Old-timers provide cushion to sensex
BSE plans to go public this year
Nagarjuna Oil in search of partner
Gilts auction
Paradeep set for May launch
Air-India selloff move hits air pocket
Foreign Exchange, Bullion, Stock Indices

 
 
OLD-TIMERS PROVIDE CUSHION TO SENSEX 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, April 17 
They had the forecasts, but were still blown away. The selling avalanche that pounded US bourses on Friday swept through Dalal Street today, knocking down the BSE sensex by 291 points and leaving behind a messy trail of battered shares, bruised investors and a staggering Rs 19,991 crore that was lost in shareholder wealth.

The only silver lining in Monday’s mayhem was that old-economy stocks were back in favour, some of which stood tall in the ruins by gaining in value.

Today’s selloff is a sign that Indian markets have tied their fortunes to exchanges abroad. A ripple abroad can become a devastating tide that sinks shares — and stock market fortunes — at home. Friday’s meltdown in New York made sure that BSE bled two days later. Bad news chases itself. So does a market slide.

Like in the US, it was the infotech bellwethers that went through the shredder. Almost all shares, including those of Big Daddies like Infosys, Satyam and Wipro, hit their lower-end circuit filters minutes after they opened for trading. They remained frozen there for the rest of the tumultuous session.

The 30-scrip sensex opened in a trough at 4797.95 but recovered a little when it hit its intra-day high of 4899.54, and closed at 4880.71 — down 291.42 points or 5.63 per cent over Thursday’s finish of 5172.13.

As the day wore on and operators counted their losses, most eyes were rivetted on the trends at Nasdaq, which seem to be driving the local markets more than they ever did before. “The influence the Nasdaq has on the local scene is total,” BSE member Ramesh Damani said wistfully.

Brokers bemoaned the sense of ‘total resignation’ to external forces. But, they had a reason to cheer late in the evening when reports trickled in that the Nasdaq composite index was up almost 174 points at 3378.74 in early Monday trading. So was the Dow Jones, which was hovering 110 points higher at 10415.90. This gave brokers reason to believe that Tuesday will be better.

The Reliance scrip — one of the old-economy heavyweights — was hammered to its lower-band initially, but staged a smart comeback on expectations that it will post sparkling earnings when it announces its annual results on Tuesday.

Sebi, the market regulator, was unfazed by the slump. “The authorities of the premier stock exchanges have told us that the markets are safe, and there is nothing to worry,” Sebi chairman D R Mehta told The Telegraph.

In the specified group, 34 scrips including all the infotech shares were locked in their lower price filters.

The BSE-200 index and the Dollex were quoted sharply lower at 567.81 and 216.57 compared with last weekend’s close of 603.25 and 230.14 respectively. The BSE-500 index tumbled by 103.75 points to 1720.56 from its previous close of 1824.31. The volume of business was considerably lower at Rs 1200.29 crore. Reliance notched up the highest turnover of Rs 399.59 crore.

Meanwhile, BSE president Anand Rathi said the existing circuit filters have to be relaxed, but added this could be done only after present bout of volatility in the stock markets have subsided.

He said though the BSE is yet to work out the precise nature of the relaxations, they must be implemented at the right time. Talking about today’s developments, he said that after the first few minutes, no trading could not take place in several stocks since they were locked in their lowest circuit filters.    


 
 
BSE PLANS TO GO PUBLIC THIS YEAR 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, April 17 
The Bombay Stock Exchange (BSE) is planning to launch an initial public offer (IPO) after it completes the process of corporatising itself by the end of this year. The move, once it goes through, will take it into the league of global biggies such as the New York Stock Exchange (NYSE) and the Nasdaq, which have announced similar plans.

Releasing a document titled Vision 2005 here today, president Anand Rathi told reporters that the BSE had chalked out a blueprint to emerge as a leader in products, technology and volumes in five years. “The exchange, as part of its plans to become technology-savvy and investor-friendly, will reposition itself as an organisation driven by knowledge to meet the emerging challenges in a better way,” he said.

BSE is aiming to double the average daily turnover of Rs 2729.21 crore recorded during 1999-2000. Also, it wants to widen the reach of its trading network to 1,000 cities and increase the number of work-stations from 4,116 at present to 7,500 by March next year.

To make sure it stays at the cutting edge of technology, the V-sat (very small aperture terminals) hub of the exchange will start working next month, along with a full transponder which will have a capacity to install 5,000 V-sats, Rathi said.

The BSE chief said index futures trading based on the sensex will take off from next month followed by internet-based deals in July. The premier bourse will also participate in the wholesale debt market, and work for the development of a retail debt mart along with the Reserve Bank of India (RBI).

Rathi also said the exchange is moving towards adopting a value-at-risk (VAR) model, as suggested by the Securities and Exchange Board of India (Sebi). This will be done after implementing the BSE on-line surveillance system, which is aimed at giving investors a higher level of protection.    


 
 
NAGARJUNA OIL IN SEARCH OF PARTNER 
 
 
FROM G. S. RADHAKRISHNA
 
Hyderabad, April 17 
Nagarjuna Oil Corporation Ltd (NOCL), a 100 per cent subsidiary of Nagarjuna Fertilizers and Chemicals Ltd (NFCL), is on the lookout for a strategic partner.

