies and its growth story will continue to be one that will unfold over decades rather than years," it added.

India should reduce rates further

India needs to cut interest rates further as two reductions in less than a month haven't been enough to make loans affordable for companies and consumers, Bimal Jalan a former central bank governor said.

Policy makers should lower benchmark rates further "if necessary" to enable banks to cut their loan rates, Bimal Jalan, the top official at the Reserve Bank of India from 1997 to 2003, said in an interview in New Delhi.

Measures taken by the central bank and the government in the past month have helped bring the crisis "under relative control."

The global financial crisis has led to a shortage of money in India's banking system, affecting lenders' ability to extend loans to companies and individuals.

That's eroding consumer demand and has prompted production cuts at companies including Ashok Leyland, the nation's second-biggest maker of commercial vehicles, and JSW Steel Ltd.

Demand for domestic loans increased after funds dried up overseas following the seizure in credit markets and the collapse of Lehman Brothers Holdings Inc. on September 15. State Bank of India, the country's largest, cut the rate it charges its best clients to 13 per cent last week from 13.75 per cent, the highest in a decade. ICICI Bank Ltd., the second biggest, hasn't reduced its 17.25 percent charge.

"We need to create conditions so that loans are available at interest rates at pre-crisis levels, as other sources of finances have dried up," said Jalan, 67. "I am in favour of further reducing the cash-reserve ratio and the repurchase rate, if necessary."

Slower growth
India's $1.2 trillion (Dh4.4 trillion) economy may expand at the slowest pace in four years, the central bank estimates, as the credit crisis tips the world's industrialised nations into a recession.

Larsen & Toubro Ltd., the country's biggest engineering firm, said its borrowing costs will climb in the next six months and DLF Ltd., India's largest developer, last week said its hotel venture with Hilton Hotels Corp. may be delayed by up to 18 months as it tries to secure funds.

The benchmark Bombay Stock Exchange Sensitive Index has declined almost 50 per cent this year on concern slowing demand will hurt companies' profits.

India's central bank cut its benchmark repurchase rate by 1.5 percentage points in two stages starting October 20 to 7.5 per cent from a seven-year high of 9 per cent. It also lowered the amount lenders must set aside as reserves to cover deposits by 3.5 percentage points in a month, freeing up as much as $29.5 billion in cash to ease lending.

"The action taken by the Reserve Bank seems to be absolutely appropriate," Jalan said.

Right time to invest in stocks

The recent carnage in the stock market has seen major indices losing more than half their peak values. By the first week of November ’08, the Sensex had fallen by 52.3% from its peak of 21,206.8 in early January ’08. The Nifty lost nearly 53% during the same period. While investors are concerned about the future performance of the stock market, they appear to be less familiar about an interesting fact. The market crash has resulted in stock prices falling below the book value of companies in most cases.

Book value represents the value of a company’s assets net of its liabilities. In other words, it tells what you will be left with, if the company were to shut down, its assets sold and liabilities paid off.

So, logically, a company that is a viable profit-making business will always be worth more than its book value due to its ability to generate earnings and growth. Hence, shares trading below their book value are a sure sign of gross under-valuation and indicate low risk for investors.

An analysis of BSE 500 stocks reveals that one out of every three stocks is currently trading below its book value. A sample of 479 companies with latest book value information was selected for the study from the 500 companies that comprise the BSE 500 index. The stock prices of these companies were then divided by their respective book values to arrive at the price-book value ratio (P/BV).

According to the study, as many as 170 companies reported stock prices lower than their book values. Interestingly, on January 21, ’08, the day when the market temporarily halted trading due to massive losses, only 26 companies out of the sample set were trading below their book values.

The study also revealed that as on November 3, ’08, nine out of 10 companies were trading at P/BV multiples which were lower than their value on January 21, ’08. Real estate companies dominated the list of companies that saw erosion in their book values during the said period. Among the top 10 such companies, five were from the realty sector.

There are two reasons for this erosion in P/BV. Not only have stock prices of companies fallen sharply, but in many cases, the book value has also increased. Every four out of five companies reported a jump in book value between January ’08 (BV in FY07) and November ’08 (BV in FY08). Investors can use the information on P/BV multiple as one of the decisive indicators while taking investment decisions in a falling market.

A P/BV multiple of less than one reflects lower risk for investors in case the company faces bankruptcy. Further, talking about stock recommendations by ETIG, some stocks have seen a considerable decline in their current P/BV compared to that on January 21, ’08.

Aban Offshore, Allied Digital Services, Bank of India, Adhunik Metaliks and Jain Irrigation are some of our recommendations that have seen a drop in their P/BV multiples, which are now between one and three. Moreover, India Glycols and Ratnamani Metals & Tubes are currently trading at P/BV of less than one.

Political aspirations of Indian diaspora rise with Obama win

Democrat Barack Obama's election as the first African American president of the US has ignited hope among Americans of Indian origin who dream of either pursuing political careers or having members of the diaspora represent them in the political arena.

"The election of Obama is encouragement for any American Indian. It shows us that anything is possible. I hope it motivates American Indians to run for elected offices. In fact, it has encouraged me to think of running again," American entrepreneur of Indian origin Chiranjeev Singh Kathuria told IANS on telephone from Chicago.

A physician from Brown's University (Rhode Island) and MBA from Stanford (California), Kathuria made an unsuccessful bid to be a Republican candidate against Obama from Illinois. However, he hailed Obama's victory as "path breaking for second generation immigrants".

"I hope in my old age, before I die, I get to see an Indian American elected as president. It was very enriching, exciting and, at times, a trying experience to run for the US senate. It will be an experience I will always remember," said Kathuria.

Rajwant Singh, national president of the Sikh Council on Religion and Education (SCORE), said: "Obama's election represents dynamic America at ease with its diversity.

"We Sikhs are proud of this nation, and this election brings new hope to 500,000 Sikhs who have been here for the last 100 years. This victory will certainly inspire many Sikh Americans to aspire for the highest office in this country and will not deter them due to their appearance," he added.

While Obama's victory has given a boost to the political aspirations of many immigrants, for minority communities such as the Sikhs, who have been victims of hate crimes post 9/11 because some Americans have mistaken them for Arab Muslims, the victory is a definite sign of change.

Jasbir Singh Kang of the Punjabi American Heritage Society from Yuba City said: "This is a historic day for all Americans. A son of an immigrant has become president-elect. This can only happen in a great country like America.

"This is a great cultural and a historical shift in American politics, and we Sikhs look forward to working with President Obama," said Satinder Singh Rekhi, CEO of a company in California's Sacramento city and chairman of SCORE's board.

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Stock Market Turbulence - A model to follow

We live in extraordinary times. After leveraging till January 2008 and averaging till October, market participants are still gauging what hit them hard. Former Fed chief Alan Greenspan, who authored the bestseller An Age Of Turbulence, is now accused of causing much of theturbulence by keeping interest rates too low for too long and failing to check the explosive growth of risky mortgage lending. He admits he was ‘partially’ wrong in opposing the regulation of derivatives.

After years of unmonitored growth, the world is finally having to pay for the huge pile up in leverage, its casual attitude towards risk management, asset froths due to cross-border carry trade flows and step up in weapons of mass destruction (read derivatives). In a matter of months, the world has gone from a state of profound optimism to that of deep pessimism. The outbreak of US Subprime crisis in August 2007 has had a cascading effect on the world economy. Carry trade, the main liquidity driver, continues to unwind and a global flight of capital is taking place. Risk aversion has reached historic levels and even while central banks are cutting rates, financial institutions are unwilling to lend, resulting in capital turning insufficient and costly.

After nearly five years of unprecedented rise, the Indian stock market hit a roadblock in January 2008 and the Nifty’s then high of 6,350 has vanished from public memory. The tsunami of relentless selling has taken its toll on commerce. The cracks are now appearing in the profit cycle of companies. Volatility has risen sharply and it is fair to say that confidence is at an all time low. We are part of that world and theories like decoupling remain literature to be read at leisure.

History suggests that Indian bear markets last 3-4 years with up to 58% price corrections. In terms of price, we have already fallen below historical levels. Whether we will spend another 2-3 years from now in the bear zone is difficult to gauge at this point. The global economy is facing a recession and the extent of damage is such that healing could take a while. But having said that, unless one believes there is no tomorrow, economies will eventually find a way to resurface and markets will make the painful adjustment and move up again. On the brighter side, economic cycles are getting shorter.

Every dark cloud has a silver lining. There are positives to take away, even in bad times. During a slowdown, companies turn cost conscious and excesses are weeded out of the system. They get time to pause and take stock of their plans. A bear phase could often act as a healthy check and help cut down flab, which helps good companies emerge stronger. Another advantage of a bearish period is that it boosts a long term investor’s return by giving the opportunity to buy future winners at yesteryear prices. Even after the staggering fall since January 2008, Rs10 lakhs invested in Sensex companies in mid 2003 would have grown to approximately Rs30 lakhs today.

