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India says closing in on French fighter plane deal

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NEW DELHI India and France are close to a deal to buy 36 combat planes from Dassault, India’s defence minister said on Monday, after months of wrangling over price and other terms of the sale.

French President Francois Hollande is due in New Delhi this month as a guest of honour at a military parade and the two sides are expected to seal the pact for the Rafale fighters either just before he arrives or during the visit.

“It’s closer to completion,” Defence Minister Manohar Parrikar told reporters. He didn’t give any details.

India’s air force desperately wants to replace its ageing squadrons of Soviet-era warplanes to face a two-front threat from China and Pakistan.

The defence ministry had originally cleared the purchase of 126 Rafale planes, estimated at the time to be worth $12 billion. Last year the number of planes was scaled back to 36 after the two sides could not agree on unit price and local assembly of the aircraft.

Under the new deal that India and France are trying to seal, the planes will be brought off the shelf. “The procedure is going on,” Parrikar said, declining to elaborate.

New Delhi is hoping the bulk of the air force fleet will be made up by an indigenous fighter that has been three decades in the making.

(Reporting by Nigam Prusty; Writing by Sanjeev Miglani; Editing by Katharine Houreld)

Source: R-Business


Wall Street edges up, rebounding from worst-ever start to a year

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U.S. stocks broadly rose on Monday, led by Apple, as they rebounded off their worst-ever start to a year and with the corporate earnings season set to kick off.

All 10 major S&P sectors opened higher, before the energy and materials sectors reversed course, staying under pressure as oil prices fell for the sixth day in a row, hovering near 12-year lows.

Global stocks were mixed as jittery investors looked for stability after a bruising start to the year due to declining oil prices and mounting worries about a China-led slowdown in global economic growth.

The S&P 500 slid 6 percent and the Nasdaq dropped 7.3 percent last week. Not even a surge in U.S. nonfarm payrolls in December stemmed the bleeding.

“A relief rally would be expected at some point during the recent precipitous fall,” said Andre Bakhos, managing director at Janlyn Capital LLC in Bernardsville, New Jersey.

Bakhos, however, warned of escalating concerns over the issues such as China and falling oil prices that have plagued the market all of last year.

At 9:37 a.m. ET (1437 GMT), the Dow Jones industrial average was up 72.08 points, or 0.44 percent, at 16,418.53.

The S&P 500 was up 8.66 points, or 0.45 percent, at 1,930.69 and the Nasdaq Composite index was up 22.95 points, or 0.49 percent, at 4,666.58.

The consumer staples sector’s 0.72 percent rise led the gainers. The health sector, off 0.56 percent, recorded the smallest drop among the three decliners.

The other two decliners, energy and materials companies, are expected to be main cause behind U.S. corporate earnings moving into a recession – two quarters of falling profits – in the fourth quarter.

Overall, fourth-quarter corporate earnings are expected to decline 4.2 percent, according to Thomson Reuters I/B/E/S.

Alcoa is scheduled to report fourth-quarter results after the close, starting the earnings season. The stock was up 1.4 percent at $8.17.

Apple’s shares were up 1.6 percent at $98.48, providing the biggest boost to the S&P 500 and Nasdaq.

The company’s music streaming service hit the 10 million-subscriber mark in six months, the Financial Times reported. Mizuho upgraded the stock to “buy”.

Macy’s was up 4.4 percent at $37.48 after hedge fund Starboard Value urged the department store chain to enter into joint ventures for its stores.

Under Armour was down 4.7 percent to $71.47 after Morgan Stanley cut its rating and price target on the stock.

Advancing issues outnumbered decliners on the NYSE by 1,825 to 820. On the Nasdaq, 1,463 issues rose and 772 fell.

The S&P 500 index showed one new 52-week high and 17 new lows, while the Nasdaq recorded seven new highs and 73 new lows.

(Reporting by Abhiram Nandakumar in Bengaluru; Editing by Savio D’Souza)

Source: R-Business


India IT firms may raise fees to counter dearer U.S. visas

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MUMBAI India’s export-driven IT outsourcing firms are likely to raise client fees and process more work from their centres in India to cushion the impact of an increase in fees for work visas in the United States, their top market, investors said.

The new U.S. measure will shave 50-60 basis points off the profit margins of information technology firms including Tata Consultancy Services (TCS) and Infosys from the next fiscal year starting April 1, they said.

India’s roughly $150 billion outsourcing sector generates about three quarters of its revenue from the United States, where outsourcing companies send thousands of staff every year to work at client locations.

TCS, leader of the Indian IT outsourcing industry, is likely to post a 10 percent increase in its December quarter net profit on Tuesday, while Infosys is expected to report a 3 percent rise in profit on Thursday, according to Thomson Reuters data.

TCS, second-largest exporter Infosys and No. 3 Wipro Ltd have in the past year increased their focus on high-margin digital and cloud computing services, as competition and pricing pressure on routine IT services dented growth.

The measure passed last month by the U.S. Congress doubled the cost of sponsoring workers under short-term H1B and L1 visas, and spurred concerns of future curbs on IT work sent overseas by U.S. companies before the U.S. presidential election.

“The higher visa fee is one of the headwinds…but they can expect to recoup some of the costs through contract re-negotiations and the stronger dollar,” said Aneesh Srivastava, chief investment officer at IDBI Federal Life Insurance.

Indian IT industry lobby group, the National Association of Software and Service Companies (Nasscom), estimates local IT firms would incur an extra $400 million a year in costs due to the spike in visa fees.

“The higher fee is unjustified because it is designed to hurt India firms disproportionately,” said R. Chandrasekhar, president of Nasscom. “Immigration reform in general in the U.S. is something that has to happen sooner or later.”

But as Indian IT firms sharpen focus on high-margin digital technology services instead of routine technology infrastructure maintenance and software application projects, they would need to send fewer staff to client locations overseas, analysts said.

“These companies know that with digital services you can cut down the number of people that need to work out of client locations and that visa costs do not pose a long-term threat,” said Srivastava, whose funds own Infosys and TCS shares.

“With legacy business shrinking, the larger digital becomes, the more it can move the needle in terms of top line growth,” said Moshe Katri, a New York-based sector analyst at CRT Stern Agee.

(Editing by Sumeet Chatterjee and Adrian Croft)

Source: R-Business

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