Mumbai, November 12
United Spirits posted its biggest single-day share gain since at least 1995 on Monday after its stake sale to Diageo plc, the world’s larrgest producer of alcoholic beverages, spurred upgrades from several analysts, who called the deal "transformational" and a "game changer" for the Indian liquor maker.

Morgan Stanley, J.P.Morgan and CLSA Asia-Pacific Markets, one of the region’s largest and most highly rated independent equity brokers and financial-services groups, raised their ratings to the equivalent of a buy, saying United Spirits will substantially cut its debt and improve its profits after its deal to sell a 53.4% stake to Diageo for US $2.1 billion.

The jump of as much as 37.8 percent on Monday added around $1.1 billion (Rs 61.8 billion) to the market value of the company controlled by Indian businessman Vijay Mallya after the glowing research reports.

The liquor maker had gained 1.3% on Friday when the deal was announced.

"United Spirits Ltd is now a stock for every portfolio, we believe," Morgan Stanley said in a note on Monday, adding the deal priced United Spirits "significantly higher" than its base-case value.

The US investment bank raised its rating on United Spirits to 'overweight' from 'equal-weight', while also raising its price target to Rs 1,905 rupees from Rs 1,000.

Under the deal announced on Friday, Diageo would first buy a 27.4 percent stake from United Spirits' founders at Rs 1,440 per share, and then launch a mandatory open offer for the remainder.

The deal would pair together the global maker of Johnnie Walker with a domestic company owning a portfolio of spirits including the popular McDowell's whiskey in India.

CLSA raised its rating to 'buy', while setting a new target price at Rs 1,800, saying the deal would benefit United Spirits by reducing debt levels, increasing earnings, imposing financial discipline and providing operational advantages.

The brokerage estimated Diageo would inject around Rs 33 billion into United Spirits, helping pare down debt of around Rs 78 billion. CLSA also raised fiscal 2014-15 earnings-per-share estimates by 35% to 40%.

"We see this deal as a game changer for UNSP," CLSA said in an email to clients, a copy of which was seen by Reuters.

In a report headlined "transformational deal," global financial services firm J.P.Morgan raised its rating on United Spirits to 'overweight' from 'neutral', while raising its price target to Rs 1,645 from Rs 720.

"This will likely help increase focus on premiumization, rationalize expenditure and exploit synergies between the two companies leading to better profitability and support re-rating for the stock," said the bank in a note dated on Sunday.

United Spirits shares rose 34.7% to Rs 1,832.95 on Monday on the Bombay Stock Exchange , after rising to as much as Rs 1,874.60, their highest since January 18, 2008. — Reuters

Mexico City, November 12
Reserve Bank of India governor Duvvuri Subbarao has said the central bank may ease monetary policy as early as January, as price pressures ease in Asia's third-largest economy in the first part of next year on the back of slower growth.

Growth in India has slumped to around 5.5% a year, far below the 9% rate it was clocking before the 2008 global financial crisis, while high inflation undermines domestic consumption. Pressure has been mounting for lower interest rates, and the RBI last week put markets on notice that it may ease in the first quarter of 2013, although it did not specifiy when. It left interest rates on hold, but cut the cash reserve ratio for banks, another policy tool.

The RBI has one more meeting scheduled for 2012, in December, when Subbarao said easing was "highly improbable." He said the bank would next review policy at meetings on January 29 and in mid-March, noting that the bank's first-quarter easing guidance was based on forecasts for growth and inflation.

"If the growth and inflation trajectories play out as we expected, we would act according to our guidance," he said in an interview with Reuters, when asked about the likely timing of any new move by the RBI.

"We would assess the situation in January and try and act according to our guidance. Should the situation be different, then we will have to defer until March."

Subbarao declined to say whether the central bank would ease by cutting interest rates or lowering bank reserve requirements.

But his comments, made on the sidelines of Group of 20 meetings in Mexico City last week, confirm market expectations of no move by the RBI in December and suggest easing is more likely in January than March, barring surprises in growth or inflation.

Investors, companies and the government have clamoured for a cut in interest rates to boost flagging growth. The central bank expects inflation to ease in the first quarter of 2013, from a 10-month high of 7.8% in September. The central bank's comfort level is for inflation of 4-5%.