This simply re-emphasizes that equities have proved to be the best asset class in the long run.

“Most people get interested in stocks when everyone else is. The time to get interested is when no one else is.” – Warren Buffet

“For those properly prepared in advance, a bear market in stocks is not a calamity but an opportunity” – Sir John Templeton

Investors have in recent times paid the price for not being fearful when others were greedy. The reverse holds true now. The time has come to be greedy as others turn fearful. Investors with a 3-year horizon should see opportunity in these adverse times. That does not mean you rush to create wealth overnight. The best way to create wealth is to build a portfolio of fundamentally strong companies which will bounce back stronger in the years to come. When the dust settles and the world economy stabilizes, India will be among the first to race ahead. The best bargains are now available at the equity shopping mall. But deep discounts need not necessarily mean value for money in the long term.

Keeping in mind a 3-year horizon, we have built a model portfolio of 12 stocks with assigned weights. We believe IMP strikes the right mix as our chosen stocks are:

1) Companies that are adequately funded with low financial leverage and will therefore, not be severely affected by reversal in credit cycle

2) Businesses with reasonable earnings visibility even in this uncertain environment

3) Value buys that will be less damage prone to the high volatility in markets

4) Growth stories with an element of inelasticity in demand

The India story cannot be thought of without giving enough importance to rural themes. Rural India is not much susceptible to a slump in the stock market or property market. Three consecutive years of good monsoon, farm loan waiver and benefits accruing from the ‘Bharat Nirman’ and ‘Rural Employment Guarantee’ programs provide enough proof that demand will sustain even as the broader economy loses steam for some time. Some of these forma part of the IMP.

Attractive bargains often tempt people to spend more than they can afford. We advise you to resist such temptation and gradually add stocks to your portfolio. We are confident the IMP will strengthen your portfolio and outperform the benchmark (Sensex). Take your time to build a strong portfolio. After all, Rome wasn’t built in one day.

You won't get there by reading 'Now is the time to buy.’ – Peter Lynch

“Uncertainty actually is the friend of the buyer of long-term values” – Warren Buffet

A Model Portfolio of 12 stocks with assigned weights :-

1.Bharti Telecom 10.0 Market leader with high visibility; impressive return ratios

2. BHEL Capital Goods 5.0 4.2x Order backlog/Sales; well funded for executing capex plans

3. CESC Power 6.0 Capex on track; trading at 60% discount to peers

4. Cipla Pharma 4.0 Continues to outperform guidance; benefits from INR depreciation

5. Gail Oil and Gas 5.0 Increased gas supplies to drive core business of transmission

6. Hero Honda Auto 5.0 Gaining market share; riding on rural growth

7. Jindal Saw Pipes 5.0 High order book and margin improvement to drive earnings

8. M&M Auto 5.0 Rural play: Tractor and Bolero growth to remain strong; trading below BV

9. Marico FMCG 5.0 Highest growth among peers - trades at a discount; 25% sales from rural

10. Reliance Ind Oil and Gas 17.0 Commencement of KG-D6 and RPL growth drivers

11. Sun Pharma Pharma 4.0 Low risk business model in the industry; robust balance sheet

12. Tech Mahindra IT 7.0 High revenue visibility vis-a-vis peers; best play in IT

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EXPERT OPINION ABOUT CURRENT STOCK MARKET SCENARIO

During this time of turbulence in the markets, I must congratulate you for taking the wise decision to remain patient. At this time I also wanted to share with you some facts from the history of the markets in India.

It is important for all investors who invest or tend to invest in equities to take a trip down memory lane, particulary during times when the investor feels tired and let down by the market. We need to be aware that this kind of despair is not new in the market but public memory being short, one tends to forget the days of despair.

Let me take some of your precious time to draw your attention to the table below depicting the peaks and bottoms of the Sensex in the recent past. Only the recent past is given here because it is relatively easier to connect to it.

SENSEX HIGH DATE SENSEX LOW DATE

4546 02.04.1992 1980 27.04.1993

4643 12.09.1994 2713 04.12.1996

6150 14.02.2000 2156 03.10.2001

6249 09.01.2004 4227 17.05.2004

12671 11.05.2006 8799 14.06.2006

14723 09.02.2007 12316 16.03.2007

21206 10.01.2008 8701 24.10.2008


I hope that you remember the historic bull phase of early 1990s charging to 4546 points from below 1000 points during the Iraqi invasion of Kuwait, in April 1992. The most interesting development of this period was the amazing growth of investor population in the country and stock investing becoming fashionable for the first time, with new Stock Exchanges mushrooming in every nook and corner of the country. When the hero (or villain?) of the great bull market, Harshad Mehta was caught by the law enforcing agencies, the market collapsed like a pack of cards crushing millions of new investors who had entered the market during the peak time, leaving them in utter agony. The pain was much more than what we are seeing these days. The market mood was incredibly low and many investors along with doomsayers predicted the end of the market and the end of an asset class called equities. As the table shows, in a short span of one year from April 1992 to April 1993, investors found their wealth coming down by more than 55%. Many fortune seekers who borrowed and invested and many others who had invested their life time savings for the marriage of children to retirement life, saw their wealth disappearing in one year’s time. The painful part was that though the index came down by only 55%, many of the shares manipulated by operators came down to zero value. This tragedy occurred at a time when market regulations were weak and SEBI had no effective punitive power.

At some point of time you must have felt disappointed and angry at the way the market has been moving. Now look at the table again. In a matter of seventeen months the very same market bounced back to touch 4643 points. Think of all those who sold in disappointment during April 1993 when the index was at 1980 points! The market went up by more than 100 percent in 17 months! Just have a look at the market peaks alone. The next peak was at 6150 (in 3 years 2 months), the next at 6249 (in 2 years 3 months), then at 12671 (in 2 years), then at 14723 (in 8 months) and then at 21206 points (in 10 months). My intention is not to predict when and to where the Sensex will bounce back in the days to come, but to point out that all those who courageously got into the market in each of the troughs and waited patiently made incredible wealth as the market always peaked above the previous peak.

Now what happened to those who invested during the peak time in each of the market peaks – you know many new investors tend to start investing at the peak – they saw their wealth going down by 40 to 60 percent! Compare this to the wealth of all those who got into the market when the market touched bottom every time! Indeed, it requires courage to invest when every other investor leaves the market.

In this backdrop we must also analyse what is happening in the market that is pulling the Sensex down to 8700 points. Many foreign institutions and hedge funds have become bankrupt in their home countries forcing them to sell Indian assets at throwaway prices pulling our market down. One serious difference is that this time we have a global magnitude to this crash in relation to liquidity.

The one who can invest now, particularly in companies which are sitting with lots of cash in their balance sheet will make extraordinary returns when the dust settles down.

I felt that it is my duty to share with you some facts to enable you to look from a better perspective at the current events. Of course it is difficult to predict market tops and bottoms, but I wish to assure you that this is not the end of equity markets, and it will never be.

An article by Mr.George Geojit Securities

This Week's Honest Truth - Flowers for Dr. Reddy

It is time to send a bouquet of roses to Dr. Y. V. Reddy.
A really large one.

As a gesture of "Thank You" from all of us for keeping India afloat at a time when the world is reeling under the weight of a scary global financial crises.

Dr. Reddy retired as the Governor of the Reserve Bank of India on September 5th, 2008 but his acts - and actions - while at the helm of the RBI has, in my opinion, saved India from a total meltdown. The meltdown that we are witnessing in the US and Europe and in countries like Iceland which got carried away with access to low-cost easy money.

Dr. Reddy's caution was typified by the old-fashioned suits that central bankers wear. His old-cut and boring grey and dark suits were reminiscent of a visit to the house of a disapproving uncle. An uncle who always wanted to know why the child's hands were dirty and the clothes stained with mud.

The never-ready Dr. Reddy was constantly criticised for not allowing India to dance with the winds of change that had overtaken the global financial markets. The policies of the RBI were often at loggerheads with what the new-age economists wanted. Free markets - they urged - free up banking - free up everything.


---------------------------------------

But Dr. Reddy worked with one goal in mind: how to keep India and the Indian financial system as immune as possible from the lack of risk control that had enveloped the world. His more well-known peers had succumbed to pressures from the "real" world: The world of unreal financial engineering. The world ruled by the financial geniuses who influenced global economic policy for their personal gain. And pursued it under the guise of "free-markets".

The International Herald Tribune reported that Gordon Brown, now the Prime Minister of UK and the cheerleader of the rescue pack for the European financial markets, was vehemently opposed to tighter regulation while Mr. Brown was UK's financial representative. Mr Brown's agenda – the article suggests – was to see that London remained the capital for financial transactions and any regulation would threaten that objective. So, lax regulation it was – and the UK public is paying the price for financial innovation.

