04 August 2008

GENERAL

1)The 15th SAARC Summit concluded in Colombo on Sunday, expressing deep concern over the serious threat posed by terrorism to the peace, stability and security of the region and emphasising the need for the “strongest possible cooperation” in fighting terror and trans-national organised crime, especially in the area of information exchange.

Hindu

ECONOMY

2)The slowdown in the industrial growth is a short-term phenomenon and the country is expected to record a 10% growth in industrial production during FY09 as against of 8.3% in the previous fiscal, Centre for Monitoring Indian Economy(CMIE) has said.

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3)THE government has accorded navratna status to the public sector firm, Shipping Corporation of India(SCI). Two other PSUs, Oil India and Container Corporation of India(Concor), are next in the line to get the status of navratna. The status would provide greater financial autonomy to these PSUs while taking commercial decisions.

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CORPORATE / INDUSTRY

4)India Inc on Sunday lauded Prime Minister Manmohan Singh’s government on securing International Atomic Energy Agency (IAEA) approval for a safeguard agreement for implementing the India-nuclear deal. While the apex industry chambers hailed the milestone, they asked the government to move quickly to reap the opportunities coming with recognition of India’s nuclear capabilities. “To reap the benefits of opportunities which are in the offing, India will have to move very quickly and start working in earnest as even absorption of technology requires significant capabilities,” industry body Ficci secretary general Amit Mitra said. Assocham went to the extent of saying that with the signing of the deal, India can anticipate minimum $40 billion of investment from nuclear power countries, including France.

TOI

5)L&T ECC is not unduly worried about reports of a slowdown in the economy. Anticipating no slack in demand in the long-term, the diversified conglomerate feels that there is no slowdown in infrastruc- ture despite the fluctuations. The six-decade-old company has been registering a compounded annual growth rate of 25% to 30%.It clocked a turnover of Rs 30,500 crore last year. “We have an order book of Rs 36,000 crore, equal to two years of average business, although, some hydro power projects would be spread over five years,” said K V Rangaswami, L&T board member and president, ECC division.

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6)Power equipment major Areva T&D India Ltd, part of the French nuclear giant Areva, has capex plans of Rs 500 crore for the current financial year. In the next financial year, it would be investing ano- ther Rs 200 crore.  The company is keen to expand its footprint in the rapidly expanding power transmission and distribution sector.

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7)Hyderabad-based Suryachakra Power Venture Private Limited has entered into a joint venture with MAN Solar Millennium GmBH of Germany for developing concentrated solar power projects(CSPPs) in India. The joint venture company named Suryachakra MSM solar India Private Limited proposes to set up CSPPs of 5 Mw each in Maharashtra, Chhatisgarh, Andhra Pradesh, Gujarat and Madhya Pradesh at a total cost of Rs 420 crore over the next two years.

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MONEY & BANKING

8)After more than half a dozen banks have hiked their lending rates, at least four banks are likely to raise their rates this week in the face of tight monetary policy announced by Reserve Bank. Leading lenders like Bank of Baroda, Bank of India and Union Bank could be among the public sector banks that are set to hike their rates by 0.5-0.75%.

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9)NON-Banking finance companies(NBFCs),which do not accept depo-sits, will now have more time to meet the Reserve Bank of India’s(RBI) requirements on capital adequacy norms. The central bank has extended its earlier deadline for these players to meet CRAR(capital-to-risk-assets ratio) requirements. These companies now need to achieve a 12% CRAR ratio by March 2009 against RBI’s earlier circular, asking them to meet these levels with immediate effect. On similar lines, they need to reach a CRAR level of 15% by March 2010 as against the earlier date of April 1, 2009. The central bank,which had imposed stringent guidelines for deposit-taking NBFCs few years ago, is now bringing even non-deposit taking NBFCs under sufficient control due to underlying systematic risks.

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10)Public sector lender Punjab & Sind Bank is set to dilute 25-30 per cent stake through private placement of equity by October for raising Rs 1,000 crore to finance its expansion. The Delhi-head-quartered bank had favoured private placement over an initial public offer due to the stock market’s volatility, a source familiar with the development said.

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11)Bank of Rajasthan, will issue bonus shares in the ratio of 1:5 (one share for every five shares held), the bank said in a press release. Shareholders of the bank approved the bonus in the 65th annual general meeting in Udaipur, on August 2. The bank also decleared a dividend of five per cent for the fiscal ended March 31.

