Changing Direction

Commercial banks were accused of being too speculative in the pre-Depression era, not only because they were investing their assets but also because they were buying new issues for resale to the public. Thus, banks became greedy, taking on huge risks in the hope of even bigger rewards. Banking itself became sloppy and objectives became blurred. Unsound loans were issued to companies in which the bank had invested, and clients would be encouraged to invest in those same stocks.

But the Investment Banks have suffered more during recent economic trouble than their commercial counterparts. The risk exposure of the Investment Banks had been much larger than their Commercial Bank counterparts. The statistics shown in the above figure makes it very clear why they have been shifting focus from Investment Banking to Retail Banking after the onset of the turmoil.

International capital mobility and the “Impossible Trinity”

What is the role of economic policy? Why was it that international capital mobility prevailed before World War – I, contracted after World War – II and most revitalized in the 1970s? The answer lies in the way that international capital mobility constrains the options facing domestic economic policy. The fundamental trade-off that faces the policy makers in a global economy has been labeled the “impossible trinity” as a country cannot simultaneously pursue exchange rate stability, independent monetary policy, and perfect capital mobility. They can achieve any two goals out of three at anytime. If you have free capital flows you can use monetary policy either to have independent monetary policy or to stabilize the exchange rates but not both of them at the same time.

The exchange rate is simply the relative price of currencies, e.g., it tells you how many Euros you can buy for a Dollar. It is determined in the foreign exchange market where trillions of dollars worth of currency traded each day. Because it affects prices of goods and services sold in the world market the exchange rate is one of the most important prices in an open economy. For instance a U.S importer of T.Vs from Japan will have to pay more for the imports if the Yen becomes more expensive in terms of the U.S dollars. If the exchange rates fluctuate drastically, it may reduce the incentives for international trade. The exchange rate also affects the prices of assets. If a Swedish citizen decides to buy U.S Government bond she would first have to buy dollars so that she can pay for the bond and then once the bond is matured she would have to buy back Swedish Kronor. If the price of the dollar depreciates, its relative value declines before the bond matures then the return on the bond in terms of Swedish Kronor decreases. The exchange rate therefore also affects the expected return on assets. For these reasons one may be attracted for countries to try to stabilize the exchange rate in order to promote international trade and detract foreign investments so that the economy can grow.

A government has two major policy tools at its disposal: fiscal policy and monetary policy. Fiscal policy concerns government expenditures and tax collection while monetary policy affects the interest rate in the economy. By lowering the interest rate the monetary authorities can expand the economy and put upward pressure on prices while raising the interest rate they can contract the economy and put downward pressure on prices.

In a country that allows full capital mobility monetary policy also has a direct effect on exchange rates. If a country wants to stabilize its exchange rates and use its monetary policy to stabilize the domestic economy it has to prevent capital from moving in and out of the country. If exchange rate stability and full capital mobility are considered essential monetary policy becomes ineffective. This is because the central bank’s only objective is to stabilize the exchange rate by setting the domestic interest rate equal to the interest rate of the country to which the currency is pegged. For example in the early 1990s the Mexican Peso was fixed to the Dollar. If the U.S interest rate was raised, Mexico’s central bank had to raise the interest rate as well. Monetary policy in Mexico was therefore effectively imported from the U.S. By pegging the exchange rate to a country with low inflation and solid monetary policy it is possible to reduce domestic inflation. For example Argentina suffered hyperinflation in the late 80s and early 90s but managed to bring it down to single digits by rigidly pegging to the U.S Dollar. Finally if a country wants to keep its monetary policy independence and allow for full capital mobility it has to sacrifice exchange rate stability. The U.S for example does not stabilize its exchange rate, instead the U.S allows for full capital mobility enabling the country to invest domestically using foreign funds but at the same time controlling monetary policy to stabilize the domestic economy. As a consequence the foreign exchange value of the Dollar fluctuates in response to changes in monetary policy and capital flows.

Will It Burst or Flatten Out in India?

It has become well nigh impossible for those who invested in real estate last year to exit the scene as the downturn has deepened and the prices being quoted do not even cover the purchase costs and interest expenses. Moreover, the negative global news flow has set off a panic reaction, inducing investors to close deals at losses.