Alan Greenspan, the Chairman of the Fed, had long ago given up his conservative view of the world. He wore the ragged suits and the old fashioned glasses of the central bankers but his actions of bailing out anyone in trouble and printing money wore little resemblance to the characteristics associated with a central banker. His successor, Helicopter Ben, seems to have surpassed the Master in a short period of time.

But Dr. Reddy did not budge.
And today India can sleep well because – despite what you hear on the idiot box or read in print – Dr. Reddy's job of being a central banker has kept India from being part of the crisis that has kept central bankers – globally - awake throughout the night as they try to figure out what to do.
A crisis that has forced leaders of governments to work on weekends as they huddle together to find band-aid solutions to this crisis of confidence.

India's problems are really of little significance relative to the global crises. Our economy is not crumbling. Our banks are not leveraged. Our consumers are not in debt the way they are in other parts of the world. The problems we have – and we do have them – are of the "Made in India" kind because Dr. Reddy did not allow us to import – duty free – the "Made in Everywhere Else" problem. As a country we still get confused between making policy for the sake of making policy' or making policy with an end objective in mind. Our political leadership, with an election around the corner, looks hesitant and seems to have lost confidence in all the PR stuff they churned out about India Shining, Resurgent India, or !ncredible India.

A few weeks ago, Bloomberg news reported that Chinese Premier Wen Jiabao told a gathering of bankers and corporate executives at a World Economic Forum gathering in Tianjin, "When economic and financial crisis occur, economists and entrepreneurs, people and politicians, should be confident," Wen said. "At the moment, confidence is more precious than gold."

Ahead of the curve
Dr. Reddy had loads of confidence. And acted with determination.

Central bankers have a tough job. They have to protect the value of their country's currency; they need to ensure that inflation does not get out of control; they need to support economic policies that help create jobs.

Politicians get elected by promising the impossible. "Don't worry", the politicians tell the voters, "We will make sure you get jobs at great salaries - and that the prices of essential good will not increase. We will make India a great economic power."

While on the election campaign trail the politicians also promise things like free loans, free rice, or some guaranteed employment schemes. To make life more interesting the politicians may burn a few places of religious worship along the election trail. Occasionally, they will hassle people from some other state who seek a job in their "mother" state. Having left their voters a bagful of candies, the politicians tend to disappear for five years till the next elections.

And once the politicians are gone for five years, the central bankers are left to do the dirty work.

The central bankers are left to worry about the effects of a generation of diabetic patients overstuffed with sugar-coated sweets and chocolates – sometimes laced with adulterated ingredients.

The jobs the politicians promised need to be paid with currency notes.

The handouts the politicians declared and the promises they made - to build roads, bridges, factories - need to be paid for in currency notes.

In most instances, what the government collects by way of taxes is not good enough to meet the costs of all the promises. The RBI has to print the notes to plug the gap, the deficit. The RBI has to print paper currency to pay the bills.

And printing too many notes can lead to a situation where inflation gets out of control.
And if inflation gets out of control, the value of the currency falls. If currencies lose value, it can lead to inflation.

Sometimes, with a view to generating quick growth – another wonderful point to discuss when an election is on the horizon – the policy makers in the government want "growth at any cost". Usually that means asking the central bank to lower interest rates in the country. This allows people to buy what they really cannot afford to buy – but now can afford to buy because the cost of borrowing (the famous EMI) is lowered.

We witnessed the debate played out in the media over the past two years. The Ministry of Finance wanted interest rates to be reduced and the RBI said "no".

Lowering interest rates, felt the RBI, would lead to a lack of pricing discipline and risk assessment by the banks. The RBI was under tremendous pressure to reduce interest rates. They did not. Since 2006 they raised interest rates. The RBI raised the amount of capital that banks had to keep aside against loans given for homes, loans given against real estate projects, and receivables against credit cards. They controlled the borrowings of Indian banks from international sources. The RBI was not keen to see India hostage to an unfriendly world. They, like a true central bank, were concerned about what could go wrong when and if the world turned. Not about the rewards of being a friendly central banker.

(And by the way the RBI has been saying "no" to P-Notes since December 2003. Remind me to send Dr. Reddy a bouquet for that, too.)

Saving India from financial catastrophe.



This chart shows the India 10 year Bond Yield (dotted orange line) and the Repo Rate (the rate at which banks borrow from the RBI). The period between the two red vertical lines was when Dr. Reddy was the RBI governor. Dr. Reddy was making money expensive to control a super-fast economy.

From default to choice
India has been witness to many crises in the past. And some pretty big ones after we began on our own economic reforms in 1991.

There was the Tequila crisis when Mexico went bust in 1994.

There was the Asian Crisis when the magical Asian Tigers went bust in 1997.

There was the LTCM collapse which led to South Korea and Russia going bust in 1998.

In each of these crises, the central bankers of these countries had set themselves up for the fall. They had allowed the companies and banks under their jurisdiction to borrow excessively and rely on foreign capital. While the world was greedy and no one priced risk correctly, all these countries enjoyed boom years. When risk got re-priced – as is being done now – and capital was in short supply, all the Salsa dancers and Tigers sunk into disaster.

But, during those crises, India was still a relatively closed economy. Our total trade with the free world was less than 10% of GDP for a long time. Today it is over 25% of GDP. India is now a more open economy.

The RBI has allowed Indian individuals to invest overseas; they have allowed us to use Indian credit cards anywhere in the world; they have allowed Indian companies to buy companies overseas.

The uncle has had no problem letting the child play in the mud – but he has first used a stick to ensure that the mud is not quicksand.

But that did not make our finance companies happy. Like the finance companies monitored by Mr. Gordon Brown during his tenure, our "Made in India" finance companies wanted India to have access to any and all capital. The colour of money is green, they said, why should the RBI care where it came from.

Thank god, the RBI did care.

Thank god, Dr. Reddy did care.

Unlike the central bankers in Iceland, who must have been so enthralled by that classic line from "Gone with the Wind": "Frankly, my dear, I don't give a damn"

The top 3 banks in Iceland borrowed US$ 60 billion from the global financial markets. The value of their liabilities is 12x the size of Iceland's GDP. Their foreign currency reserves are only US$ 3.7 billion.

Now the top 3 banks in Iceland are bust.

And so is Iceland.

It is seeking US$ 8 billion from the IMF, Russia, and some Nordic countries. CLICK HERE to read what my colleague had to say about Iceland in 2006).

If Dr. Reddy had not done what central bankers are supposed to do – the Indian banks would have all been in an Icelandic mess.

Remember: financial geniuses – in India and overseas - have generally been rewarded for some mythical annual profit and have left the mountains of debt to be cleaned up by tax payers' money from bailout programmes. Their rewards stay with them. And they live in prime health. Sub-prime is the problem of the public.


---------------------------------------

A new era, a new response
But despite all the great work that Dr. Reddy has done, India still got hit a bit. Some cracks have appeared in the system.

The stock market continues to show its true colours as a casino rather than a place where savers (like you and me) provide capital to companies to build long term businesses. The P-Notes are the mysterious Phantoms who have left the Opera – and us wailing as we see a meltdown in the Indian stock markets.

Yes, some companies were over extended and some banks did not have great pricing models for the risks they took. Many banks focused on market share, rather than profits. They will stay solvent and they will not fail – but these banks are not likely to see the profit growth the investors in their shares had expected. A minor crisis. But an expensive one if you own shares in these "market-share" banks.

This is a new era and it requires a new response.

The new Governor of the Reserve Bank of India, Mr. Subbarao, has responded firmly. He has thrown money back into the system and started the process of lowering interest rates.

Dr. Bimal Jalan, who was the RBI Governor till 2003, lowered interest rates in India as a response to the technology bubble, UTI going bust, 9/11, and SARS. The situation needed some money pumping. The plumber was there to turn on the faucet.

Dr. Reddy, who took over as the Governor of the RBI in September 2003, inherited a weak economy but began to see significant capital inflows and solid economic growth since 2004. Once the plumber sees the tap flowing fully, he reduces the pressure of the water flow. Sometimes he shuts down the tap. Dr. Reddy set forth the appropriate response and began the long journey of increasing interest rates and slowing the pace of financial innovation (see Chart 1).

Dr. Reddy had stalled the introduction of the Credit Default Swap markets, one of the root causes of the global financial crisis. If CDS was allowed in India, we would have been an Iceland by now! Why am I so sure? Look around you and see what the "market-share" banks have done – would they not have enjoyed an opportunity to make another quick quarterly profit – and leave the garbage for someone else to clean up? That is the DNA of the current financial reward-me-now generation of market-share bankers.

On October 20th Prime Minister Manmohan Singh read out a statement in Parliament to confirm that India is quite safe from the turmoil. "Our banks", said the Prime Minister, "both in the public sector and in the private sector, are financially sound, well capitalised, and well regulated."

