Headlines (19 September 2008)

GENERAL

1)Tata Motors on Thursday evinced keen interest in Karnataka government’s offer to give it 1000 acre in Dharwad. The company assured the government that it would come back in a fortnight’s time with a decision. Asked whether Tata Motors was looking at relocating the plant from trouble-torn Singur in West Bengal, Tata Motors managing director G Ravikanth said the company would consider alternatives, if required.

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ECONOMY

2)AFTER declining for three successive weeks, inflation rose marginally to 12.14% for the first week of September mainly due to dearer food items such as fruits and vegetables. It was a 0.04% rise in inflation for the week ended September 6 from 12.10% a week earlier, even as some fuel items such as ATF turned cheaper on account of falling global crude oil prices. However, the increase in the inflation figure was described as ‘stable’ by the finance ministry.

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CORPORATE / INDUSTRY

3)Lupin Ltd has bought 60 per cent stake in South African drugmaker Pharma Dynamics(PD). The company has not disclosed the cost of acquisition. This is Lupin’s third acquisition this year. The company acquired German drugmaker Hormosan Pharma in July and it picked up signficant stake in Generic Health, Australia in August.

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MONEY & BANKING

4)The rupee depreciated marginally against the dollar on Thursday, pulled down by the meltdown in global indices. The domestic currency opened lower at 46.63/65, and weakened further to touch an intra- day low of 46.79. It recovered to close at 46.41/42, against the previous close of 46.34/35.

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5)INDIAN banks appear to be headed for better profits this quarter in sharp contrast to banks in the West which are issuing profit warnings amidst writedowns. Most banks in India are likely to show better profits for the quarter ending September compared with the previous quarter(June 2008).

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INSURANCE

6)CRISIL, India’s leading rating agency, continues to have the AAA/ Stable rating for financial strength rating of SBI Life Insurance. Last financial year, SBI Life become the first life insurance company to get the highest rating of ‘AAA/Stable” from CRISIL. This rating reflects highest financial strength to meet policyholder obligations.

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7)The Anil Ambani-promoted Reliance Life Insurance on Thursday said its premium income has grown by 152 per cent in April-June this fiscal as compared with the overall life insurance industry growth of only 1.6 per cent in the same period.

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MARKETS

8)Putting to end seven days of losses, the markets bounced back on Thursday after finance minister P Chidambaram put to rest fears of any US-like meltdown, saying that the credit crisis gripping the country posed to threat to public sector banks in India. Also, positive cues from the European bourses helped lift market sentiment. The 30-share Bombay Stock Exchange(BSE) Sensex added 52.70 points or 0.40% ending the day at 13,315.60 points. The broader Nifty of the National Stock Exchange(NSE) gained 29.90 points or 0.75%, closing at 4,038.15 points.

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9)THERE is a common thread between US and Indian markets in the valuations being assigned to financial institutions. In both markets, stodgy conservative banks have gained leadership in terms of stock valuations, while banks with exposure to structured products and large global business, and which are known for their innovation in finance have taken a hit. India’s largest bank State Bank of India has re- gained its numero uno position in the market capitalisation sweep- stakes for financial institutions, toppling ICICI Bank which is now neck-to-neck with mortgage lender HDFC which is much smaller in terms of asset size.

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10)RETAIL broking firms, staring shrinking revenues due to the sustained down-trend in stock prices, have now come up with a new way to generate cash for their business. Some of the broking firms have started approaching their customers with the concept of ‘advance brokerage’. In this, the client pays a certain amount of money upfront and then trades without paying any brokerage on individual trades. Depending on the quantum of upfront payment, the customer also stands to gain by way of reduced brokerage.

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11)The National Securities Depository Limited (NSDL), India’s largest depository holding more than 80% of the securities held in dematerialised mode, will be conducting a round of series of Investor Depository Meets(IDMs) in Mumbai. These seminars would aim at spreading awareness about the depository processes and about safety and benefits of depository system. They will provide an opportunity to investors to interact directly with NSDL as well as its Depository Participants (DPs). Investors queries on demat, suggestions and feedback will be solicited. The Venue for the event would be Borivali, Dombivli, Malad and Vasai and will be organised between September 20-28.

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IPO

12)Softline Software Services is set to expand its operations in India and some markets overseas. Engaged in sale of software products for the last 17 years, Softline last year forayed into software services. The company is considering an IPO to partly fund its expansion.

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RIGHTS ISSUE

13)Aditya Birla group company Hindalco Industries’s rights share issue will open on September 22 and close on October 10, according to draft documents posted on Sebi website on Thursday. The company is offering three shares for every seven held by shareholders, on rights basis, at Rs 96 per share having a face value of Re 1.

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MUTUAL FUNDS

14)Reliance Mutual Fund has earned certificate of finalist recognition in two categories, ‘best sales team’ category and ‘Website Category-Overall design’ in the 2008 International Business Awards. The International Business Awards are the only global, all-encompassing business awards programme honouring great performances in business.