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PENSION

12)The four Left parties may no longer be allies of the Congress party led United Progressive Alliance, but their concerns on the pension  Bill will still be addressed by the government. Officials said the finance ministry, which is sending the final Bill for law ministry clearance, has decided to bar fund managers from investing overseas. Also, individuals will be allowed the option to invest their entire corpus in debt instruments.

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MARKETS

13)With the completion of the first quarter results season last week and in the absence of any major trigger on the home front, domestic markets are expected to look West and at their Asian counterparts for direction next week. Dealers, however, said the crude oil prices and inflation that weighed on the market till recently, will continue to determine the market direction for some more time now. However, the biggest event of the week is the US Fed’s crucial meeting on Tuesday.

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COMMODITIES
 
14)Crude oil futures on the national bourse continued to remain weak last week after witnessing more than a $22 fall in prices. Declining levels of demand are still in the forefront of the market. Gold futures prices were range bound last week, as falling crude oil prices weighed on gold prices. The base metals pack traded on a mixed note as a variety of factors influenced the markets. Gold prices fell below $900 an ounce for the first time after a month. In the initial party of the week, firm financial markets and strength in the dollar lead to a heavy sell off in precious metals. A major factor that moved base metal prices was the dollar movement as there was a list of economic data releases in the last week. Copper prices in the international markets have managed to hold strenth around $8,000 levels on the back of news that Group Mexico has not decided a date to re-start its mining operations.

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15)The National Commodity and Derivatives Exchange(NCDEX) will launch coriander seed futures on August 11 and the contracts will expire in October, December and April, an exchange official said on Saturday. “Our contract is in line with the expectations and needs of coriander traders in spot markets such as Kota and Ramgunj. We hope our exper- tise in farm commodity futures will attract market participants to our contract,” Unupom Kaushik, chief business officer, NCDEX said. The Coriander seed contract’s lot size will be 10 tonnes, and the main delivery centre will be Kota in Rajasthan.

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16)Silver has beaten gold in returns, with the white metal giving returns of 30 per cent against 14 per cent returns from gold in 2007. The white metal is still maintaining a significant lead this year. The average return from investment in silver has grown by about 18 per cent since January this year.

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17)Indian pepper futures market moved up at the weekend on strong domestic demand that in turn has made it out-priced in the world market. The fundamentals continued to remain strong. The Indian futures market is negatively affected by the tug of war between the bulls and bears creating uncertainty in the prices. “We were having some good opportunity last month but now we are loosing ground,” market sources told Business Line. On the other hand, the festival season is coming up, increasing the domestic demand.

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18)The sharp fall in chilli arrivals in the Guntur spot markets and rising export demand may push up chilli prices in the short-term. According to market estimates, stock with farmers will exhaust within a fortnight. Arrivals from the new crop are expected to hit the market only in February.

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REAL ESTATE

19)HDFC Property Ventures is investing $20-25 million in South India’s largest central business district(CBD) mall developed by Nitesh Estates in Bangalore. The move probably marks the $900- million HDFC Property Ventures’ foray into retail infrastructure in a rather tight market environment, sources said. HDFC Property Ven- tures will pick up around 20-25% stake in the 6-lakh sq ft Nitesh Mall, which is being designed by Settle-based Callison. Nitesh Mall, which is the Bangalore-headquartered real estate firm’s first retail play, is estimated to be a Rs 300-crore project.

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20)Essar Realty Holdings-the real estate arm of Essar group-has won a bid for building a Rs 500 crore five-star hotel, utility centre and a multiplex at the upcoming Multimodal International Hub Airport at Nagpur. The realty firm has also formed a joint venture with the US-based hospitality group Accor Hospitality to develop and manage the hotel project.

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INFORMATION TECHNOLOGY

21)Indian IT firms have started mining smaller clients with more fervour given that the revenue accruring from their top clients has been declining due to the US slowdown and the sub-prime crisis. Consider this. Revenue accruring from the top clients(top most, top 5 and top 10) for the leading IT firms by revenue – Tata Consultancy Services(TCS), Infosys Technologies, Wipro Technologies, Satyam Computer Services and HCL Technologies – dropped by anywhere between 0.2 per cent and 4 per cent over the last two quarters(January- March ’08 and April-June ’08). The top clients were not able to ramp up their budget since a majority are from the BFSI segment. While the US accounts for 40-60 per cent of their revenues, the BFSI segment( which is bearing the brunt of the sub-prime crisis) accounts for up to 40 per cent of the revenues. However, mining smaller clients requires great attention and management focus. However, managements of the top tier firms tend to focus their bandwidth on clients that can return higher revenues, so the focus is almost always on Fortune 500-type firms, note analysts.
                                  
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