We believe that – and we know we have the RBI and Dr. Reddy to thank for that.

Thank you, Dr. Reddy, and I hope you get more flowers from the bankers whose very banks you have saved.


Courtesy: Equity Master Home page

Tax free wealth

LATELY, I have been thinking a lot about the Lehman crisis . Spending money that they didn't have and going beyond their means is one of the main reasons for their situation today. In fact that is the cause for the current economic crisis in the US.

When I see all this happening, I can only remember the good old days. Then, karz was bad. People looked down upon those who took loans. Parents would not give their daughter's hand in marriage to a man with loans.

But of course, the times have changed now. Everyone I know has a loan. The buzz word is EMI (equated monthly installment). Today, you can buy everything on EMI - a house, a television, even an i-Pod. In fact I know of someone who just bought a fancy BMW 3 series on EMI, instead of buying a cheaper car outright with cash. I mostly prefer to take public transport, but then I am an old man with old thoughts!

Anyway, coming back to what caused the crisis. Imagine having Rs 2 lakh in your bank account, no regular income, yet buying a house worth Rs 65 lakh, in the hope of selling it for a higher price. Even if the price of the house fell by just 5 per cent (that is Rs 3 lakh), you will go bankrupt. This is what Lehman Brothers did; with around USD 20 billion they went and bought assets worth over USD 600 billion. Isn't it suicidal and simply foolish?

I am sure things would have been different, had I been the head of Lehman brothers. But who wants an old conservative man like me to head a complex financial institution.

But there are a few lessons that we can learn:

1.Live a balanced life and avoid overspending.

2. Don't buy things we don't need.

3. Don't buy Branded goods.

4. Don't buy excess Food, Cloths, Cosmetics, Footwear, electronics and Fashion accuracies
just think before you buy.
Tip: World still has a lot of growth ahead and the future holds immense opportunities for us. Let us make the most of it and save and invest it wisely instead of wasting our precious little on things we don't need.

5. Try to balance life with work (No one is happy to work in their professions).

6. Don't stress out yourself, after work try to do some extra activities like swimming, yoga, walking, running where you can divert your mind from stress.
A thumb rule: Health is more important than money.

7. Try to understand each other (Wife and Husband) in financial matters and help each other.

Tip: As soon as you get your monthly salary, set aside a fixed amount, usually 35 per cent, for insurance, savings and investments. You can then spend the rest.

8. Not all loans are bad. Loans that are 'need based' (home loans, education loans) can always find a place in your finances against those that are largely 'want based' (Credit cards, personal loans, car loans).

9. Borrow only if repayment is financially comfortable.
A thumb rule: Keep EMIs within 35 to 45 per cent of your monthly income

In that respect, there is one American who I really respect - Warren Buffet. He has lived in the same ordinary house for over three decades, drives his own medium sized car and leads an extremely regular 'middle class' life. If that's all it takes for the richest person on earth to be happy, why do all of us need to take extra stress just so that we can get things which aren't even essential?

Health is Wealth Its Tax Free...

Free Voip Phone calls with Nexus123‏

Today's we will be discussing about another voip provider "Nexus123". The key part about Nexus123 is that, it is offering free 10 minutes of free voip phone calls to anywhere in world. Yes, you can make 10 minutes free voip phone calls.

When some voip provider offer free minutes, the best part is that it can be used for making free calls to destinations which have very high calling rates. Some African and Asian countries where calling rates can also be called using Nexus. (Calls to Cuba will last for 3-4 minutes, actually calling rate to Cuba is very high).

Nexus123 Saver from Nexustel is a service that will allow you to make long distance calls from your cell phone or any phone you want. Most importantly, there is no need to dial an access key or PIN so you will save time.


To get your free 10 minutes,

1. Visit Nexus123, fill your details. You need to enter your correct phone number, email address. I am not sure if it is only available to people living in USA and Canada. However, calls can be made to any part of world.

2. Check your email and click the confirmation link in order to verify your email.

Your free account is active now. To make free calls you need to dial the access number. A list of access numbers can be found on Nexus123 website.

No need to pay anything in order to get free minutes.
No credit card required to register for free account.
No maintenance fees or hidden charges of any kind.

Free VOIP Solution Free calls Worldwide: 600 Mins Free Calls to India#links

Free VOIP Solution Free calls Worldwide: 600 Mins Free Calls to India#links

Free calling with QtTel‏

For those people with slow internet connection such as dial up QtTell is a nice solution. They can now enjoy the cost savings of voip telephony without a broadband internet connection. QtTel web makes it possible to use your normal phone to make internet calls. No download, no installation, no headset is required. The maximum calling time is 5 minutes per call.

To make a call just enter your telephone number and the number of the person you want to call and click Call. Immediately your phone will ring and a voice will ask you to hold while your call is connected , in seconds your call is connected and you can continue to make internet call using your normal telephone.

Be prudent in fixed income investments

As stock markets world-over witnessed declines, Indian investors while focusing on their equity portfolio should also take a re-look at their fixed income investments and restructure it according to the changes.

The income tax rate slabs for the current financial year have been revised thoroughly for individuals. The marginal rate of 30% of income is applicable only for individuals with income above Rs 5 lakh, while the basic exemption limit has been raised substantially upwards for male, female and senior citizen assesses.

If this year’s income was the same as the last financial year, then the tax payable will be substantially lower—mainly because the rate of tax at lower levels of income has been reduced drastically.
Secondly, the interest rates on options like bank fixed deposits , fixed maturity plans (FMPs) of mutual funds, corporate fixed deposits among others have gone up by more than 2-3 % per annum.

But the interest rate on schemes like PPF, National Savings Certificates , Kisan Vikas Patra, Post Office Monthly Income Scheme as well as taxable government bonds and Senior Citizen Savings Scheme, has remained static at 8-9 %.

Thirdly, inflation, which has risen lately, has started showing signs of tapering off. It may come down over the next few months, which will mean that the interest rates too will start falling. If interest rates fall, it makes sense to commit to fixed income schemes offering higher rates of interest for a longer term.

Premature exit options and withdrawals before maturity are not available in National Savings Schemes and 8% taxable government of India (GOI) bonds. In respect of all other fixed income options, an investor can withdraw or close prematurely the lower yielding investments and invest at current high rates.

We should find out whether it would be beneficial to withdraw from these options and invest in higher yielding options available. The important factor that would influence this decision is the rate of taxation on one’s income. We will bifurcate the investors as those who are required to pay tax at the rate of 10% or lower and others at the rate of 20% or more.

Withdraw the maximum amount from your PPF account and invest in bank FDs and FMPs of longer maturities of two years or more. If you can close the account and withdraw the entire amount, then it’s recommended.

Before maturity, withdraw your investments from the Senior Citizen Savings Scheme, even if you need to pay a penalty of 1%, and invest the amount in bank FDs offering 10% or more. Tax deduction at source (TDS) on a Senior Citizen Scheme, besides the interest rate of just 9% per annum, is a big irritant for senior people.

Hence, avoid this hassle and invest in different branches of banks. If you ensure that the interest on your FDs with a bank does not exceed Rs 10,000 in a financial year per branch, then TDS on interest can be avoided.

Consider premature renewal of your old bank FDs earning a lower rate of interest . Banks consider this without any penalty and roll over your FDs with them at the current interest rate. Long-term deposits of say three years or more are preferable.

FMPs are the best option for this category of investors. With draw your money from FDs postal schemes among others before maturity and invest in FMPs. The expected yields are even higher than the interest rates on FDs. The tax adjusted yields on FMPs of more than one year is much higher compared to FDs.

The difference between the amount received and the amount invested is considered as long-term capital gains and it is taxed at a rate of 10% without indexation of cost of acquisition or 20% with indexation benefit—under the growth option. As inflation is ruling high, the application of double indexation benefit to a 19-month FMP which will mature after March 31, 2010, will mean a taxfree income at the rate of more than 10% per annum.

Investors who will pay tax at 20% or more
Long-term FMPs should be preferred to short-term ones as the interest rates are likely to go down after a few months. The growth option would be a better one compared to the dividend pay-out option as the fund will be required to pay a Dividend Distribution Tax which is currently 12.5% plus a surcharge and education cess among others (effectively 14.1625%).

For investors parking funds in monthly and quarterly interval FMPs, the dividend pay out option will be better. FMPs do not guarantee a fixed rate of return and there is a risk of getting lower yields compared to indicated yields.

RBI cuts CRR by 100 basis points

The Reserve Bank of India on 15/10/2008 Wednesday cut the Cash Reserve Ratio (CRR) further by 100 basis points to 6.5 per cent of NDTL with effect from the current reporting fortnight that began on October 11, 2008. This measure will release additional liquidity into the system of the order of Rs.40,000 crore.

