The years 2006 and early 2007 saw record numbers of mergers, takeovers and buyouts. Since that time, the activity has subsided due to the problems in the credit markets. Liquidity is not as easily available and, as result, there is a lot less money sloshing around to drive mergers and takeovers. Yet, while the frantic pace of merger activity seen in past years is unlikely to return soon, a few deals will surely be announced next year. This installment of “Stock Talk” highlights three of the top takeover candidates for 2008.

OptionsXpress (OXPS) is a familiar name to most options traders. The Chicago-based online broker is a niche player with a focus on trading puts and calls. OptionsXpress also offers online trading of stocks, bonds, mutual funds, and futures. The firm has been steadily growing and, in the five years ended 2006, saw revenues grow from $17.3 million to almost $187 million.

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India’s Sensitive Index swung between gains and losses yesterday. ICICI Bank Ltd led declines after neighbouring Pakistan’s former Prime Minister Benazir Bhutto was assassinated, increasing concern over the stability of the nuclear-armed nation that is a hub of the war on terrorism.
The Bombay Stock Exchange’s Sensex slid 9.77, or 0.1%, to 20,206.95. It earlier rose as much as 0.2%. The index rose 5.5% in the week and is set for a 47% gain this year, matching a similar gain last year. Markets will remain open on Monday.

The S&P/CNX Nifty Index on the National Stock Exchange fell 1.80, or less than 0.1%, to 6,079.70.

“Markets could remain volatile for a few days after the turmoil in the neighbouring country,” said Sandip Sabharwal, chief investment officer at JM Financial Mutual Fund in Mumbai, which oversees the equivalent of $1.1bn in equities. Reliance Energy Ltd gained after the stock regulator rejected objections to the initial share sale of its unit.

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Even as foreign institutional investors (FIIs) have made a killing in the stock market in the past two years, multinational banks, on the other hand, have been cautious at their equity desks. In contrast, Indian banks, both private sector and public sector banks, have higher direct exposure to stocks.

Public sector banks - nationalised banks and the State Bank group - have started turning to stocks ever since the interest rate scenario turned southward in the past three years which made bond investment unremunerative.

According to the latest bank-wise figures released by the Reserve Bank of India in its Statistical Tables Relating to Banks in India, total bank investments in stocks by the country’s commercial banks rose by 36% in FY07 from Rs 11,028.64 crore to Rs 15,001.88 crore. While the Sensex rose 18% during the period from 11,279 in end-March ‘06 to 13,384 in end-March ‘07. But within bank groups, nationalised banks (with the highest direct investments at Rs 9,398 crore as of March ‘07) as well as the State Bank group hiked their exposure by more than 50% during the period.

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The Bombay Stock Exchange (BSE) will launch Sensex mini derivative contracts from January 1, 2008, in a market lot of five.

“The small size of the contract would be attractive for retail investors as there would be comparatively lower capital outlay, lower trading costs, more precise hedging and flexible trading. It is a step to encourage and enable small investors to mitigate risk and enable easy access to Sensex, through Futures & Options,” stated the BSE in a press release.

The security symbol for Sensex mini contracts will be MSX. The contract is available for one, two and three months along with weekly options. The announcement came in immediately after SEBI allowed trading in mini contracts on index (BSE 30-share Sensex and NSE 50-share Nifty) with a minimum contract size of Rs. 1 lakh.

The SEBI board had proposed to introduce seven new derivative products based on the recommendations made by the SEBI Committee on Derivatives.

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In general term, a bond is similar to IOU. An investor obtains a bond from any financial institution for a fixed amount of money. It is then that financial institution promises to return the money back years from that day with a small percentage of interest added to the actual amount.

Lets sort this with an example, when a person purchases a house, he or she usually require to go for a loan that is to borrow money from a bank or a mortgage lending company. To borrow this amount, people need to sign up a promissory note stating he or she would pay back the loan amount by particular given time, plus a percentage of interest that is accrued each month. Normally, a mortgage fee spans fifteen to thirty years and is paid back in way of EMI Monthly installations.

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The sensex rode the yuletide cheer to clamber above 20000 once again as frontline stocks surged on expectations that third-quarter corporate earnings would be robust.

The benchmark index ended at 20192.52, a gain of 338.40 points over the last close, buoyed to some extent by the shortcovering ahead of the expiry of monthly futures contracts.

“Investors are generally optimistic that the third-quarter results season which will commence next month will be good and that foreign institutional investors (FIIs) will return to the markets,” an analyst said.

Since the Securities and Exchange Board of India’s curbs on participatory notes, FIIs have not taken an active interest in the equity markets. Last week, foreign investors sold stocks of over $1 billion.

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