IT Stocks Lead The Gains

Indian stock market indices are trading in the positive over the last two hours of trade on buying in index heavyweights. All sectoral indices are trading strong led by Realty and IT stocks.
The BSE-Sensex is up by 189 points and NSE-Nifty is up by 69 points. BSE Mid Cap and BSE Small Cap indices are also up by 1.2% and 1.1% respectively. The rupee is trading at 47.05 to the US dollar.
Auto stocks are trading firm. Escorts and Force Motors are the biggest gainers. According to a leading financial daily, Ashok Leyland is expecting its newly launched light commercial vehicle "Dost" to clock in a sales of 55,000 units annually. Dost is a 1.25 tonne truck and is priced between Rs 0.38 m - Rs 0.44 m. It is meant for truck operators who deliver fruits and vegetables. Dost is a product of joint venture between Ashok Leyland and Nissan Motor Company Limited. The launch for this LCV was delayed because of economic slowdown in the global economies. Dost is expected to help compensate the fall in sales of medium and heavy vehicles by Ashok Leyland.
Steel stocks are trading strong. All stocks in the sectoral index are trading in the green. JSW Steel and Tata steel are the biggest gainers. According to a leading financial daily, India's largest public sector steel maker Steel Authority of India (SAIL) is planning to invest more than 1% of its gross sales on Research and Development (R&D) activities in order to facilitate acquisition and development of appropriate technologies. The company plans to undertake technology missions which will be aimed at reducing raw material and energy consumption. This involves beneficiation and pelletisation of low-grade ores and increasing the use of medium and non-coking coal in steel making. The company's plan also involves production of cold rolled grain-oriented (CRGO) electrical steels, development of alternative iron-making technologies and carbon dioxide reduction. The company would also set up center of excellence at individual steel plants in partnership with key customers and suppliers to focus on product develop

Profits Elude Bankers

Ajay Piramal is just the sort of big fish every Indian private banker would love to land. With businesses from healthcare to glass and property, the 56-year-old Piramal has a net worth of $1.4 billion, according to Forbes, good for 39th on its India rich list.

The problem, at least for the swelling ranks of wealth managers in India, is that Piramal doesn't need them, putting his millions instead in his own companies and real estate ventures.
"These are only two areas I invest in, and therefore we don't need any advisor," said Piramal, who is approached by private bankers "all the time".
India may be minting millionaires, but that is failing to translate to profits for the banks that have set up teams of well-dressed, well-paid bankers to help manage those riches.
A narrow product range, rising competition, falling advisory fees and billions of dollars in wealth hidden from tax officials has stifled profits for private banks, which have aggressively ramped up operations in India.
At the same time, expenses -- mostly salaries -- are growing by as much as 20 percent a year, some in the industry say, meaning many private banks must absorb potentially heavy running costs for years before they are profitable.
The industry's difficulties in India come as more established wealth management centres in Hong Kong, Singapore and elsewhere are buffeted by poor markets.
Profit margin pressure on the sector that serves the wealthy is "partly driven by a plain vanilla product platform available for clients," said Atul Singh, head of global wealth and investment management for India at Bank of America Merrill Lynch, among the biggest players in the country.
The challenge is made greater by poor market performance, with Indian shares sliding about 17 percent this year. A spate of scandals embroiling the country's business and political elite has also soured sentiment among the rich.
The tough conditions are exacting a toll, even as many banks such as Morgan Stanley, Royal Bank of Scotland, Barclays and Bank of America Merrill Lynch continue to add staff, with an eye to the long-term potential of the fast-growing economy.
Credit Suisse, one of the largest global private banks and a player in India since 2008, is cutting its India wealth management staff by 12 people, or 20 percent, as part of a global reduction, sources said last month.
Credit Suisse is unlikely to be the last to trim staff over the medium term, industry players said.
For graphic on global wealthy population, India ranking, click http://link.reuters.com/ber43s
A dearth of fee-spinning alternate investment vehicles such as hedge funds and private equity, a $200,000 cap on overseas investments by onshore Indians, and an underdeveloped corporate bond market means most investments are channelled into run-of-the-mill equity products, bank deposits, and government bonds.
Investments in exotic assets such as art and wine are rare in India. Instead, the homegrown rich keep their money in real estate and gold, which doesn't require the services of polished bankers of the sort that cater to the rich in places like London, New York, Zurich and Singapore.
"When product platforms are largely undifferentiated, then prices get driven down," Singh told Reuters. "Making money is certainly tough for players in the sector, especially ones without scale."
Many tycoons like Azim Premji, chairman of No. 3 IT services exporter Wipro and the third-richest person in India, with net worth estimated by Forbes at $16.8 billion, thus prefer to use in-house staff to manage personal wealth.
In neighbouring China, wealth managers also contend with tight regulations and limited product offerings, but they also face less domestic competition. Many rich mainland Chinese invest in real estate or stash their wealth in Hong Hong or Singapore, which are thriving private banking centres.
Many of the richest Indians also have substantial wealth overseas and do their private banking in Singapore, Zurich, London or Dubai, where there are more investment options and where some banks cater specifically to non-resident Indians.
FEE AND COST PRESSURE
Private banks in India charge between zero and 0.5 percent advisory fees to wealthy clients, which barely covers costs for smaller players, compared to about 0.5 percent to 2 percent in more developed markets, industry insiders say.
Pressure on fees and rising costs have dragged down most wealth management firms' margins to 40-50 basis points now from 1-2 percent a few years back, they said.
The gradual shift from charging transaction-based fees to an advisory fee model, amid a global move to discourage selling of risky exotic instruments, has added to margin pressure.
"No one is making money in private banking in India," said the head of India wealth management at a U.S. bank. "Margins are so very low here because very few people want to pay money for advice and your cost of operations is going up."
To woo clients, some banks will send the adult children of entreprenuers for short training courses at U.S. universities on preserving and growing family wealth, giving them an opportunity to rub shoulders with the sons and daughters of rich Americans.
Closer to home, private banks coddle prospective and would-be customers with wine tastings and live music and dance performances by Bollywood stars.
In 2010, the population of high net worth individuals -- those with more than $1 million in investable assets -- rose nearly 21 percent in India to 153,000 -- making it the 12th largest such market, ahead of Spain and just behind Brazil, according to a report by Capgemini and Merrill Lynch.
BLACK MONEY
A large chunk of Indian wealth goes undeclared. Tax authorities say billions of dollars in funds have been deposited by Indians in Swiss bank accounts and other tax havens.
A government panel in 2009 found Indian illicit funds to range between $500 billion and $1.4 trillion, which is now nearly the size of India's economy. Global Financial Integrity, a Washington-based think-tank, estimated illicit outflows of about $16 billion a year from 2002-2006.
Technology consultancy firm Cognizant said in a report that the Indian wealth management sector in the short-term would remain fragmented with a large number of brokers, financial advisors, insurance agents and tax consultants offering services.
Bank of America-Merrill Lynch, Kotak Mahindra, and HSBC were cited by Cognizant as strong players in the sector in India because of their reach, potential for cross-selling banking products and focus on domestic equities.
Big banks that have yet to take the full plunge on Indian private banking may end up looking prescient, or lucky.
UBS, a global leader in private banking, is in the early stages of providing onshore wealth management services in India.
Goldman Sachs' private wealth management arm serves high net worth Indians from Singapore but does not have an onshore presence in India, while JPMorgan has pushed back plans to launch onshore services to late 2012, according to a source with knowledge of the situation.
Rising salaries, poaching of talent and wafer-thin margins have made it tougher for smaller home-grown wealth managers to compete with the global rivals.
However, while Western banks bring brand cachet and global expertise, they also tend to be saddled with higher costs.
"Some level of consolidation will have to happen in the next year or so. Pure broking businesses will find it difficult to continue because costs are rising and margins are under pressure," said Tashwinder Singh, head of Citi's private bank in India.

