Stearns proves bearish for Indian cos

MUMBAI: The impact of the US sub-prime crisis is telling in more ways than one on Indian companies and equities. The latest being the bailout of US's fifth largest broker Bear Stearns by JP Morgan Chase for a rock-bottom price of $236 million. The deal will see JP Morgan pay only about $2 a share for Bear, which was driven to the brink of bankruptcy by a virtual run on the bank.

This saw the global markets face another bear onslaught Friday. The news sent the Bear Stearns stock southward by as much as 50 per cent from $60 to $30 per share. Last April, the stock had hit a 52-week high over $159, valuing the company at about $24 billion at that time.

The US brokerage’s downfall saw global markets plunge Monday. In India, shares of companies in which Bear Sterns has equity stake were also hit badly. Ganesh Housing was the worst hit, tripping more than 11 per cent. Bear Sterns has interests in more than 15 companies--from real estate, infrastructure, energy to capital goods.

The investment bank has maximum exposure in RPG Transmission at 8.93 per cent and on the lower side, 1.06 per cent in Hindustan Construction Company. Ganesh Housing, in which Bear Sterns holds 4.09 per cent, fell 11.53 per cent on the BSE to Rs 317. Madhucon Projects fared comparatively better, with the scrip shedding just 2.63 per cent to Rs 459. The US brokerage holds 5.96 per cent in the company.

Source : TET