Crude oil is killing everyone and Indian economy too. Soaring crude oil prices that surged past $146 a barrel mark and fears of an economic slowdown dampened trading sentiment in India with the benchmark index skidding 570 points to 13,100 levels.

Well only Indian market was not down it seems, in other markets, South Korean shares closed 1.1% lower, while Hang Seng Index shed 461 points to 21,242 levels as well. So the worries are everywhere.

Tata Steel was the worst hit that slipped 11.5% or Rs 85. DLF Limited, Reliance Infra, Reliance Industries, Maruti Suzuki and ITC limited were among the other top losers again.

Among sectoral indices, the BSE realty index was the worst hit with Sobha Developers ending down over 10%. DLF Limited, HDIL, Omaxe Limited and Unitech Limited slipped over 9%. By the way if you remember, DLF had shot up 15% yesterday on the news of DLF Buy Back offer.

In this current volatile market, investors are losing their risk appetite. But those who haven’t lost heart and know equity investment still holds an edge over other asset classes, are constantly on the lookout for stocks capable of giving good dividend yield and have good upside potential. For such investors, UCO Bank (UBL), which is trading at a discount of 50 per cent from its January peak, sure would be a good pick. UBL can provide the much-needed stability to the portfolio as it has a dividend yield of 2.4 per cent and can give returns of 20-25 per cent from the current price level.

In its recently announced quarterly and yearly results, UBL posted a net profit of Rs 412 crore (FY08), up 30 per cent from Rs 316 crore. In the same period, the total business of the bank went up by 20.66 per cent to Rs 1,35,536 crore against Rs 1,12,331 crore reported last year. UBL’s deposits increased by 23.2 per cent to Rs 79,909 crore from Rs 64,860 crore, while advances rose by 17 per cent to Rs 55,627 crore from Rs 47,471 crore in the previous year. Growth in advances for not up to the industry average of 25 per cent.

There was a deliberate attempt by the bank management to go slow on credit because it wanted to save capital for the compliance of Basel II requirements. Now, UBL is Basel II compliant and has a capital adequacy ratio of 11.02 per cent. The net interest income of the bank declined by 6.5 per cent at Rs 1,419 crore from Rs ,1518 crore last year. The net interest margin (NIM) also fell to 1.87 percent from 2 per cent in the same period. The change in economic environment of the country is claimed to be the reason behind this.

Loans given earlier given at lower rates have pulled down net interest margin. At the same time, cost of deposits has also increased, affecting the bank’s net interest margin in both ways. But the worst is over for the bank and things have begun improving from this fiscal. The management has initiated concrete measures to diversify its loan portfolio and is focusing on education loan where there is no business cycle. UBL has posted a growth of 38 per cent on education loan advances in 2007-08. For the first time, the bank has brought down its net NPA (non-performing assets) to less than 2 per cent (1.98 per cent). It was the result of conscious efforts to contain NPA. Any recovery from this written-off accounts directly adds to the bank’s bottom line. UBL recovered Rs 102 crore this fiscal (FY08) against Rs 60 crore in the lastfiscal. For next year, the bank has set a recovery target of Rs 150 from its Rs 1,300 crore written-off accounts. This will also help it clean its balance-sheet.

We have been very bullish on the prospects of GMR Infra, due to its business models. The company is the infrastructure holding company formed to fund the capital requirements of various infrastructure projects in the Group’s Energy, Highways and Urban Infrastructure including SEZ and Airports.

The company is having 50.10% stake in Delhi Airport with an initial term of 30 years which can get extended for another 30 years. The first phase of Delhi Airport is designed to handle 37 million passengers per annum, which would be completed by March 2010, and will be fully operational before the Commonwealth Games. The Delhi Airport is spread over 5,000 acres of land and 5% of such land equivalent to 250 acres is available for development and use for commercial purposes.

The company has 63% interest in Hyderabad Airport which went into commercial operations from 23rd March 08. The airport has capacity to handle 12 million passengers per annum. This airport also has a concession term of 30 years which is extendable for another 30 years. It may be noted that the company would be paying 45.99% of the airports’ gross revenue to AAI for Delhi Airport while 4% would get paid for Hyderabad Airport. The company has been given 5,500 acres of land on lease for Rs.155 crores at Hyderabad for the airport. Major part of this land would be developed by the company including by way of sub-lease for hotels, resorts, flight catering, aircraft maintenance , cargo, convention centres and commercial and residential buildings.

The company has 40% stake in Istanbul Airport in Turkey for a concession period of 20 years, capable of handling 10 million passengers per annum.