Early last year a flat in Greater Noida or Gurgaon, bought with a bank loan to finance 80 – 85% of the cost would have the EMIs continuously go up since the purchase, thanks to a series of rate hikes by the RBI. The flat may have been purchased for a pure investment decision after hearing stories of skyrocketing returns made on property investments. However, the prices haven't climbed as expected and the interest outgo has made the property expensive. The owner is now left with the only option of selling at a loss. And given the global economic gloom, he is willing to take a hit. Several investors are stuck simply because there hasn't been enough price appreciation in the past one year.

Several young investors invested in property at the peak of the property cycle last year. Many purchased two apartments simultaneously, assuming that they would finance one by selling off the other at a premium. They are now caught in a difficult situation as they bought at a higher market rate and are compelled to service two EMIs.

Some investors have started defaulting and there is a significant rise in the number of people who are approaching the realty developers to cancel their bookings and return the money. I feel that investors will have to bear huge losses if the markets do not improve during the festive season. Home buyers in the country are staying away due to the high interest rate regime and expectations of a correction following the realty crash worldwide.

Supplemental Insurance for Banks: A Myth?

Don't many banks and funds have supplemental insurance to protect themselves? Tons of it. Insurers have written $62 trillion worth of credit-default swaps. Banks have private deposit insurance. But you have to understand: These seeming guarantees have been part of the problem, because they have given speculators a false sense of security. Insurers wrote them when they believed the system was risk-free. CDSs became speculative vehicles, and the liabilities at this point are way too big to cover. Additionally, many of the deals are complex and nearly opaque as to who owes what to whom.

Insurance is always available when there is nothing to fear, but it goes away when big trouble looms. A subsidiary of Warren Buffett's Berkshire Hathaway company just announced (9/10) that it will stop offering supplemental deposit insurance to the 1500 banks it was covering. As you can see, it offered the insurance to make money, not to protect banks. Now that banks need protection, there is no more insurance.

Still, one can hardly blame an insurance company for getting out of the business. Insurance is supposed to provide a way for prudent people voluntarily to socialize their risks. But when profligacy puts everyone at risk, insurance is impossible. In a depression, insurance companies stop insuring because they fail. Washington Mutual bank, reportedly in trouble, is 7.5 times as big as the biggest bank that's ever failed in the U.S. Buffet is just acting ahead of the disaster. The government never acts ahead of disaster, so when the FDIC stops providing insurance, it will be because it has no choice.

Erotica & Economics

A brain-scan study may help explain what is going through the minds of financial titans when they take risky monetary gambles: sex.

When young men are shown erotic pictures, they are more likely to make larger financial gambles than if they are shown a picture of something scary, such as a snake, or something neutral, such as a stapler. The arousing pictures light up the same part of the brain that lights up when financial risks are taken.

These results have been brought out in a study involving 15 heterosexual young men at Stanford University, focused on the sex-and-money hub, the V-shaped nucleus accumbens, which sits near the base of the brain and plays a central role in what is experienced as pleasure. When that hub is activated by the erotic images, the men are far more likely to bet high on a random chance game that would earn them either a dollar or a dime.

Stanford psychologist Brian Knutson, a lead author of the study, says “it is all about the power of emotion and arousal and financial decisions. The trigger does not have to be sex - it could be chocolate or a winning lottery ticket”. To quote … the link between sex and greed goes back hundreds of thousands of years, to men's evolutionary role as provider or resource gatherer to attract women.

The study conforms to recent research that indicates men shown a pornographic movie are more likely to make riskier sexual decisions. Another suggests straight men think less about their financial future after being shown pictures of pretty women. One still-to-be-published study at Harvard University found a link between higher testosterone levels and financial risk-taking.But the study conducted at Stanford, funded by the National Institutes of Health, went deeper, using functional magnetic resonance imaging machines. It is part of a new but growing field called neuroeconomics that attempts to take the hard-wired science of brain biology and mix it with the softer sciences of psychology and economics to figure out why people make the financial decisions they do.

An earlier study by the same team found that the brain's reward area lit up at about the same time as risky decision-making. The erotic pictures experiment is designed to find which is the cause and which is the effect. The answer: Lighting up the reward area, in this case with soft-core pictures, caused the risk-taking. The more activation there you have, the more prone you are to taking more risk. It could be a feedback loop. The flip side is that the photos of snakes and spiders activated the portion of the brain often associated with pain, fear and anger. And those people are more likely to bet low.

This all makes sense to Harvard economist Terry Burnham, author of the book "Mean Genes". Burnham said it could be all summed up in a famous line from the movie "Scarface". "In this country, you gotta make the money first. Then when you get the money, you get the power. Then when you get the power, then you get the women."

Is Fed's Bailout Going To Be Dramatic?