Finance Minister P. Chidambaram told Reuters earlier India's economic growth could slow to as little as 5.5% this fiscal, which would be the slowest pace in a decade. — Reuters

Mumbai, November 12
As a new Samvat year begins tomorrow on Divali, the stock market is looking up to prosperous gains after an increase of over Rs 5 lakh crore in the overall investor wealth over the past year.

A new Hindu calendar year, Samvat 2069, will begin Tuesday on the occasion of Divali, which is celebrated as a festival of lights and prosperity.

Since last Divali, the stock market benchmark has recorded a gain of about eight per cent, while the overall investor wealth, measured in terms of cumulative market value of all listed shares, has risen by over Rs 5 lakh crore to nearly Rs 66 lakh crore.

Out of this, the 30 Sensex companies alone have seen their market value grow by about Rs 2 lakh crore to near Rs 30.5 lakh crore currently.

Market analysts expect this Divali to bring even better luck to the Dalal Street. The markets would conduct mahurat trading to mark the beginning of a new Samvat.

The Samvat year 2069, which would commence from tomorrow, is expected to be positive due to festive mood and the Sensex would trade around 18,700 level.

The 30-share BSE benchmark index currently stands at 18,683.68 points, a surge of around 1,400 points or around 8% since last Divali, when the Sensex had scaled at 17,288.83 points during its mahurat trade on October 26, 2011.

Experts are optimistic about market scaling a new peak next year on account of smart corporate earnings in the second quarter. The market benchmark Sensex is currently nearly 2,500 points away from its record high level of 21,206.77 pts (in intraday trading), scaled on January 10, 2008. — PTI

Mumbai, November 12
The country's worst on record trade deficit of $21 billion may prompt the government to impose measures in order to curb it, said investment bank Credit Suisse on Monday.

The bank feels that a further increase in import duties of gold is likely. Although seasonal factors typically narrow the trade deficit in November and December, Credit Suisse expects a gap of at least $15 billion in the last month of the year.

The RBI is "unlikely to take too kindly to the record trade deficit," the bank added. India's exports fell for the sixth month running, dropping 1.6% in October 2012 due to persistent economic turmoil in the western markets. Imports increased during the month as oil purchases shot up widening the trade deficit.

Exports during October 2012 were at $ 23.24 billion which was 1.63% lower than exports in October 2011, according to figures released by the commerce department on Monday.

Imports during the month were at $44.20 billion posting an increase of 7.37% over imports in the same month of the previous year increasing the trade deficit to $20.96 billion during the month.

The directorate general of foreign trade will conclude its detailed analysis of various export sectors in the next two days which will be presented to the commerce minister. "We will then see if there is a need to fine-tune this year's foreign trade policy or whether specific steps need to be taken to improve export performance," commerce secretary S R Rao told reporters at a press conference.

The increase in imports after four months of continuous fall is largely due to a jump in imports of pertroleum and gold, the secretary said. While dismissing increase in gold imports as a seasonal spurt, Rao attributed the increase in oil imports to increased purchases for captive power generation in addition to rising prices. Oil imports in October increased 31.6% to $ 14.78 billion compared to the previous year. — Agencies

Mumbai, November 12
India's $100 billion software and services outsourcing sector is likely to meet the lower end of the growth outlook for this fiscal year, an industry lobby group said as customers tread cautiously on technology spending due to global economic uncertainty.

The National Association of Software & Services Companies (Nasscom) had in February forecast IT exports to grow 11-14% in the fiscal year ending March 2013.

"For FY2013, a year marked by significantly varied trends, the industry is expected to meet the lower-end of its growth guidance and at least achieve a double-digit growth," Nasscom said in a statement on Monday.

Industry export revenues are estimated at US $75 billion to $77 billion for the year, it said.

The pace of growth slowed in the recent quarters for India's top outsourcing companies, including Infosys and Wipro, as western clients curbed spending in a difficult business environment.

With customers such as Citigroup, Wal-Mart Stores, BP Plc and Volkswagen AG, the Indian outsourcing sector relies on the United States and Europe for three quarters of its revenue. — Reuters