Headlines (17 September 2008)

GENERAL

1)India and China will hold the next round of the two-day boundary talks in Beijing from Thursday during which their special representatives will explore ways to resolve the festering issue affecting the bilateral ties.

Indian Express

ECONOMY

2)India is set to amend the Atomic Energy Act, 1962, to allow the entry of private players in the generation of nuclear power. The Manmohan Singh administration is working overtime to bring an amendment of this effect through a Bill in the upcoming session of Parliament. The Bill will also include allowing FDI in nuclear power generation.

FE

CORPORATE / INDUSTRY

3)Home textiles major Welspun India(WIL) has announced the demerger of its distribution and marketing and investment divisions into two separate companies. The firm said that such a res-structuring will allow it to have strategic focus on specific tiers of the businesses and therefore enable better business control, flexibility on business operations and help leverage international focus of the group.

BS

MONEY & BANKING

4)THE rupee’s weakness continued on Tuesday, as it crept slowly but surely towards the 47-mark against the US dollar, thereby posting its steepest intra-day fall in almost a decade. Heavy dollar demand from foreign banks, coupled with dollar outflow from foreign investors in the backdrop of the sliding stock market severely dented sentiment for the local unit. It touched a low of 46.99 during early trade, its weakest level in over two years. However, consistent central bank intervention at lower levels halted its slide. The rupee finally ended the day at 46.88/89 against the dollar, considerably weaker than its previous close of 46.05/06.

ET

5)THE move by Lehman Brothers Holdings, the fourth largest investment bank, to file for bankruptcy in the US will impact the country’s largest private bank, ICICI Bank. The bank – the second biggest lender after State Bank of India will have to take a hit of $28m on account of the additional provisioning that ICICI Bank’ UK sub- sidiary will have to make. During this quarter, ICICI Bank pared its credit defaults swaps (CDS) exposures to overseas corporates from $65m-$80m. Some of the large state-owned banks are also likely to take small hits because of mark-to-market provioning on their over- seas investments.

ET

INSURANCE

6)INDIAN non-life insurance companies are anxiously waiting to see the impact of AIG’s troubles on the ratings of its reinsurance arm. Any downgrade of the parent would have a ripple effect on its arm. If the reinsuring arm’s rating falls below the BBB prescribed by Irda, local insurers will have to look for a new reinsurer.

ET

7)Insurance Regulatory Development Authority (Irda) on Tuesday said Tata AIG Life and Tata AIG General Insurance are well equipped to settle claims based on an analysis of their accounts as on March 2008. “We have asked them to file a report on the recent turmoil at AIG. However, we gather the two companies are comfortable on their solvency margins and there is nothing to worry,” said Irda chairman J Hari Narayan.

ET

MARKETS

8)Still reeling from turmoil in the global financial sector, the stock markets opened in the red on Tuesday, but recovered all its losses as several central banks worldwide stepped in inject liquidity, and also on expectations of a Fed Reserve cut in US interest rates. It was buying by domestic financial institutions that lifted stocks later in the day. There was a lot of short covering in anticipation of a Fed rate cut that might drive up stocks again. However, FII selling was unabated. They were net sellers of stocks for Rs 1,303.41 crore, while domestic institutions were net buyers for Rs 612.36 crore, according to the combined provisional BSE NSE data. The Sensex opened with a negative gap of 445 points and touched an intra-day low of 13,051.73; it finally made a smart recovery to close the day at 13,517.80, just 12 points lower. The broader Nifty index too ended flat at 4,074.90; it had fallen below the 4,000 mark in early trade.

BL

9)Currency futures trade on NSE saw trades on nearly one lakh contracts,the highest since its launch last month. “Currency futures saw a trading volume of Rs 456.88 crore arising out of 97,642 contracts,” said an NSE report. Total number of contracts and the turnover doubled as the number of contracts traded touched nearly one lakh mark as compared to 50,386 contracts valued at Rs 232.06 crore traded on Monday. Currency futures were launched on August 29 on NSE. On that day, the exchange had registered trade of 65,798 contracts worth Rs 292.05 crore.

BL

BUYBACK

10)Rain Commodities said it will buy back its fully paid-up equity shares from the existing shareholders and beneficial owners of the firm’s shares. The number of shares would depend upon the average price paid for the shares and the amount deployed in the buyback.