Companies with blockbuster earnings, little to no debt, and with the strength to gobble up the weak companies and expand their market share and their profit margins will be the biggest winners of all. Specifically, the oil and gas sectors will rise along with transportation and utilities as the dollar strengthens around the world. You’ll also see big gains in chemical and fertilizer companies as the Fed’s action will have no effect on rising food inflation. Surprisingly, you’ll see strength in niche tech stocks as these companies continue to increase sales and earnings light years away from the financial mess on Wall Street.

If today’s BIG GAINS in National Oil Well Varco (12%) Weatherford International (+12%), Fluor Corporation (11%) Cameron International (10%), Apple (+4%) and Rimm (+4%) are indicative of mammoth sector shift that’s headed your way, this is a situation that you simply cannot ignore. And the shift may have already just begun!

As a result of the Fed bailout, interest rates on 30-year mortgages enjoyed their biggest weekly drop in 28 years, from 6.35% to 5.95%—spurring home sales throughout the U.S. While housing continues to collapse, we’re beginning to see signs of a rebound. In Southern California, for example, homes sales jumped 13.8% in July—the biggest jump in three years. We’re not just talking about California real estate rebounding. Some of the toughest states, like Ohio, are seeing a rebound in home sales as well. We’re not out of the woods yet, but thanks to falling mortgage rates, experts are estimating that a rebound in the housing sector could take place nationally in the early months of 2009.

U.S's top-performing consumer stocks, with 292% and 105% earnings per share growth, could easily deliver 30% to 40% profits in the next 12 months. And that’s just in the short term. The long-term effect of the Fed plan could result an even bigger sector shift in the commercial services sector as well—thanks to a stronger dollar—which surged against the euro, the franc and the yen again.

When you consider that a weak dollar was one of the key factors behind rising fuel costs, a rising dollar will continue to push fuel prices lower, crimping inflation. In fact, today’s collapse in oil prices to $94 a barrel—and the rise in U.S's two top transportation stocks (+7% and +3%)—could be just a sneak preview of what’s headed your way. When you consider that U.S's two top transportation stocks are up 38% and 28% over the past 12 months, you can only imagine how much more profitable these companies will be in the weeks and months ahead.

The bottom line is this: In a world where bank failures, a weak dollar and worldwide illiquidity have been the driving force behind the market’s decline, the repercussions from the Fed’s new bailout are not only going to be quite dramatic……but will also favor a new set of stocks in new sectors.

Who Wants To Be The D-e-p-r-e-s-s-i-o-n President? Obama or McCain?

What a load of bull! The worst isn’t over – not by a long shot. We’re going to see runs on small-town banks, as people steamroll each other to get their money out while they still can. We’re going to see more “safe” money markets worth under a buck a share. And mark my words, we’re going to see several more big names go belly-up, as the politicians finally realize they can’t stop this panic with smoke and mirrors.

The truth about the economy is so bad that Barack Obama and John McCain might be changing their minds right about now. I’m betting neither one of them is looking forward to being tagged as the next Depression President. That’s right. D-e-p-r-e-s-s-i-o-n.

Even just typing the word makes me shudder. But at this point, the Americans would be foolish not to own up to the very real possibility. Wall Street understands. Year-to-date, Lehman Brothers is down 99%. American International Group is down 95%. Washington Mutual, Fannie Mae and Freddie Mac, down 94%, 98% and 99%, respectively.

These are not sniggering little companies. These are giants. These are some of the very pillars of American finance. Throw in Merrill Lynch, Citigroup and Bank of America, and it’s very plain that the foundation of U.S economy is crumbling. And as far as the average Joe or Jane is concerned, the economy is already in shambles.

And it’s going to get a whole lot worse. Worse? Yes, unemployment soared to 6.1% in August. That came as a surprise to economists. Home prices are down some 16% year over year. The magnitude of the drop surprised economists. Retail sales fell 0.3% in August. They were revised down 0.5% for July. Both numbers came as a surprise to economists.

Are you starting to see a trend here? All the eggheads and government wonks have consistently underestimated the depth and breadth of economic troubles. They said the housing problems would be “short-lived.” They said their financial system was “resilient and strong.” They said the stock market would “recover by the end of the year.” None of that is happening. And if you hold your breath waiting, it just might be the last breath you ever take. 2009 is going to be a devastating year for Main Street and Wall Street.

Will Sugar Retain Its Sweetness?