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15)AMID the high volatility in the yellow metal, gold exchange traded funds(GETFs) have seen a surge in assets under management(AUM) which have risen by over 46% since January to Rs 694 crore at the end of August ’08. However, what’s impressive is the 10% growth in the AUM of these ETF’s between July to August this year despite the price swings from high levels of $983 per ounce in July to $787 on August 19. Gold prices however bounced backed later during the month. According to Rajan Mehta, executive director, Benchmark Mutual Fund, there has always been a psychological difference in the investment pattern of gold vis-a-vis the equity markets. He added that while equities tended to attract money when stock prices were moving up, money flowed into gold when stock prices move southwards. “More investors have started to invest systematically in gold ETFs, buying a few units every month,” he said. Benchmark GETF has seen the number of investors growing from 14,000 in February 2007 to 33,000 in August.

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16)ICICI Prudential Mutual Fund on Thursday launched a quarterly debt interval fund, which will be closed for subscription on Tuesday, according to the mutual fund’s website.

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17)Escorts Mutual Fund has sought the Securities and Exchange Board of India’s (Sebi) approval to launch an open-ended growth plan that will invest in low-priced shares, according to information on capital market regulator’s website.

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COMMODITIES

18)Pepper futures market moved up on Thursday and crossed the first circuit on buying support. Bear operators were seen trying to cover back their sales. On the other hand, local dealers, who are not getting any replacement from the farmers, were approaching the exchange for meeting their requirements, market sources told Business Line.

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19)THE yellow metal is again slipping out of the comman’s reach. With the marriage and festive season around the corner, prices are approaching new peaks after financial turmoil in global markets, making the commodity almost unaffordable for the retail user. As equities melted across the globe and investors rushed to safe havens, gold set a record with the prices rising Rs 1,265 per 10 gm in a single day, crossing the psychological level of Rs 13,000. In Mumbai, standard and pure gold shot up by Rs 1,265 and Rs 1,270 to Rs 13,020 and Rs 13,090 respectively. The metal was last seen above Rs 13,000-level on July 21 this year, when prices settled at Rs 13,425.

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REAL ESTATE

20)THE department of industrial policy & promotion (DIPP) and the Reserve Bank will shortly meet to evaluate the situation arising out of Lehman’s collapse as the US giant has $500 million investment in Indian real estate projects. Foreign investment norms for real estate do not allow repatriation of funds within three years of investment. The meeting will discuss a mechanism to deal with cases like Lehman, when foreign investors in real estate go bust. One of the key questions is what happens to the failed investor’s assets which are bound by certain lock-in periods. Lehman has its real estate assets spread across the country. The US giant invested $200 million last year in DLF promoter group company DLF Assets which holds office properties in Gurgaon.

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COMMUNICATIONS

21)Mobile phone users looking to change their service provider without changing their number will have to wait till the end of 2009 for the all-India roll-out of mobile number portability services, Telecom Secretary Siddharth Behura today.

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KNOWLEDGE PROCESS OUTSOURCING

22)Cost arbitrage played a big part in US companies offshoring work to India. But wages and infrastructure costs have increased mainfold in the BPO sector in India. Multiple locations are now competing with India on cost. To tide over the problem, Indian companies are now focusing on providing higher value-added services. BPO companies have growing from providing just voice-based marketing and CRM(customer relationship management) services to transaction processing, and to establishing shared services centres for outsourcing functions such as accounts, receivables and HR. They are now building capabilities on high-end analytics in finance and marketing. Also, companies are adding capabilities through KPO acquisitions. The KPO opportunity could be as high as $10billion by 2010. KPO in legal process, market research, analytics, pharma, engineering and animation hold promise.

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INFORMATION TECHNOLOGY

23)Even amidst the ongoing global financial turmoil, India’s fifth largest IT services exporter HCL Technologies said on Thursday it would be keen on large ‘transformational’ acquisition of up to $1-2 billion within the next three years, as part of its strategy for do- minant positioning in the global IT market.

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INTERNATIONAL

24)In a coordinated move on Thursday, central banks worldwide pumped in $247 billion to revive the world financial system, hit by what former Federal Reserve governor Alan Greenspan has described as ‘the crisis of the century’. This is the biggest ever lifeline offered to the world financial markets, where Morgan Stanley became the latest to join the growing list of investment bankers seeking a bailout.

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25)Lloyds sealed a rescue takeover of HBOs on Thursday to create a dominant British mortgage and savings bank in a $22-billion deal helped through by the government. A change in competition law ensured the credit crunch did not claim another victim, after HBOs shares were battered in the past week by fears it was struggling to raise funds in wholesale markets.

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26)MORGAN Stanley, which saw its stock pummelled on Wednesday on worries it may not survive the credit crunch, has held preliminary takeover talks with Wachovia, a person familiar with the situation said. Separately, CNBC reported that Morgan Stanley was having deal discussions with CITIC, the China-controlled conglomerate that owns brokerage firm CITIC.

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27)OIL rose to $100 on Thursday as a move by global central banks to add liquidity to money markets rallied world stocks and the united States energy sector struggles to restart operations shut by Hurricane Ike. US crude traded up $2.62 to $98.78 a barrel after touching a high of $100.10 earlier, adding to a $6 gain on Wednesday. London Brent crude rose $2.51 to $97.35 a barrel.

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