On Tuesday, October 14, 2008, the RBI decided to conduct a special 14 day Repo at 9 per cent per annum for a notified amount of Rs 20,000 crore with a view to enabling banks to meet the liquidity requirements of mutual funds. Rs 3,500 crore of this facility was utilised by banks yesterday.

Further, the Reserve Bank announced this morning that this 14 day repo facility will now be conducted every day until further notice upto a cumulative amount of Rs 20,000 crore for the same purpose. Banks obtain liquidity from the Reserve Bank under the Liquidity Adjustment Facility (LAF) against the collateral of eligible securities that are in excess of their prescribed Statutory Liquidity Ratio (SLR).

It has been decided, purely as a temporary measure, that banks may avail of additional liquidity support exclusively for the purpose of meeting the liquidity requirements of mutual funds to the extent of up to 0.5 per cent of their NDTL. This additional liquidity support will terminate 14 days from the closure of this special term repo facility announced on October 14, 2008. This accommodation will be in addition to the temporary measure announced on September 16, 2008 permitting banks to avail of additional liquidity support to the extent of up to 1 per cent of their NDTL.

Interest Rates on FCNR (B) Deposits

Currently, the interest rate ceiling on FCNR(B) deposits of all maturities has been fixed at Libor/Euribor/Swap rates for the corresponding maturities minus 25 basis points for the respective foreign currencies. In view of the prevailing market conditions, RBI has decided to increase, with immediate effect, the interest rate ceiling on FCNR (B) deposits by 50 basis points, i.e., to Libor/Euribor/Swap rates plus 25 basis points.

Interest Rate on NR(E) RA Deposits

Currently, the interest rate ceiling on NR(E) RA for one to three years maturity should not exceed the Libor/Euribor/Swap rates plus 50 basis points for US dollar of corresponding maturity. In view of the prevailing market conditions, RBI has decided to increase, with immediate effect, the interest rate ceiling on NR(E)RA deposits by 50 basis points, i.e., to Libor/Euribor/Swap rates plus 100 basis points.

Banks will be allowed to borrow funds from their overseas branches and correspondent banks up to a limit of 50 per cent of their unimpaired Tier I capital as at the close of the previous quarter or $10 million, whichever is higher, as against the existing limit of 25 per cent.

The above measures will be reviewed on a continuous basis in the light of the evolving liquidity conditions.

The Reserve Bank is monitoring developments in the financial markets closely and continuously and would respond swiftly and even pre-emptively to any adverse external developments impinging on domestic financial stability, price stability and inflation expectations. The Reserve Bank is committed to maintaining financial stability and active, and flexible liquidity management using all policy instruments is an integral part of this objective.

ICICI Bank: Fear psychosis comes to rest

After a series of damage control measures, the ICICI Bank authorities seem to have dispelled all the negative impact of the malicious rumours
against it.

The stock which was down 20 per cent last week, is now up by 20.91 per cent on the NSE. Around 1pm, the volume of trading for ICICI in the F&O market is 1 crore 46 lakh while it is 2 crore 5 lakh in cash market.

If volumes are any indication (on Monday), investors are reposing faith on the bank once again. In the derivative market, the stock is being traded at a premium to the spot.

“Both volumes are good. In view of research reports by global agencies, the fear psychosis is over. It is worth investing in the stock. Buy at every decline,” said Alex Mathew, head – research, Geojit Financials.

In a press note, Standard & Poor's Ratings Services said today that credit fundamentals of ICICI Bank continue to be sound, backed by strong market position in the domestic banking industry, adequate financial profile, which is supported by its healthy capitalization, satisfactory loan quality, and diversification.

The overseas loan and credit derivative portfolio of the bank, including its overseas subsidiaries, is predominantly to Indian companies for their Indian and overseas operations and hence its quality is largely dependent on corporate credit quality and economic conditions in India, S&P Ratings Services adds.

The bank through its UK-based subsidiary also has a sizeable US$3.5 billion investment portfolio. This includes about $80 million exposure to Lehman Brothers.

According to S&P, likely credit or marked-to-market losses on its overseas exposure can be easily absorbed within its financial profile, considering the size of its balance sheet of about $100 billion and capital base of about $10 billion.

Currently, the bank has a capital adequacy ratio of 13.9 per cent as against SBI’s 12.6 per cent and HDFC’s 13.6 per cent. As per RBI norms, it is 9 per cent only.

In a press statement the CEO and MD of ICICI Bank said, "We (ICICI Bank) have evidence of organised attempts to destabilise the bank. But our bank, India's largest in the private space, is over-capitalised and is one of the strongest financial institutions in the world. We have not seen any drastic decline in deposits in the past few weeks

Sensex tumbles below 12000 - Rupee closes at 47.80 per dollar

The rupee slid to its lowest in more than 5-½ years on Monday as local shares dived nearly 6 percent, closing at 11801.70, triggering fears of an accelerated outflow of foreign funds, while dollar demand from importers and oil firms weighed. The partially convertible rupee ended at 47.80/81 per dollar, 1.5 percent weaker than its 47.0750/0850 at close on Friday. It slumped to 47.85 during the session, its lowest since Feb. 14, 2003.

The rupee has lost 17.6 percent so far this year. "The rupee was very volatile today, the Sensex was down. The dollar is stronger overseas. Importers and oil firms were buying dollars and there are no dollar inflows," said K.N.Reghunathan, a currency trader at state-run Union Bank of India.

"If this trend continues then we may see the rupee touch 49 against the dollar in the near-term," he added. India's main share index or Sensex ended down 5.8 percent as concerns grew of an acceleration in foreign fund withdrawals amid fears the credit crisis could lead to a global recession.

FREE CALLS TO INDIA WITH INDAFON

IndaFon provides free international calls to India.

When you sign up to IndaFon, you need to put the promo code "voipguide" in the Promo Code Box. This will give you 15 minutes of free calls immediately.

You can invite your friends with Indafon's referral system. When your invited friends signs-up, for each new member you will get 10 minutes of free international calls. The invited person gets 10 minutes free at the same time.

That means the more friends you bring under your invite, you will get 10 mins of free international call credit.

Indafon is purely a PC to Phone calling service and you have to use the flash phone they have under the account page.

Combine both Callsdiscount and Bezecom‏ for Free Voip Calls

Now we will discribe how to combine two sites Callsdiscount and Bezecom.

We added a new Bezecom account with the phone number 0033176722656, which is the French phone number for using Callsdiscount free countries. The bezecom number is: 531833 .

When I live in Peru I need to call the local bezecom access number in Lima: 1-7185055 and then the bezecom number is: 531833

Now you have access the all Free countries for the french version of Callsdiscount.

Later I will list all these free countries but you can find them on the french version of the callsdiscount site.

Of course you can use all countries which have a Bezecom access number.

25 extra free voip destinations with combination of Voipbuster and Callsdiscount‏

You want more then 25 extra free destinations with Voipbuster?
You dial the Swiss access number for Calldiscount (+41-445050790) and dial your wanted number ending with #.
See for instructions: http://www.callsdiscount.com/
Choose Switzerland

Extra free countries:
- Turkey
- Switzerland - Mobile
- Romania + Romania - Mobile
- Sweden
- Slovakia
- Poland
- Luxembourg - Mobile
- Mexico
- Greece
- Germany
- Brazil
- China + China - Mobile
- Austria - Mobile
- Australia - Mobile

and many more!

Free Voip calling with Bezecom

Bezecom (www.bezecom.com) is global supplier for international call services between communities. Bezecom is currently in beta. With Bezecom you can make free international calls to USA, Canada, Isreal.

Lets see how this VOIP Phone service works:

You will receive a global number – through access numbers that cover main destinations in the world (at this stage they have access numbers in 25 countries).

People can call you by dialing a local call. You can either forward your call or receive calls on your softphone.

You can receive your calls free of charge to the following destinations:

a. Israel, Britain, and France – landlines
b. USA and Canada – landline and cellular phones
c. PC or IP phone that connected to the internet

That means you can forward call to one of those destinations. You can actually convert this service into a totally free VOIP Phone service.

Lets see how we do this.

1) You are in Isreal, Britain (UK), France or USA/Canada. Forward your calls to landline/Mobile.
2) Ask your friends or relatives to dial the access number in their country.
3) Then they should enter your Bezecom number.
4) You and your friend are now connected.

You can even use this service with your being on PC and other party using access number. Unfortunately, this service doesn't work in India. I hope they add more asian numbers to the list.

Remember, There is no limit to the limit of the calls but the duration of the call the limited to 10 minutes and included infomercials. We guess you can call the same number again and again.