The company has recently acquired 50% stake in Netherland based power producer InterGen NV for Rs.4,708 crores (US $ 1.1 Billion). This company has operations in 5 countries with interest in 12 operating power plants with gross capacity of 8,258 MW and 4,822 MW of assets under development. This acquisition has been made at most competitive acquisition at $ 3,60,000 per MW which is half the current cost of similar facility.

In India the company has 8 power projects, of which, 3 are operational and 5 under development with gross capacity of about 3,500 MW. Of these, Orissa and Chattisgarh has thermal power projects of 1,000 MW each.

The company has 6 BOT road projects for 421 kms of which 2 are operational and 4 are under implementation.

The present equity of the company is Rs.364 crores with face value of Rs.2 each. Promoters stake in the company is at Rs.73.28% while 18.14% is held by FIIs and FIs and about 8.58% is held by the Indian public.

The present market capitalization of the company is at about Rs.14,500 crores at its present market price of Rs.80 per share. This is considered quite low considering the value of holdings in its various subsidiaries and the growth expected and visible from all its projects, over the next 2 – 5 years.

For FY 08, on consolidated basis, the total income of the company was at Rs.2,365 crores with profit before tax of Rs.321 crores while net profit was at Rs.210 crores. As the Hyderabad Airport commenced operations only in the last week of March 08, results would start reflecting from FY 09.

The real benefit would accrue to the company on development of its real estate at Delhi and Hyderabad Airports. Since the cost of both the lands are virtually nil for the company, it is not very much affected by the slowdown or impact cost of realty companies, presently going through.

The company’s subsidiaries have also gone for financial closure for all its projects and for its overseas subsidiaries, debt is being raised abroad at the most competitive rates. So interest rates hardening or credit crunch would not affect much for the company’s projects.

Share is now ruling at Rs.80 has very limited downside and even if it falls from hereon it should soon get recovered atleast to the levels of Rs.80. Those who have bought the stock earlier at much higher rates are advised to remain invested with a view of 2 years. Holding the stock with horizon of 2 years would give returns in one go as the company is proxy to India’s infrastructure growth story.

At Rs.80, the share is a safe long term bet, but with 2 year’s time horizon

Interest rates on some mortgage products have been increased by a number of lenders, including the Internet arm of HSBC, First Direct, the Cooperative Bank, and the Bradford and Bingley. All of these lenders have raised the interest rates on their fixed rate mortgage deals. The Bradford and Bingley has increased the rates on its fixed rate loans by between 0.5% and 0.7%. First Direct has increased rates on a two year fixed rate mortgage by 0.16%. The Cooperative Bank has increased the rate on its three year fixed rate mortgage 0.7% and the rate on its five year fixed rate deal has gone up by 0.9%.

These latest rate rises come despite the fact that the base rate has fallen three times since December, and has stayed on hold since April. This adds further expense and worry for those trying to get mortgage loans, and will make it increasingly difficult for first time buyers to get onto the ladder due to lack of affordability. Banks have blamed the continued difficulty and expense in securing finance for their mortgage lending operations.

In the meantime another lender, the Alliance and Leicester, has introduced a new mortgage product available to those that meet the eligibility requirements and can put down a deposit of at least 25%. The new mortgage is available through branches, Mortgage Direct, or via brokers. It is a two year base rate tracker, and offers an interest rate of 5.98%. There is a £999 arrangement fee, and the maximum borrowing level subject to status is £1 million.

An official from the Alliance and Leicester stated: “The addition of this new product to our mortgage portfolio demonstrates Alliance & Leicester’s commitment to the mortgage market. With both flexible features and a headline rate below six per cent, it represents a great deal for both new and existing customers - particularly as fixed rate pricing continues to rise across the market.”

We are all worried with the falling markets but there are still some nice gems available to invest in. One of them is Aban Offshore company. Increasing spends on oil exploration and production activities, driven by the surge in global crude oil prices, have put Aban Offshore, the country’s largest offshore oil rig service provider, in a sweet spot. Well, I have been watching this stock since last few months and I think this is the right time to invest in it now. Who should invest in this? Investors looking to play the high oil price scenario can consider investments in the stock at current market price. Aban’s large and relatively young fleet with an optimal mix of short- and medium-term rig contracts lend it strong revenue visibility over the medium term.

Besides, the current market valuation also makes a compelling case for fresh investments in the stock. At the current price of Rs 2992, Aban trades at about nine times its likely FY-09 per share earnings on a consolidated basis which is attractive in my opinion.

But you guys may need to temper your expectations on the returns front given the volatility in the broader market.

