Headlines (16 October 2008)

GENERAL

1)The 10-day final phase of the Indo-US Malabar naval wargames kicked off on Wednesday, with an American nuclear-powered aircraft carrier, a nuclear submarine and five other warships undertaking combat manoeuvres with seven Indian warships and a diesel-electric submarine in the Arabian Sea.

TOI

ECONOMY

2)The Centre for Monitoring Indian Economy (CMIE), an independent think tank, has scaled down India’s growth rate forecast to 8.7 per cent in 2008-09, as against an earlier projection of 9.4 percent. Interestingly, the CMIE said the revised estimate was ‘not entirely’ due to turmoil in the financial markets, but because of a slowdown in the real estate sector and delays in implementation of investment projects.

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CORPORATE / INDUSTRY

3)POWER equipment major Bharat Heavy Electricals(BHEL) has joined the race for Czech power utility company Skoda Power. Skoda Power, a subsidiary of Skoda Holdings, is a leading European manufacturer and supplier of technological equipment and customer services in the field of power generation. The bidding will be held online and BHEL will be competing against 15 other global firms.

ET

4)Indu Projects along with Srinivasa Construction, Kirloskar Brothers and WEG Electric has bagged the Rs 1,447 crore project related to the Pranahita-Chevella lift irrigation scheme. The share of Indu Projects in this contract is expected to be Rs 588 crore.

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MONEY & BANKING

5)The rupee fell against the dollar on Wednesday as it tracked the equities market and on month-end dollar demand. “There are no positive signs for the rupee and it will continue to remain under pressure for some time. There was overall dollar buying with a private bank. The rupee opened on a weak note at 48.34/36 and closed at 48.52/54, against the previous close of 48.10.

BL

6)The Reserve Bank of India(RBI) today cut by a further percentage point the cash reserve ratio(CRR) or the amount of mandatory cash that banks need to park with it. The move is with retrospective effect from October 11 and is expected to unlock Rs 40,000 crore into the financial system and pave the way for lower lending rates. This is the third time the central bank has cut the CRR in two weeks, bringing the combined cut to 2.5 percentage points, releasing a total of Rs 100,000 crore into the cash-starved banking sector to allow it to resume normal lending operations.

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7)DENA Bank, Andhra Bank, Vijaya Bank and UCO will benefit the most, with the government decision to infuse capital into commercial banks to improve their capital adequacy ratio(CAR). On Wednesday, the government announced that it would provide banks access to finance to raise their capital adequacy ratio(CAR) up to 12%. CAR is the amount of capital that banks need to set aside as a prudential practice based on the risk associated with various assets. Among government-owned banks, Dena Bank, Andhra Bank and UCO Bank have a CAR of less than 12% and its shareholding in these banks has nearly touched 51% – a level below which the government can not reduce its stake if it wants to raise fresh equity.

ET

8)Punjab National Bank(PNB) on Tuesday decided to reduce the interest rates by 50 basis points on housing and car loans, becoming the first lender to announce a rate cut amid series of liquidity injection measures by the Reserve Bank of India (RBI) and the government. The interest rate has been reduced on housing, educational and car loans with effect from Thursday, PNB chairman and MD KC Chakrabarty said.

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INSURANCE

9)Private life insurer Max New York Life today launched a new policy aimed at low income group in the rural and urban areas. Max Vijay is a noval insurance and savings product primarily targetted at people in the income bracket of Rs 30,000-3 lakh per annum. The product would be made available to the customers by a wide spread distribution network, including the neighbourhood retail outlets and even NGOs. There is minimum formality in buying the policy and the premiums can be paid easily just like topping up or recharging a mobile phone.

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MARKETS

10)The BSE Sensex under performed major global indices today as the Indian benchmark fell 5.87 per cent, or 674 points, to close at 10,809. The broader index, S&P CNX Nifty of the National Stock Exchange (NSE), fell 5.12 per cent, or 180 points, to end the day at 3,338. Heavy selling by foreign institutional investors (FIIs) snapped the two-day rally in domestic stocks.

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11)SEBI on Wednesday increased the margin requirement for exchange traded equity derivatives, a step to protect the interest of investors, amid huge volatility being witnessed on bourses in the past few days. “With a view to ensure market safety and safeguard the interest of investors, it has now been decided that the expo- sure margin shall be higher of 10 per cent or 1.5 times the stand- ard deviation,” Sebi said in a circular.