Free PC to Phone International Calls with GoogleTalk & Talkster

Free international calling service is hard to come by, after all, commercial telephone companies or phone communication operators need to pay connection fee to receiving called party’s providers no matter the calls are made to land line, cell phone or satellite phone, and regardless of it’s a trunk, toll or VoIP calls. Lots of sites that offer free worldwide phone calls has now defunct, e.g. AllFreeCalls. Most established PC-to-Phone or VoIP operators such as MediaRing gives free calls to limited countries or destinations as promotion to attract users.

There is another opportunity for free international phone calls in from PC to phone style, by using Google Talk, and Talkster integration with GTalk2VoIP. The partnership, using ad-supported business model, allows callers from anywhere worldwide in every countries free international, long distance and group conference calls by leveraging on Google Talk. And callers able to call to more than 30 countries supported by Talkster’s network completely free, or partially free (caller portion) for anywhere else in the world.

The free international calls by dialing from GTalk instant messaging client is especially beneficial to areas with strictly regulated VoIP and telecom practices, such as India, Africa and Middle East countries such as United Arab Emirates, where using Talkster through GTalk2VoIP will let people communicate freely between mobile phones, landlines and PCs, even in countries not currently supported through Talkster’s ad supported free calling service.

To take advantage of free international calling via Google Talk via Talkster, follow these steps:

Run Google Talk desktop client. Download and install Google Talk if you haven’t.
Click on the Add button on Google Talk to add contacts into Google Talk, as the same usual way.
Type in the phone number of the person you want to call in the following format:
complete-full-phone-number@talkster.gtalk2voip.com

The complete full phone number must include country code and area code. For example, a telephone number in UK will have the following phone number assigned in GTalk: 442071234567@talkster.gtalk2voip.com, or for USA, 12125551212@talkster.gtalk2voip.com.

A confirmation instant message will be sent by Talkster for instructions together with a local Talkster call-in number on how to place the free international calls for both calling party and called party. Typically, Talkster assigns a local Talkster number for calling party (the person you want to call) in their country, which allows he or she to incur only cheap local call charge (which may be free in some countries).

To place the free international call to your friend, click on friend’s number in the Google Talk Contact List.
Click on the Call button to start the call.
Talkster will dial out to the calling phone number from Google Talk.
When the calling party answers, there is 10 seconds for caller to check to see if he’s available to talk, and to instruct the answering party to hang up and callback using the caller’s local Taskster phone number in that country.
Wait while the calling party hangs up and calls back using the Talkster local number for the caller. Ensure that the calling party knows this number, else send the phone number to him or by email or IM. If the phone number is a mobile phone number, an SMS with Talkster call-in number will be sent to the cellphone too. The call recipient or the calling party must calls back in for the international call to be connected.
Note that Talkster uses Caller ID to recognize who to connect the call to, so Caller ID must not be disabled or suppressed.
As soon as the ‘original calling party’ calls in, Talkster and GTalk2VoIP connect both caller and called party into an international call where talkers can talk as long as you want for free.
When finished talking, just end the call. Users are welcome to call as often as possible.
Currently, Talkster has local numbers in more than 30 countries, including Argentina, Australia, Austria, Belgium, Canada, Chile, China, Czech Republic, Denmark, El Salvador, Finland, France, Germany, Hong Kong, Hungary, Ireland, Israel, Italy, Latvia, Lithuania, Luxembourg, Mexico, Netherlands, Norway, Peru, Poland, Romania, Slovakia, Slovenia, Spain, Sweden, Switzerland, United Kingdom and United States.

Calling fixed line, landline, mobile, cell or any phone number of supported international destinations or countries from Google Talk via Talkster and GTalk2VoIP integration is always free, and no credit card, no sign-up and no registration required, no catches, no limites, and no conditions attached, and free usage is unlimited. Users can can call as often as you like and talk as long as you like.

Rebtel Hack: Making calls to Blocked Numbers - Free International Calling Guide

Rebtel Hack: Making calls to Blocked Numbers

Wipphone offers free calls to India

Wipphone offers free 30 minutes to call any country.

To get 30 free minutes, you need to register with Wipphone, download their voip application (softphone). Now you will be able to make free calls worth 30 minutes. Its a free Pc to phone calling service.

Wipphone also offers business voip services. To call a wIPphone user, just dial his/her 10-digit wIPphone number.
To call a mobile or landline, just dial :
00+country code+telephone number

You Tring provides free calls to India

Enjoy free PC to phone calls at You Tring.
Phone bills driving the daylights out of you?

No more unpleasant surprises!

Register at You Tring

YouTring brings to its users (Tringers) an exciting 'earn-as-you-surf' plan and Tringers would be awarded free points called Trings (Ŧ) as shown below. These points can be redeemed by you to purchase any items.

Free Pc to Phone Calls ! Free VOIP Phone Calls to India, WorldWide !: Get 5$ calling credit by Tabrio : Call anywhere free

Free Pc to Phone Calls ! Free VOIP Phone Calls to India, WorldWide !: Get 5$ calling credit by Tabrio : Call anywhere free

Free VOIP Solution Free calls Worldwide: Tuitalk offers free international voip calls#links

Tuitalk offers free international voip calls

GOOGLE - The worlds most powerful search engine is now 10 years old

When Larry Page and Sergey Brin founded Google Inc on September 7, 1998, they had little more than their ingenuity, four computers and an investor's $100,000 bet on their belief that an Internet search engine could change the world.

It sounded preposterous 10 years ago, but look now: Google draws upon a gargantuan computer network, nearly 20,000 employees and a $150 billion(Dh550.50 billion) market value to redefine media, marketing and technology.

Perhaps Google's biggest test in the next decade will be finding a way to pursue its seemingly boundless ambitions without triggering a backlash that derails the company.

"You can't do some of the things that they are trying to do without eventually facing some challenges from the government and your rivals," said Danny Sullivan, who has followed Google since its inception and is now editor-in-chief of SearchEngineLand.

Google's expanding control over the flow of Internet traffic and advertising already is raising monopoly concerns.

The intensifying regulatory and political scrutiny on Google's expansion could present more roadblocks in the future.

Privacy watchdogs also have sharpened their attacks on Google's retention of potentially sensitive information about the 650 million people who use its search engine and other Internet services like YouTube, Maps and Gmail.

If the harping eventually inspires rules that restrict Google's data collection, it could make its search engine less relevant and its ad network less profitable.

To protect its interests, Google has hired lobbyists to bend the ears of lawmakers and ramped up its public relations staff to sway opinion as management gears up to conquer new frontiers.

"Google will keep pushing the envelope," predicted John Battelle, who wrote a book about the company and now runs Federated Media, a conduit for Internet publishers and advertisers. "It's one of the things that seems to make them happy."

In the latest example of its relentless expansion, Google has just released a Web browser to make its search engine and other online services even more accessible and appealing. Not every peripheral step has gone smoothly, though; several of the company's ancillary products have flopped or never lived up to the hype.

Extending Google's ubiquity to cell phones and other mobile devices sits at the top of management's agenda for the next decade.

But the lengthy to-do list also includes: making digital copies of all the world's books; establishing electronic file cabinets for people's health records; leading the alternative energy charge away from fossil fuels; selling computer programmes to businesses over the Internet; and tweaking its search engine so it can better understand requests stated in plain language, just like a human would.

Force for good

"There are people who think we are plenty full of ourselves right now, but from inside at least, it doesn't look that way," said Craig Silverstein, Google's technology director and the first employee hired by Page and Brin. "I think what keeps us humble is realising how much further we have to go."

Page and Brin, both 35 now and worth nearly $19 billion apiece, declined to be interviewed for this story. But they have never left any doubt they view Google as a force for good - a philosophy punctuated by their corporate motto: "Don't Be Evil."

"If we had a lightsaber, we would be Luke (Skywalker)," Silverstein said.

A Star Wars analogy can just as easily be used to depict Google as an imposing empire. It holds commanding leads in both the Internet search and advertising markets.

The company processes nearly two-thirds of the world's online search requests, according to the research firm comScore Inc., and sells about three-fourths of the ads tied to search requests, according to another firm, eMarketer Inc.

The dominance has enabled Google to rake in $48 billion from Internet ads since 2001. Google hasn't hoarded all of that money: the company has paid $15 billion in commissions to the Web sites that run its ads during the same period, helping to support major online destinations like AOL, Ask.com and MySpace as well as an array of bloggers.

"Google is the oxygen in this ecosystem," Battelle said. The company hopes to inhale even more Internet advertising from the biggest deal in its short history - a $3.2 billion acquisition of online marketing service DoubleClick Inc. that was completed six months ago.

Google also is trying to mine more money from its second-largest acquisition, YouTube, the Internet's leading video channel.

YouTube is expected to generate about $200 million in revenue this year, an amount that analysts believe barely scratches the video site's moneymaking potential.

Eventually, Google Chairman Eric Schmidt wants the entire company to generate $100 billion in annual revenue, which would make it roughly as big as the two largest information-technology companies - Hewlett-Packard Co. and IBM Corp. - each are now. This year, Google will surpass the $20 billion threshold for the first time.