Investments with a one-year horizon can be considered in the shares of HCL Infosystems, considering its well-positioned business in the domestic IT infrastructure market and very reasonable valuations. At Rs 137, the stock trades at 7 times its expected 2007-08 earnings, with a 5.8 per cent dividend yield also providing a cushion against downside.

Strong positioning in the domestic desktop and laptop markets, scope for higher margins on system integration deals and recent e-governance initiatives hold promise for the company.

Compared to MNCs in these segments, HCL Info’s pricing is fairly aggressive and may position it to capture further market share, considering that PC penetration is very low in India. The company manufactures and markets its own brand of desktops and laptops. Over the last four years, HCL Info has captured an estimated market share of 15.5 per cent in the desktop and 7.4 per cent in laptops. HCL Info’s tie-up with Microsoft to provide low-cost laptops also holds promise; the laptop market has expanded two-fold in 2007-08, according to a recent IDC survey. Because of the hardware-intensive nature of the business, the operating profit margins have been in the 5 per cent range, but hold scope for improvement.

With equity markets in the doldrums, mutual funds are increasingly turning to debt instruments. Several mutual funds have diverted a large portion of their portfolios into debt schemes in the past few months.

The debt portion of assets under management of the mutual funds industry increased by around 25 per cent by May-end from January 2008, while the share of equity fell by 14 per cent.

The equity portion of the assets under management of mutual funds dropped to Rs 189,958 crore in May 2008 from Rs 219,367 crore in December 2007. The portion of hybrid schemes (which has a large percentage of equity) also fell by around 20 per cent during the same time.

The debt portion of the asset base has increased by around 25 per cent in the past five months, in which the share of medium-term funds and gilt funds etc has gone up by more than 50 per cent, while the cash portion which generally includes liquid funds, floating rate funds and Fixed Maturity Plans (FMPs) amongst others, grew by around 22 per cent.

The total debt portion of the mutual funds asset base has gone up to Rs 381,373 crore in May from Rs 306,786 crore in December.

Jetking Infotrain soared 17.44% to Rs 322.95 yesterday on BSE after the company said its board will meet on 30 June 2008 to consider issue of bonus shares. The company made this announcement during trading hours today, 24 June 2007. The stock had a 52-week high of Rs 433.70 on 6 November 2007 and a 52-week low of Rs 251 on 2 June 2008.

The small-cap company had outperformed the market over the past one month till 23 June 2008, declining 10.74% compared to the Sensex’s decline of 14.15%. It had also outperformed the market in the past one quarter, declining 1.86% compared to Sensex’s decline of 11.86%.

The company has an equity capital of Rs 3.93 crore. Face value per share is Rs 10. The current price of Rs 241 discounts its Q3 December 2007 annualised EPS of Rs 40.30, by a PE multiple of 25.03. Jetking Infotrain’s net profit rose 47.04% to Rs 3.97 crore on 0.71% increase in net sales to Rs 9.91 crore in Q3 December 2007 over Q2 September 2007.

Jetking Infotrain provides training in the field of computer hardware and networking and relevant courses. The institute operates through 85 training centers with 2500 faculty members.

Shareholders can consider booking profits in the stock of Vishal Retail. Investors who subscribed to the company’s initial public offer last June are still sitting on a 160 per cent return on the offer price, though the stock has corrected substantially from its highs. The current market price of Rs 689 values the stock at about 25 times its likely FY-09 earnings, assuming the company delivers on its guidance.

The valuation is slightly stiff, in our view, as it factors in sustained ramp up in new stores. We are somewhat skeptical of the company’s ability to meet its expansion target for FY-09, as it is not yet adequately funded for the expansion. Even if it manages to raise equity worth Rs 200 crore through private placement, as proposed, with the balance to be funded by debt, higher interest costs are likely to be a drain on earnings over the next year. As a slower-than-expected pace of roll-out could lead to a de-rating of valuations, shareholders can consider booking profits at least partially on the stock.

The recent move into the alternative fuel segment and the introduction of diesel versions for some models will help the company combat the spike in petrol prices.

We recommended a ‘buy’ on Maruti Suzuki in early February at Rs 904. At that time, the company’s strong sales numbers in the backdrop of rising interest rates, its market leadership position in the compact cars segment and improved product mix in the A2 (compact) and A3 (midsize) segment, were expected to translate into good earnings prospects for the company.

These positives notwithstanding, the stock has shed about 20 per cent since our recommendation. The fall (partly due to broader market volatility too) is attributable to three reasons — a moderation in growth in monthly sales numbers since December, fall in net profits in the fourth quarter and apprehensions over a further rise in interest rates and fuel prices. At the current market price of Rs 727, the stock trades at an inexpensive PE of 12 times its trailing 12-month earnings.