>Nymex crude dn with equities; weak fundamentals

Singapore - Crude oil futures lost ground Thursday in Asia as rising U.S. stockpiles and weakening share markets fanned concerns about the outlook for the economy and for energy demand.

Asian equities were dragged lower by financial stocks, mirroring a late pullback Wednesday on Wall Street, while overnight U.S. government oil data showing further increases in inventories weighed on sentiment.

"The market held up relatively well in our view given the seemingly bearish (Energy Information Administration) stats," said Jim Ritterbusch, president at trading advisory firm Ritterbusch and Associates.

"Nonetheless, we viewed the weekly stats as decidedly bearish given a larger-than-expected crude stockbuild. The jump in (refinery) runs boosted production of both gasoline and distillates and contributed to unexpected increases in both key product categories."

On the New York Mercantile Exchange, light sweet crude futures for delivery in June traded at $48.61 a barrel at 0705 GMT, down 24 cents in the Globex electronic session.

Nymex heating oil for May slipped 77 points to 132.22 cents a gallon, while May reformulated gasoline blendstock traded at 138.13 cents, 93 points lower.

Oil prices in recent weeks have found support from firmer equity markets, which many traders interpreted as a sign the worst of the economic recession may be behind, but fundamentals meantime have continued to weaken.

Asia's leading oil consumer nations - China, Japan and South Korea - Wednesday each reported steep on-year drops in their March crude imports despite lower prices, showing demand for fuels remained soft.

The EIA, in its Weekly Petroleum Status Report overnight, also posted sizable increases in crude, gasoline and diesel stockpiles.

Commercially held U.S. crude stocks climbed for the sixth straight week in the week to April 17 to 370.6 million barrels, staying at their highest levels since September 1990.

Gasoline stockpiles - closely watched in the lead-up to the U.S. summer driving season - have also risen about 6% above the five-year average level.

"The data reinforced our bearish view of the complex," Ritterbusch said in a note to clients.

"We suggest maintaining short June (Nymex crude) holdings, keeping stop protection at the $52.60 level in anticipation of an eventual price decline to the $43-$44 area."

At 0705 GMT, oil prices on London's ICE Futures exchange also fell.

Brent crude for June slipped 31 cents to $49.50 a barrel, while May gasoil changed hands at $423.50 a metric ton, losing 75 cents from Wednesday's settlement.

Source: COMMODITIESCONTROL

>India imposes anti-dumping tax on some steel Products

New Delhi - India has imposed an anti-dumping import tax on some stainless steel products to curb cheap imports that were hurting the local industry, the government said Thursday.

The punitive taxes are being levied until Oct. 21 on imports from China, Japan, Korea, the European Union, South Africa, Taiwan, Thailand and the U.S., the trade ministry said in a statement.

"This is a clear message to the producers and to the countries" that have been sharply underselling Indian producers, said N.C. Mathur, president of the Indian Stainless Steel Development Association. Stainless steel imports have increased by around 20%-30% annually since 2006, Mathur said.

The level of taxes vary, depending on product and origin, ranging from $12.74 a metric ton to $2,011/ton.

The banned products are used in the automotive, and household appliance sectors as well as for industrial applications.

"The varieties banned are the highest value-added products," Mathur said.

India produces about 1.8 million metric tons of stainless steel annually, two-thirds of which is consumed locally.

Source: COMMODITIESCONTROL

>New Stock Market Story (WHARTON)

India's New Stock Market Story and Its 'Next Trillion Dollar Opportunity'.

If there's one thing Raamdeo Agrawal has learned over 22 years as an investor, it's that the stock markets "always come up with a story every four or five years." Soya processing and leasing companies caught the Indian stock markets' imagination in the early 1990s. Then came the Y2K rush and the dot-com boom in the late 1990s, followed by yet another binge on IT software stocks, he recalled.

Agrawal, co-founder of Motilal Oswal Securities, an investment services firm in Mumbai, made money by investing in all those boom phases, even if he didn't initially understand "the difference between hardware and software." At the 13th Wharton India Economic Forum in Philadelphia in March, he participated in a panel discussion on "Rational Exuberance in the Indian Capital Markets."

Agrawal was more bullish about the outlook for the Indian capital markets than his fellow panelists. Seth Freeman, CEO and chief investment officer at EM Capital Management of San Francisco, a hedge fund that invests in India, among other markets, is also a long-term bull on India. But Sandeep Naik, principal at Apax Partners India Advisers, a private equity fund with global headquarters in London, noted he was worried about capital formation trends and India's ability to sustain a targeted GDP growth rate of 7% to 8.5%.

Senthil Chengalvarayan, president and group editorial director, business media, at Television 18 in India and the discussion's moderator, pointed out that share values in the Indian stock markets are trading at between nine and 11 times earnings these days, compared with 22 times a year ago. "When do you see the market turning?" Chengalvarayan asked, noting the coming Indian general elections and the fact that foreign investors have taken a double whammy in seeing both their Indian investments and the rupee lose value. "Foreign investors have pulled out about US$16 billion in the last 17 months from India," and it's
unclear whether that trend will continue, he said.

A Hedging Opportunity

Time was when global investors looked at developing markets like India to hedge some of their investments. "That myth has clearly been shattered," Naik said, referring to the erosion in stock values over the past year. He noted some key factors that contributed to that trend: "huge redemptions" by foreign institutional investors causing a net outflow of US$15 billion last year (compared with a net inflow of US$17.4 billion in 2007); a 25% drop in domestic equity issuance; and a 95% drop in foreign issues by Indian companies.

India needs to build upon its recent successes to sustain its growth story, according to Naik. He listed its accomplishments in recent years: household savings have climbed to between 23% and 24% of GDP and stayed at that level; corporate savings have doubled from 4% to 8%; the government's savings rate has moved from negative territory to reach 3% of GDP; and foreign institutional investments have grown 40% in the past six years to account for 6% of GDP.

To see full report: NEW STOCK MARKET STORY

>Infosys Technologies Ltd (INDIABULLS)

Bleak near-term outlook
Infosys Technologies Limited (Infosys)’s result for FY09 was in line with our estimates. For Q4’09, Infosys reported a decline of 2.6% qoq to Rs. 56.4 bn in its top line largely due to increasing pricing pressure and sluggish volume growth, partially offset by the depreciation in the rupee against the dollar. Besides, revenues in the USD terms went down by ~4.5% qoq. Other than this, weak operational performance and increase in the SG&A expenses led
to fall in the EBITDA margin by 154 bps qoq to 33.6%.

Price erosion is inevitable
Billing rate for the quarter went down 2% and 4.2% qoq for onsite and offshore, respectively, indicating that clients renegotiated their contracts and new deals were signed at lower pricing. In our view, this trend is likely to continue, considering that the large clients from the developed economies are likely to demand price cuts. Thus, we expect billing to decline by 2–3% per quarter for the next 4–5 quarters.

Client engagement to help in the medium term
Infosys is focusing on client engagement and has guided to increase its selling & marketing efforts in the near term. Consequently, we expect SG&A expenses to increase by ~5% in FY10, which will strain the margins in the near term. However, this can benefit the Company in winning large deals in the medium term.

Potential strategic acquisitions to strengthen its positioning
Infosys has a strong balance sheet position along with a huge liquidity advantage in the current weak market scenario as it maintains a cash balance of USD 2.2 bn. In our view, the Company can use cash for strategic acquisitions in the next 12–15 months, which will strengthen its service offerings. Moreover, potential acquisitions in high end services such as consulting and system integration space can help to revive the margins.

To see full report: INFOSYS