Schmidt, 53, who became Google's CEO in 2001, seems determined to stick around to reach his goal. He, Brin and Page have made an informal pact to remain the company's brain trust through 2024, at least.

But some rivals are determined to thwart Google. TV and movie conglomerate Viacom Inc. is suing Google for $1 billion for alleged copyright infringement at YouTube, while Microsoft signalled how desperately it wants to topple Google by offering to buy Yahoo for $47.5 billion this year.

Microsoft withdrew the takeover bid in a dispute over Yahoo's value, but some analysts still think those two companies may get together if they fall farther behind Google.

The notion that Microsoft would spend so much time worrying about Google seemed inconceivable in September 1998, when Page and Brin decided to convert their research project in Stanford University's computer science graduate programme into a formal company.

Page, a University of Michigan graduate, and Brin, a University of Maryland alum, began working on a search engine - originally called BackRub - in 1996 because they believed a lot of important content wasn't being found on the Web.

At the time, the companies behind the Internet's major search engines - Yahoo, AltaVista and Excite - were increasingly focused on building multifaceted Web sites.

Internet search was considered such a low priority at the time that Page and Brin couldn't even find anyone willing to pay a couple of million dollars to buy their technology.

Instead, they got a $100,000 investment from one of Sun Microsystems Inc.'s co-founders, Andy Bechtolsheim, and filed incorporation papers so they could cash a cheque made out to Google Inc.

In a nod to their geeky roots as children of computer science and math professors, Page and Brin had derived the name from the mathematical term "googol" - a 1 followed by 100 zeros.

Even after Google became an official company in 1998, the business continued to operate out of the founders' Stanford dorm rooms.

Like Google's stripped-down home page, the company itself had a bare-bones aesthetic. Page's room was converted into a "server farm" for the three computers that ran the search engine, which then processed about 10,000 requests per day compared with about 1.5 billion per day now.

The headquarters were in Brin's room in a neighbouring dorm hall, where the founders and Silverstein wrestled for control of another computer to bang out programming code.

Adopt a long-term investment approach

The Sensex ended in August 2008 at 14565 gaining just 209 points (1.5 per cent) over the July close of 14356. The initial rally to cross the 15000 mark faltered on the subsequent weaker GDP growth forecast and inflation hovering close to 13 per cent. The market almost consistently fell except on the last day when it gained 516 points. FIIs and Mutual Funds again turned net sellers of equities while favouring investment in debt instruments. Prevailing higher interest rates are taking these institutional investors away from equities because the macro environment is too hazy to support upward bias in equities.

In addition to the subdued economic scenario, the political situation and the nuclear deal are on shaky ground. Further, floods are wreaking havoc causing agricultural output to suffer. The positive sentiment required for investment is thus lacking.

The cumulative seasonal rainfall for the country in August is below the Long Period Average value by only 2 %. The June-September monsoon, which accounts for four-fifth of the nation’s annual rainfall should help the country’s 234 million farmers harvest a bigger crop and boost rural incomes. Going forward, agriculture will hold the key for both industry and overall growth, and also for taming inflation levels.

On the positive side, crude oil prices cooled off from US$150 to around US$110 mainly due to dwindling demand. However, there are contrary views about the trend that might prevail for prices of commodities including crude oil over the short to medium term.

The RBI is hiking interest rates to reign in inflation. Both higher interest rates and inflation bother the industry as they impact consumer demand and hurt corporate profitability. Until we see inflation easing, it would be unrealistic to expect easing of the monetary policy. Higher interest rates and inflation levels might to some extent delay expansion projects of corporates. With general elections scheduled for early 2009, more populist measures are expected to keep economic considerations at bay. Further, the US$17billion (Rs.68,000 crore) farm loan waiver and 21 percent increase in salaries paid to about 5 million government employees should certainly spur consumer demand in the ensuing festive season.

Consequently, in a not very congenial macro environment, it is suggested that emphasis be put on getting into stocks of well-run companies having reputed promoters and proven management. invest in the underlying businesses of the companies since the stock market will eventually appropriately value the business. If the business does well, the stock eventually follows. So, by adopting a long-term approach to investment, you emerge a winner regardless of short-term blips.

Sensex poised for volatile trading

Rising anxiety about the health of the global economy will cast a long shadow on Indian shares this week, while falling oil prices are unlikely to provide much comfort to nervous investors who have been grappling with volatile markets.

Although inflation has eased for two weeks in a row, it remains near 16-year highs and the new Reserve Bank of India governor, D. Subbarao, who took over on Friday has said his priority was calming price pressures.

"There are too many dark clouds hanging over the market," said stocks trader Rasesh Shah. "It will be tough going with the headwinds picking up."

Worsening prospects for the US and European economies, combined with a slowdown in China, India and Brazil, are expected to lead to a global contraction and put immense pressure on corporate earnings across the board, he said.


Information technology companies like Tata Consultancy, Infosys, Wipro and Satyam which rely on the US for most of their business could be hurt if the world's largest economy slips into a full blown recession.

Shah said the gloomy business outlook had pushed the stocks of these companies sharply lower last week, even though a weakening rupee was a big positive for the export-dependent companies.

Commodity firms will also face the heat as shrinking growth in China douse demand and pile downward pressure on prices.

Goldman Sachs last week downgraded US steel stocks to 'neutral' from 'attractive' and lowered its price forecast for the metal in the next 16 months because of slowing economic growth in China and a strengthening dollar.

Steel prices are likely to average $923 a tonne this year and $951 next year, Goldman said, 3.2 per cent and 6.1 per cent less than it previously forecast.

This will have an impact on Tata Steel, the world's sixth-largest steel producer, which now gets the bulk of its earnings from its Corus unit in Europe. Its domestic operation along with rivals Steel Authority of India and JSW Steel have been facing pressure from a government-engineered price freeze since May.

The benchmark Sensex index, which slipped 0.6 per cent last week to 14,483.83 last week, could see a slide in the near term as investors turn risk averse.

Grim forecast

Lehman Brothers said in a report released on Friday the Sensex could drop 10-15 per cent in the short term to 12,500-13,000 and forecast borrowing costs to remain high in the next three to six months.

However, the US research house said the fall should be used as an opportunity in the coming year to accumulate shares. Corporate earnings have been affected by higher interest rates, rising raw material costs and high yields, but margins are likely to stabilise in coming quarters in a deflationary commodity environment, it said.

Investor should consider buying shares in banks and in auto, media, consumer, telecom, real estate and pharma companies, but avoid capital goods, non-ferrous metals and cement companies, Lehman said.

Equity strategist V. Venugopal said it was too early to suggest inflation had lost momentum and the Reserve Bank of India (RBI) was more likely to raise interest rates again in October, when the central bank is scheduled to review policy.


Annual inflation in the week ended August 23 was at 12.34 per cent, edging down from 12.63 per cent two weeks earlier, but well above the RBI's target of seven per cent.

Venugopal said a sliding rupee and an Organisation of Petroleum Exporting Countries (Opec) meeting this week would be closely watched.

The rupee, which has tumbled nearly 12 per cent this year to a 21-month-low of 44.7 per dollar, could weaken beyond 45 this week, he said, as refiners step up dollar purchases to buy oil.

The currency has been under pressure after India's trade deficit jumped to a monthly record of $10.8 billion in July, with oil imports soaring 69.3 per cent to $9.48 billion. The gap stood at $41.23 billion in April-July, sharply up from $27.35 billion in the year-earlier period.

The Opec meeting in Vienna this week could announce a cut in crude output to halt tumbling prices of oil - down eight per cent last week to below $107 a barrel from a recover over $147 in mid-July.

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Indian Rupee eases to hit a low of 44.69 per dollar

The rupee dropped to its lowest level in more than 17 months in volatile trade on Tuesday, shrugging off heavy central bank intervention as the dollar rallied strongly against a basket of currencies. The partially convertible rupee closed at 44.38/44.39 per dollar, half a percent down from Monday's close of 44.17/18.

Dealers said a combination of capital outflows from the stock market, stop-loss positions being triggered and heavy dollar buying by oil refiners pushed the rupee down, adding the local unit could hit 45 per dollar in the next couple of days.

The rupee traded in a broad 44.14-44.56 per dollar band, and the day's trough was the rupee's lowest since March 5, 2007, when it touched 44.6950. Currency markets are closed on Wednesday for a holiday and trading resumes on Thursday.

At its low, the rupee has fallen 1.4 percent in the first two days of the month. It fell 3.1 percent in August and is down more than 11 per cent in 2008, making it one of Asia's worst-performing currencies. It rose more than 12 per cent in 2007.