BS

MUTUAL FUNDS

11)Mutual Fund houses have started providing innovative value added services(VAS) to investors in order to survive future competition. Many new fund houses are set to enter the Indian mutual fund(MF) industry in the coming months and MF players feel that those players that provide better services will survive competition. ICICI Prudential MF’s mobile based services that provides 24×7 access to investments in ICICI Prudential schemes is one such VAS. Also, recently launched Edleweiss MF provides services like simplified application form and grievance redressal mechanism.

FE

COMMODITIES

12)National Commodity and Derivatives Exchange has announced a change in trading hours due to sun outage from September 24 to October 8. During this period, the day trading session will remain closed between 11:25 am and 12:05 pm for sun outage, when members may face network connectivity issues, a relase from the exchange said today. Trading hours for farm commodities, except robusta cherry AB coffee, will end at 5:45 pm, compared to 5 p.m now, on week days, NCDEX said.

BS

13)CONCERNED over increasing delivery defaults on the exchanges, commodity market regulator Forward Markets Commission(FMC) has decided to hike penalty to 3% and has authorised exchanges to deliver the commodity. “To protect the interest of the buyer, we have increased the penalty fee to 3% from earlier 2.5%,” FMC chairman BC Khatua said.

ET

14)The pepper futures market on Tuesday recovered on tight supply position coupled with bullish sentiments. September contract moved up Rs 261 a quintal to close at Rs 12,320 on NCDEX, but still much below the spot prices of MG 1 which was at Rs 13,200 a quintal.

BL

15)Ignoring weak global cues gold prices today rose for the fourth day, adding another Rs 80 to close at Rs 11,890 per 10 gm on the bullion market in New Delhi on increased demand ahead of the marriage and festive season. Weakening global trends, where the precious metal fell by seven dollar to reach $779.65 an ounce failed to have any negative impact on the sentiments, they added. On the other hand, silver ready dropped by Rs 175 to Rs 18,350 and weekly-based deivery by Rs 215 to Rs 18,050 per kg owing to sluggish demand.

BS

REAL ESTATE

16)The impact of the collapse of the Lehman Brothers and the buyout of Merill Lynch is sure to spread like a contagion. However, realty operators in India are putting up a brave front and maintaining that there will be no impact on the real estate sector of the country. The impact of Lehman Brothers filing for bankruptcy will impact those Indian realty operators who have not structured their agreement care- fully, opines Sanjay Dutt, joint managing director, Cushman & Wake- field.

FE
 
BUSINESS PROCESS OUTSOURCING

17)Leading BPO service provider WNS announced a multi-year contract to provide healthcare revenue cycle management services to EBI LLC (a Biomet Inc. subsidiary). Under the five-year agreement, WNS will deliver service level improvemnts, utilising high-end analytics to optimise collections and order processes, said a company release in Mumbai.

BL

INFORMATION TECHNOLOGY

18)Bank of America’s takeover of Merrill Lynch has cast a pall of uncertainty over the latter’s outsourcing deals with TCS and Satyam, according to industry sources. Insiders say that Merill Lynch was a significant client for the two IT firms, and it will now be a “wait and watch” situation for the IT companies.

FE

19)THE CURRENT economic crisis in the US has trigered Hyderabad based Satyam Computer Services to expand its presence in the Middle-East. With the Middle-East market set to grow in terms of IT services spending, the firm expects to clinch more deals but small- sized ones. The de-risking strategy could help the firm cushion the im- pact of receding revenue from the US market, albeit marginally.

ET

20)Wipro Infotech is learned to have bagged an over SAR 100 million (Rs 121.1 crore) information technology engagement contract from King Abdullah University of Science and Technology(KAUST) through its joint venture company in Saudi Arabia.

BL

INTERNATIONAL

21)Oil fell more than 4 per cent on Tuesday on rising concern that turmoil in global financial markets will further undermine fuel demand and send investors into safer havens. Reports that US oil infrastructure had escaped Hurricane Ike also weighed on markets, which fell more than $5 on Monday after Lehman Brothers sought bankruptcy protection. US crude traded down $4.30 to $91.41 a barrel by 1133 GMT, just off a seven-month low of $91.11 a barrel earlier. Brent crude fell $4.54 to $89.70 a barrel.

BS

22)Barclays Plc, the UK’s third-biggest bank, is in talks to buy assets from bankrupt Lehman Brothers Holdings Inc two days after abandoning plans to acquire the entire securities firm. Barclays is weighing a bid for Lehman’s broker-dealer unit to increase its US securities revenue, three people familiar with the situation said.

BS

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