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Tuesday, September 16, 2008 (00:38:31)

Tags : Lehman Brothers, Banking, Largest bank,

Little impact of Lehman Brothers' collapse on India
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New Delhi/Mumbai: Even as global markets tottered under the impact of the buyout of Merrill Lynch and
collapse of Lehman Brothers, the world's third and fourth largest investment banks, the India impact will be
limited, experts said on Monday. "The impact will be limited and restricted to three areas mainly - stock
markets, realty and outsourcing," a person familiar with Lehman and Merrill's operations in India said on
condition of anonymity.
"A large part of the impact on equity markets has already been discounted by today's slide in Indian markets,"
said Naresh Pachisia, managing director of leading merchant banker and securities brokerage house, the
Kolkata-based SKP Securities Ltd. "I do not expect any more bad news at least in the next few months," he
said, adding that markets may fall a little more but should begin to recover once the Indian festive season kicks
"This is certainly not good news. It will certainly have a negative impact on those areas in India where these
two companies have operations, specifically in the realty sector, said Anuj Puri, country head, Jones Lang
Lasele Meghraj, a global real estate consultancy firm. "The sector is already facing a fund crunch. Even if the
immediate implication on India cannot be assessed it will certainly shake the confidence of the industry in
general which was banking too much on foreign institutional investors," Puri said.
Earlier during the day, however, many Indian information technology companies such as software and
outsourcing giants Wipro and TCS issued statements that they may not see much impact.
Lehman has investments in Indian companies such as Spice Communications, Spice Mobile, Edelweiss Cap,
IVRCL Infra, Development Credit Bank, Champagne Indage, Golden Tobacco and Emkay Global. "Many
Indian companies draw liquidity from these investment firms and may be impacted, said Religare Securities
President Amitabh Chakraborty.
"I believe the US Federal Reserve Bank chairman Ben S. Bernanke will come out with a statement any time to
help stop this financial tsunami," said Jagannadham Thunuguntla, equity head of NEXGEN Capitals Ltd,
India's fourth largest securities brokerage firm SMC Group.
With regard to Merrill's acquisition by Bank of America, experts said the impact is likely to be limited as
Merrill Lynch was already in the process of offloading its India assets.
BlackRock Inc, one of the largest quoted asset management companies in the world, is currently in the process
of acquiring Merrill Lynch's 40 percent stake in its joint venture with noted Indian investor Hemendra
Kothari's DSP group.
DSP Merrill Lynch, had announced a few months ago that once BlackRock picks up Merrill's stake, the two
joint venture entities in India - the investment banking arm and a mutual fund - will be renamed DSP
BlackRock Investment Managers and DSP BlackRock Mutual Fund. While BlackRock currently manages
assets worth $1.3 trillion, DSP Merrill Lynch has some $9 billion worth of assets under its management.