Bikram Yoga

It seems Sonam Kapoor is aiming for size zero. The already slim actress has now joined Bikram Yoga classes, where she is expected to sweat it out and burn oodles of calories.
'Starting bikram yoga today or as everyone calls it hot yoga. It's my dads secret for looking fab. (sic),' Sonam posted on her Twitter page.
Bikram Yoga is a distinct style developed by yoga guru Bikram Choudhury who holds a US copyright on his yoga that comprises 26 'asanas' or postures and two breathing exercises.
In the West, celebrities like Madonna, Brooke Shields and Raquel Welch practice it.
Sonam, who was lost almost 30 kg before she made her film debut with Sanjay Leela Bhansali's 'Saawariya' in 2007, also loves munching.
'Can someone find the special k bars in mumbai please! I like the chocolatey drizzle special k bars.. Anyone i know where I can find them in mumbai,' she asked her Twitter followers.
Big B misses 'Sholay' shooting sites
Bollywood megastar Amitabh Bachchan went down memory lane on a visit to Bangalore. He reminisced the times when he shot for cult Hindi movie 'Sholay' around the city.
'In Bengaluru...familiar sites from the times of the shoot of 'Sholay' all gone ...now a bustling modern slick and swish city...WOW! So many memories linked to this 'garden city' ..its not important whether they were good or bad, its important that you remember them (sic),' Amitabh posted on his Twitter page.
The actor, who featured alongside Dharmendra in the 1975 movie, is busy promoting his forthcoming film 'Aarakshan' these days, and Bangalore happened to be on of the cities in the promotional plan. The movie, which also features Saif Ali Khan, Deepika Padukone, Manoj Bajpayee and Prateik Babbar, will release Aug 12.
Arjun skips 'RA.One' wrap-up party
Model-turned-actor Arjun Rampal, who plays a villain in 'RA.One', missed the wrap-up party of the mega-budget film due to the shooting of 'Rascals'.
'In Bangkok for Rascals, missed the RA 1 wrap party cause was on flight, want to thank the whole team, for the special film,' Arjun posted on micro-blogging site Twitter.
The wrap-up party for the Shah Rukh Khan production was held in Mumbai, and from director Anubhav Sinha's tweet, it seems to have been a blast.
'Fantabulous wrap party..... was pushed by the team into matching steps with @iamsrk Guys it is official, I can't dance to save my life,' wrote Sinha.
Poor Arjun is now dealing with rains in Bangkok.
'It's pouring here, Grrrrrr. Have two days to shoot, I hope the weather permits, Want to get back to rainy Mumbai,' added Arjun.
'RA.One' will release Oct 26. It features Shah Rukh as G.One and Kareena Kapoor as his love interest.