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12)IN another move to boost investor sentiment, the government has decided to double foreign investment limits in corporate debt to $6 billion. This is the second time that the investment limits for FIIs in debt has been increased this year. Market participants have welcomed the move in the anticipation that foreign money will flow in to the cash-strapped markets. With the current investment limit of $3 billion fully utilised, bankers are bullish about further foreign investment coming in through this route.

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MUTUAL FUNDS

13)AT A time when investing in realty and real estate-related instruments is considered a taboo, a few fund houses – having debt port- folios – are seen holding on to their investments in debt securities issued by real estate companies. Fund houses like LIC Mutual Fund, Canara Robeco Mutual, Reliance Mutual and DSP ML reveal substantial holdings in the real estate sector at the end of September. As per mutual fund tracker MFI Explorer, the liquid and liquid-plus funds of LIC Mutual Fund hold 19% and 65%, respectively, on each portfolios in real estate debt papers. LIC’s floater fund holds nearly 71% investments in papers issued by real estate companies. The Canara Robeco floater has nearly 46% in real estate debt securities.

ET

14)Franklin Templeton Mutual Fund will Thursday launch ‘Plan D’ under Templeton Fixed Horizon Fund Series-XI, a fund house notice said today. Subscription to the 367-day income plan will close Oct 22. The close-ended scheme will invest its entire corpus in fixed-income securities with a maturity profile similar to that of the plan.

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15)HDFC Mutual Fund will launch a 90-day fixed term plan on Friday that will close for subscription on Tuesday. HDFC FMP 90D will be under HDFC Fixed Maturity Plans-Series IX.

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CORPORATE SCORE

16)Despite a pressure on profitability in some segments like its electricals business, Larsen & Toubro Ltd(L&T) has posted a net profit of Rs 460 crore for the quarter ended September 30,2008, registering an increase of 32% over the corresponding quarter of the previous year.

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COMMODITIES

17)Gold prices jumped by Rs 130 to close at Rs 13,330 per 10 gram in the bullion market in New Delhi on buying by stockists and investors as melting stock market boosted the demand for the precious metal as a safe haven.

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REAL ESTATE

18)DLF Home Developers Ltd plans to invest Rs 4000 crore in Kerala for the next years for the construction of hotels, shopping malls and office complexes along with the residential apartments. DLF lauched the mega residential project in Kochi on Wednesday which would have 1500 apartments setting new benchmarks for the industry in Kerala.

Indian Express

19)RELIANCE Infrastructure, a unit of Anil Ambani’s ADAG group, would go slow in its real estate projects, where the company has to spend about Rs 5,000 crore over the next five years. The move is because of the general tightening in liquidity conditions.

ET

20)Undeterred by the ongoing global financial meltdown, private equity(PE) firm Red Fort Capital plans to invest Rs 3,200 crore by the next year to cash in on the liquidity crunch in the real estate sector. “Since the financial crisis started last month, the number of proposals to us has increased by over 50 per cent; some of them are well-established, big developers,” Red Fort Capital Director Kuldip Chawlla said.

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INFORMATION TECHNOLOGY

21)If you deliver top class products or services, you can weather the current global down turn – because in the information technology business, quality sells, in good times and bad: that was the message industry leaders heard at the National Association of Software and Service Companies'(Nasscom) annual quality summit which opened in Bangalore on Wednesday.

Hindu

22)The current liquidity crunch in India seems to be creating a problem for IT companies when it comes to collection of dues. Several mid-tier IT firms have said that some of their domestic clients have delayed payments by six months to a year.

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23)HCL Technologies on Wednesday reported a 15.5% year-on-year and 152.5% quarter-on-quarter increase in consolidated net profit for the first quarter ended September 2008 at Rs 356.2 crore. Consolidated revenue grew 38.6% y-o-y and 9.2% sequentially to Rs 2,369.2 crore, driven by growth in verticals such as life sciences, hi-tech and telecom. HCL declared a 150% interim dividend for the first quarter of its financial year.

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INTERNATIONAL

24)European leaders pressed on Wednesday for an overhaul of global financial structures, as signs of global recession mounted. The United States reported its biggest monthly decline in retail sales in more than three years in September, sending stock index futures lower before Wall Street markets opened.

FE

25)Oil prices fell on Wednesday to their lowest in 13 months, dragged down by expectations that economic weakness will cut further into demand for crude. US crude was down $2.70 a barrel at $75.93 by 1335 GMT. It touched a session low of $74.97, its lowest since September last year.

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