While India is dilly-dallying over withdrawal of export subsidies to sugar mills, major sugar exporters such as Australia and Thailand are continuing to mount pressure on India at the multilateral level to ensure the subsidies are revoked as early as possible. The committee on agriculture of the World Trade Organization (WTO) is all set to discuss the issue in its meeting scheduled for Thursday.

Australia and Thailand had approached the WTO last November asking for details on the sugar export subsidy being provided by India. They had later threatened to drag India to the dispute settlement panel of the WTO if the subsidies were not withdrawn. This made agriculture and food minister Sharad Pawar reduce the period for the subsidy from April 1, 2009 earlier to September 30, 2008.

There is also pressure on Mr Pawar from within the government to remove the subsidy immediately to check inflation and sugar prices. The committee of secretaries had recommended last month that export subsidies should be withdrawn with immediate effect as they were contributing to inflation.

Continued pressure from WTO members would ensure the subsidies are not extended beyond September 30. The subsidy is given in the form of freight assistance to sugar mills. The government has been subsidising inland movement of sugar in coastal states to the extent of Rs 1,350 a tonne and Rs 1,450 a tonne for mills located in other states since last year.

It was aimed at providing support to the industry, which was hit by a 35-40% crash in prices. However, now with sugar prices rising more than 25% over the last few weeks, the subsidy has clearly outlived its utility.

The so-called “bailout” of American International Group!

The U.S government is taking a viable company with a short-term liquidity squeeze and using that as an excuse to almost completely destroy shareholder value. The Fed could have simply issued a “bridge loan”; but instead, they insisted on a complete takeover. And small investors are getting SCREWED again.

Lehman Brothers. Merrill Lynch. AIG. The financial system is near total collapse. And the market could crash all the way down to Dow 8,000. AIG got caught in the “perfect storm.” I’m talking about the most successful insurance company on the planet, caught in the maelstrom of the subprime mess.

In the long term, most of AIG’s assets are fine. But short-term – as is happening throughout the financial industry – no one really knows how to value all the derivatives on its books. And if no one knows what they’re worth, government “mark to market” rules demand that these assets be valued at virtually nothing.

That’s why AIG’s credit ratings got slashed, which sent carrying costs soaring and pushed the company to the edge of bankruptcy. So in stepped the government – and wiped out billions in shareholder value.

It was a Sunday night massacre on Wall Street!

Lehman Brothers filed for bankruptcy. And the venerable Merrill Lynch was taken over by Bank of America.

Bank of America? What a joke! That’s just another house of cards that could come crashing down at any moment. After all, these are truly desperate times. Analysts now admit that subprime losses will eventually total up to $1 TRILLION —and not even half that amount has been written off so far.

Frankly, this could be the end of the banking system as we know it. But it’s not just the financial sector that’s weighing on the stock market. The entire U.S. economy is riddled with risk. The retail sales numbers for August just came out. They fooled all the experts, who were looking for a 0.3% gain. They fell 0.3%, instead. What’s more, the July numbers were adjusted to a miserable minus 0.5%.

I won’t bore you with all the charts and graphs. But PLEASE, do take a moment to look at this one. Your wealth depends on it. It shows a rapidly-increasing percentage of companies are hitting the skids, in regards to sales. And if sales are dropping...earnings will follow them down...and so will stock prices.

That’s not a pretty picture.

What’s more, latest research shows:

• Companies can’t borrow money. The credit crunch is turning into a death grip.
• Companies are slashing capital spending to the bone.
• Companies aren’t hiring. Good luck if you expect the American consumer to turn this ship around. No jobs. No equity in their homes. Maxed out on credit cards. Forget about any soft landing to this CRASH.

Will International Donors Open Their Wallets for Zimbabwe?

After much political unrest and severe economic crisis Zimbabwe’s political rivals finally appear to have found common ground. At the end of the long negotiation talks held between President Robert Mugabe and the leaders of opposition, they have agreed to a power-sharing deal. This could be a sigh of relief for the teeming millions of Zimbabwe who have been subjected to the political and economic crisis for years together. But, it is still not clear how Zimbabwe’s political arch-enemies will manage to work together.

Will this be good enough for international donors to open their wallets? Zimbabwe badly needs outside help. The central bank has failed to rein in hyperinflation—now officially over 11m% but in reality probably over 40m%. So devalued is Zimbabwe’s currency that the bank was forced to announce this week that it would allow some shops to trade in foreign exchange. Farming and manufacturing have collapsed, and shortages are crippling. Some 2m people urgently need food handouts, a number likely to swell to 5m by early next year.