"Dollar demand is huge and the supply pipeline is very thin as most exporters have sold their receivables and capital inflows have all but dried up," said J. Moses Harding, head of global markets at IndusInd Bank in Mumbai. Foreigners have sold more than $7.3 bn in local shares so far in 2008 pushing the stock market down by more than a quarter.

They bought a record $17.4 bn in 2007. A widening trade deficit added to funding concerns. The trade deficit in July was $10.8 bn, expanding from $9.8 bn in June. For April-July, the first four months of the fiscal year, the deficit widened to $41.23 bn between April-July from $27.35 bn a year earlier.

Central bank dollar sales between 44.20-44.55 ensured the rupee closed above its intraday lows. Five dealers at different banks estimated the central bank had sold between $1-$2 billion in the spot market, its biggest intervention in months.

One-month offshore non-deliverable forward contracts were quoting at 44.55/44.65, weaker than the onshore rate. In the futures market, more than 42,000 contracts were dealt with the near-month contract leading the way. It closed at 44.5450 per dollar.

Two dealers said some stop-losses bunched around the 44.40 per dollar levels helped the rupee lower. R.K. Gurumurthy, head of financial markets at ING Vysya Bank, said a clean break above 44.40 would be bullish for the dollar/rupee

Gold prices Falls

Over the past fortnight, we have seen a sharp fall in gold prices. This fall in price has stimulated demand for gold from consumers and investors across the globe. After a year of dull demand for gold, the sharp fall in prices provided a golden opportunity for consumers and investors waiting on the sidelines to buy gold. This spurt in demand shows that consumers and investors believe that gold is attractively priced at current levels (approx. Rs. 11,500 per 10 grams).

The past few days have been very busy for gold market traders and for employees at the gold vaults. Demand has been strong and widespread, with gold markets in the Middle East, Europe and Asia witnessing strong demand. The strongest demand continues to come from the Indian markets. This has once again reinforced the belief that there will continue to be increased demand for gold from consumers/investors in India. Gold refiners on the other hand have been literally struggling to meet the increased demand for gold.

Demand for gold in India has been so huge that despite a sharp increase in gold imports over the past fortnight, there has been acute shortage of physical gold in the market. Premiums charged by wholesale suppliers and banks have increased to abnormal levels, way beyond what has been seen in the past. What does this indicate? Is this a one-off scenario where refiners and suppliers couldn’t match the unexpected increase in gold demand i.e. they weren’t ready for it? or will there be continued supply constraints for a longer period of time?

The second scenario looks more likely.

An analysis of trends in the three main supply sources for gold (Gold Mines, Central Banks and Scrap Gold), will help to throw more light on this.

Supply of physical gold from mines has been virtually stagnant since the beginning of the decade. There has not been any major discovery of new gold reserves over the past few years. The process of exploration and opening of new mines has become even more challenging due to environmental bottlenecks, manpower, equipment and power shortages.

Historically, Central Banks have been active influencers in the gold market. There have been many instances in the past wherein Central Banks have aggressively sold physical gold, leading to depressed gold prices. However, recent trends show that the reverse seems to be happening now. According to the World Gold Council, trends indicate that gold sales by signatories to the Central Bank Gold Agreement (CBGA), could be the lowest since the CBGA was signed in 1999. With only one month to go before the year end of September 2008, only about 319 tonnes of gold have been sold so far this year by the European central banks. This is against their maximum allowable annual (September 2008 end) sale quota of 500 tonnes. Central Banks worldwide are putting increased importance on gold reserves especially in these times of global economic turmoil. The global economy is going through a pretty traumatic period, and the Central Banks believe that having gold to back up t heir currency is a good idea.

Gold Scrap (typically old jewellery and jewellery manufacturing wastage) has been a major source of supply over the past year. At the prevailing attractive price levels, consumers would be reluctant to exchange old jewellery for new and would rather buy new gold jewellery. The increased demand and higher premiums for physical gold over the past fortnight also suggests that scrap supply has virtually vanished.

The demand in gold just doesn’t seem to be waning. It is increasing every day. Buyers who adore jewellery and those preparing for the upcoming marriage season are rushing in to buy gold. Investors want to buy more gold to protect their portfolio from rising inflation, economic uncertainity and unpredictable and volatile stock markets. Investors in India, have also increasingly preferred to buy gold through Gold Exchange Traded Funds. Globally, investors who buy gold for investment purposes have preferred buying gold exchange traded funds rather than buying physical gold coins or bars. This trend is catching on rapidly in India. This is primarily due to the many benefits that Gold Exchange Traded Funds offer including lower purchase cost, purity, security, transparency and tax efficiency.

It is increasingly clear, that demand for physical gold is set to go higher in the near term especially given the current attractive price levels. Supply of physical gold does not seem sufficient enough to satisfy the needs of hungry gold consumers. The fundamental question is - "Where is the gold supply going to come from?" Gold Mines are not producing enough, Central Banks are selling lesser gold, Scrap Gold is virtually not available. We are still ahead of the peak demand season and facing a supply crunch already. What would happen when demand accelerates during the festival/marriage season that will start from mid September onwards? Where is the gold going to come from to cater to the peak demand?

Buy some gold now before the demand supply mismatch leads gold to higher levels.

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Indian Rupee falls to 17month low

The rupee fell to 17-month lows in opening deals on Tuesday, slipping below 44 per dollar, weighed down by weak Asian stock markets.

The partially convertible rupee was today at 44.01/02, a level it last tested on March 20, 2007 and 0.5 per cent weaker than Monday's close of 43.79/80.

Storm clouds over Indian market grow darker

The going will get harder for Indian shares this week as soaring inflation raises the prospect of higher interest rates, which could burn a hole in the pockets of consumers, slow down demand and hurt corporate earnings.

Throw in volatile commodity prices and the outlook gets more worrisome. With fears the global credit crisis could worsen there is little comfort for investors, who have already suffered big losses this year.

The risk of a downside is making investors nervous and many funds are sitting on cash. Large investors have moved to the sidelines on mounting expectation that shares will decline in the near term and throw up opportunities for bargain hunting.


Annual wholesale price-based inflation (WPI) in early August shot up to 12.6 per cent, the most in 16 years, strengthening fears the Reserve Bank of India (RBI) will hike interest rates and tighten money supply again.

Sonal Varma, economist at Leh-man Brothers in Mumbai said that the final WPI inflation to peak in October-November at around 13.5-14.0 per cent, but to stay above 10 per cent until February 2009.
A steep increase in salaries for some five million civil servants announced this month, ahead of national elections due by May, is expected to fuel inflation.

"The whole objective of monetary policy at this point in time, which is to contain and manage demand, is going to face hurdles," said Shubhada Rao, an economist with Yes Bank. "The pay revision is going to add to demand pressures on inflation."

Last week, New Delhi-based National Council for Applied Economic Research (NCAER) cut its outlook for economic growth to 7.8 per cent in 2008-09, saying high inflation and a global slowdown were major threats. In its forecast in May, the economic think-tank had forecast growth of 8.5-8.8 per cent.

Forecast revision

A week earlier, the prime minister's economic advisory panel had lowered its growth forecast to 7.7 per cent, slower than 9 per cent expansion in 2007-08. Last month, the RBI pegged down its growth projection to 8 per cent from 8-8.5 per cent forecast earlier.

"The brakes on growth have been brought about by the slowdown in global growth and high inflation," NCAER said in a report.

It said industrial output growth was expected to moderate to 8.4 per cent in 2008-09 from 8.6 per cent of last year, while farm output growth would slow to 2.5 per cent from 4.5 per cent. Services sector was seen up 9.1 per cent, slower than 10.8 per cent of last year.

Foreign funds, which usually set the trend for the stock market, have been voting with their feet as the economic situation worsens. Overseas portfolio investors dumped shares worth $775 million over the past six days, data from the Securities and Exchange Board of India showed.

D'Souza said the withdrawals were likely to pick up momentum and push the market down this week, with the expiry of monthly derivatives contracts on Thursday making prices more volatile.

The Sensex fell 2.2 per cent last week to 14,401.49, its second weekly drop in a row. The marker has dropped 29 per cent this year, with foreign funds pulling out $7.2 billion during the period.

Crude oil's 5.4 per cent slide on Friday, the biggest single-day tumble in four years, to about $114.6 a barrel should bolster sentiment when trading starts tomorrow, but the sharp swings will keep investors cautious, D'Souza said.

Although oil prices have dropped more than a fifth since hitting a record high above $147 in mid-July, the outlook is marred by geopolitical tensions between the US and Russia and concerns Opec may decide to cut output when it meets in Vienna in September.

Energy-starved India imports more than 70 per cent of its oil, the price of which has a heavy bearing on domestic inflation.

In July, Merrill Lynch strategist Mark Matthews said that if oil prices fell below $120, inflation eased and the US banking crisis ends, Chinese and Indian stock markets could rebound. For that to happen, it will take a few more months, D'Souza said.