To mention recently Zimbabwe had to take a loan of US$300 million from South Africa to pay the IMF. The load alone is not enough and Zimbabwe will need much more financial help from its Asian allies to ward off a total collapse. The often-violent seizure of thousands of white-owned farms for redistribution to black Zimbabweans, combined with years of drought, has destroyed the country's agriculture-based economy. Inflation has soared to 164 percent, and Zimbabwe is also suffering critical shortages of food, fuel and foreign currency.

We have to wait until Monday (September 15, 2008) when the details of the agreement will be made public. Our eyes would be on the economic policy changes that would be taken up after this power-sharing to counter the economic downturn in the country.

They Are Buzzing!!!

For the last two days the "to-be" marketing managers of Alliance Business School have got the adrenaline of the entire student community rise. A mock assignment on "buzz marketing" can be so creative and exciting was beyond my imagination. The healthy competitive bent-of-mind have given it an altogether different dimension. The "purple" theme of one such group - codenamed "EPOK" - stole the centrestage today. Their innovative idea of spreading the buzz through colorful "epok" tattooes drawn on all students stole the entire show giving them a slight edge over others.

The law of demand and supply deem fit almost everywhere, and this case is no exception. The entire food-court resembled almost a competitive market; the competing teams resembling the sellers, their ideas the product, and other fellow students and peers the buyers. There were neither any entry/exit barriers nor information assymetry. The enthusiasm of the participants (in any form) made the event a crazy show.

The bottomline is that, the idea(s) would create maximum buzz which can generate more demand, attract more people and throw a tougher challenge to other competitors. Kudos to the creativity of the team members and to their mentor!!

Gartner Says Indian IT Market To Reach US $110 Billion In 2012

IT end user spending in India is expected to grow at a compound annual growth rate (CAGR) of 14.8 per cent from 2007 through 2012 to generate US $110 billion in 2012, according to Gartner, Inc. In 2008, IT end user spending is on pace to reach US $64.7 billion, a 17.2 per cent increase from 2007.

This prediction, supplemented by a robust gross domestic product (GDP) averaging 8.08 per cent growth from 2007 through 2012, means the Indian market continues to represent a significant growth opportunity for IT vendors. (See Table 1)

Source: Gartner (July 2008)

India is poised for double-digit growth across many vertical markets, with financial services and communications organizations spending the most on IT, closely followed by services, manufacturing and government.

The Economics of Corruption

To truly understand any economy, we need to know both that is recorded and the one that is hidden. The impact of corruption in an economy has rarely been recognized to its true potential. In the recent survey conducted by Transparency International India and the Centre for Media Studies, Delhi the total monetary value of petty corruption in India is estimated at Rs. 21,088 crore (approx. USD 4.734 billion). This study has used perception and actual experience of paying bribes as the key parameters.

The study, 'Indian Corruption Study 2005 to Improve Governance', released on Thursday, covered 11 services — Police (Crime and Traffic), Subordinate Judiciary, Land Administration, Municipal Services, Government Hospitals, Electricity (Consumers), Public Distribution System (Ration Card/Supplies), Income Tax (Individual Assesses), Water Supply, Education (up to Class XII) and Rural Financial Institutions (Farm Micro-Credit).

It claims to be the "largest corruption survey" ever undertaken in the country and the sample size includes 14,405 respondents, spread across 20 States, 151 cities and 306 villages. The study used both the perception and the actual experience of paying bribes.

On the corruption index the highest rank is claimed by police, closely followed by the judiciary (lower courts), and land administration. But, in monetary terms, schools are ranked the highest. Another observation from this study has been that States where private monopolies have replaced public government monopolies have fared only marginally.

Bihar has been rated as the most corrupt State, and the least corrupt State, according to the study, is Kerala where all the 11 public services considered for the study were ranked as the least corrupt. This has been attributed to extensive "decentralization" and the "more aware" citizen. Nevertheless Participatory Economics can be considered a panacea to the ailing state of affairs in India.

"Brand Bengal" It's High Time To Rethink

West Bengal is one such state of India where a single political party and their allies have been the ruling government for more than three decades. The pace of industrialization in this left-liberal state has been nevertheless slow as compared to all other major states of India. The withdrawal of the Tatas from the Singur project is yet another plight, another result of political intrigues which is resulting in a pyrrhic victory for the opposition party. If the Tatas go, they will take with them almost everything that matters to Brand Bengal. Image and the big bucks. The first entity doesn't carry a price tag but the second one does: a whopping Rs 80,000 crore in investments.

The immediate loss will be over Rs 5,000 crore, including the investments on the ancillary units in Singur. The list would also include tier-II vendors, who will have no reason to be here once Ratan Tata moves out. What's more, the Tata brands like Tata Realty Infrastructure, Tata Metaliks and Maithon Power Limited might also take flight, amounting to a loss of at least Rs 10,000 crore. Besides, there are other bigtime investors who are already jittery. Bharat Forge, which had decided to invest big time in Bengal largely because of the Nano plant in Singur, is now in two minds. The company would have brought in Rs 6,500 crore. This top-of-the-line forging company had signed an MoU with the government earlier this year. Ever since trouble erupted in Singur, their response to the state industries department is: We'll get back.

Brand Bengal had attracted investment announcements of Rs 1,27,302 crore since the third quarter of the last financial year. But this target is now a distant dream. In case of a Tata pullout, there will be a question mark on the investment from nonferrous metal major Vedanta Group. That will be another Rs 16,000 crore gone. Then, there are steel majors who would have implemented their projects this year, but are apprehensive now. All these steel majors, including Adhunik (Rs 5,000 crore), Shyam Steel (Rs 8,000 crore), Jai Balaji (Rs 16,500 crore), Bhushan Steel (Rs 4,000 crore), and Abhijit Group (Rs 8,000 crore) may not be all that keen to invest.

Once the Tatas pullout it will send a negative signal to the investors' mind and they would either imitate the steps of the former or procrastinate their decision. The Tata Group is respected as an organization around the globe, and in India it is synonymous with "stability, sustainability, and reliability". A mere callous attitude of semi-literate politicians just for the sake of gaining political mileage would abjure the interest of the investors resulting into permanent damage to the economic growth of the state. It is high time that the people of Bengal give a second thought to building up "Brand Bengal"; if not now, then never!

India Inc Have Tougher Challenges Ahead

It’s not just the declining earning growth rate, but India Inc will now have to deal with the rising number of loss making companies and a larger quantum of loss. A study carried out by Financial Express with a sample of 3,496 quoted companies on BSE, reveals that around 825 firms (23.6%) made losses during April-June 2008. This is an 11.3% increase in the number reported during the same period last year. The number of loss-making companies was 741 (21.2%) during April-June 2007. And, it is not just the number of companies that has increased, even the quantum of losses has.

In terms of value, the loss amount of 825 companies was Rs 5,032 crore during April-June. The loss amount of 741 companies during the corresponding period of 2007 was Rs 2,054 crore.

An analyst from a rating agency said, “The profit performance of listed companies is affected due to inflation and higher fuel prices during the first quarter." It can be seen that although some large companies (except some refineries) delivered better earning performance, the same cannot be said for the small-cap corporates. This probably means that larger corporates have scaled themselves to rise up to the global competitive environment, whereas the small ones have been more susceptible to domestic environment alone.

During April-June 2008, top five loss-making companies are BPCL (Rs 1,067 crore), HPCL (Rs 888 crore), ITI (Rs 157 crore), Spice Comm (Rs 136 crore) and Dish TV (Rs 125 crore).

Similarly, during April-June 2007, top five loss-making companies were ITI (Rs 129 crore), Dish TV (Rs 90 crore), HPCL (Rs 87 crore), Spice Comm (Rs 63 crore) and Bajaj Hindustan (Rs 60 crore). Among top five loss-making companies, three companies—HPCL, ITI and Dish TV—are common during both quarters.

Among the industries studied, more than Rs 100-crore loss was registered during April-June 2008 by refineries, textiles, telecommunications, sugar, pharmaceuticals, NBFC, fertilisers, entertainment and IT sectors. Significant increase in loss was seen in the case of construction (Rs 4 crore during April-June 2007 to Rs 10 crore during April-June 2008.), diversified (Rs 38 crore to 93 crore), engineering (Rs 7 crore to Rs 32 crore), entertainment (Rs 125 crore to Rs 177 crore), NBFC (Rs 59 crore to Rs 158 crore), pharmaceuticals (Rs 42 crore to Rs 135 crore), refineries (Rs 93 crore to Rs1,955 crore), telecommunication (Rs 211 crore to Rs 414 crore) and textiles (Rs 179 crore to Rs 490 crore).

Refer: http://www.financialexpress.com/news/24--BSE-firms-made-losses-during-Q1/355527