“We are negotiating with an international oil major to become a strategic partner of NOCL with a 26 per cent stake in the company,” said L.V.V. Iyer, vice-president of the company.

Though Iyer refused to disclose the identity of the company, the names doing the rounds are that of Caltex and Chevron.

Nagarjuna Fertiliser is also offering its shareholders to divest part of their stake in favour of NOCL equity. Under the scheme, every shareholder of NFCL will get two fully paid-up equity shares of Rs 10 each in NOCL against one fully paid-up equity share of NFCL. According to Iyer, each shareholder of NFCL is entitled to unload 50 per cent of his share in favour NOCL scrips.

The move is expected to benefit the shareholders whose investments in NFCL will be unlocked.

The present equity of NFCL of Rs 417 crore will be reduced to Rs 208 crore after the equity-exchange offer is implemented.

The NOCL scrip is likely to be listed by September this year.

“NFCL will make further investment of Rs 173 crore in NOCL to retain the strategic control of 26 per cent stake in the oil company” a senior official of the company said. NOCL was taken over by NFCL from the Pennar group. It has an installed capacity of six million tonnes per annum.    


 
 
GILTS AUCTION 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, April 17 
The government today announced auctions of two dated securities for Rs 3,000 crore each. The first tranche of market loans by 25 state governments for Rs 4369 crore were also announced.

The sale of the two dated securities would be held on April 20, according to RBI.    


 
 
PARADEEP SET FOR MAY LAUNCH 
 
 
FROM R. SASANKAN
 
New Delhi, April 17 
Let down by Kuwait Petroleum Corporation (KPC) and with no new co-promoter in sight yet, Indian Oil Corporation (IOC) is preparing to formally launch its nine million tonne per annum East Coast Refinery project in the first week of May.

IOC sources say the foundation-stone laying ceremony will be held on May 6. IOC has already taken possession of the site at Paradeep, and the process licences have been finalised.

The refinery project is to be executed in five large packages, and the contractors will be selected on the basis of competitive bidding.

The IOC management expects the mechanical completion of the project by June 2003. IOC lost considerable time negotiating with KPC. Oil industry circles were sceptical about KPC becoming the co-promoter of the project. However, the IOC management had so much faith in KPC that it wasted more than two years worrying and wrangling over various issues.

Of late, IOC executives have started talking about the possibility of Petronas of Malaysia joining the East Coast Refinery project as a co-promoter. Petronas, it appears, is a willing partner for all projects of IOC. It has been named as a partner for as many as half a dozen projects IOC planned in recent years. Petronas seems to enjoy the publicity it gets in the Indian media.

According to IOC, Petronas has committed to partner projects such as the nine million tonne refinery in Tamil Nadu, the petrochemical complex at Panipat, a power plant and a bulk LPG storage facility at Haldia, and now the refinery at Paradeep. The question is: who is taking whom for a ride ?

IOC has been consistently unlucky in getting a respectable partner for its projects. Its Panipat refinery lost more than three years squabbling with Darbari Seth of Tata Chemicals. IOC was willing to take up the project alone, but then Prime minister Rajiv Gandhi insisted that 26 per cent of its equity should go to a co-promoter from the private sector.

For the Paradeep refinery, IOC was asked to go with the Hindujas who turned out to be far more difficult a group for the IOC to deal with. KPC was identified after the Hindujas backed out. IOC had illusions about KPC because of its trade relations. IOC has been consistently buying crude and products from KPC for several years now.

Oil industry circles say KPC is negotiating with MRPL to become its strategic partner. KPC realises that there are fat margins in marketing, not in refining. MRPL will get marketing rights soon. By investing Rs 2000 crore in that refinery, KPC can enter the lucrative area of retail marketing in India.    


 
 
AIR-INDIA SELLOFF MOVE HITS AIR POCKET 
 
 
FROM JAYANTA ROY CHOWDHURY
 
New Delhi, April 17 
The government’s move to sell off Air-India has got jammed due to an inter-ministerial tiff.

While the disinvestment ministry wants to sell a majority stake in the airline to any taker, the civil aviation ministry, in its zeal to “protect” national interests, wants to offer a mere 25 per cent to any foreign bidder.

Civil aviation minister Sharad Yadav has told The Telegraph that his ministry favoured selling “25 per cent to any videshi (foreign) bidder as this will ensure that they do not have a dominating influence on our board.”

However, Yadav said he was willing to offer 26 per cent in case the partner being brought in was desi.

Under Indian company law, a 26 per cent stake entitles a partner to bring in or be able to stall special resolutions such as changes in the board or decisions on venturing into new business areas. Yadav’s stance obviously puts the swadeshi BJP ministers on a spot as they have been demanding the sale of majority stake in the loss-making Air- India.

The disinvestment ministry’s proposal, which had been circulated to all ministries, has drawn support from the finance ministry and the Planning Commission.

But for the sudden spoke in the wheel by the civil aviation ministry, the proposal was to have been cleared by the Union Cabinet before the current Parliament session.

The ministry of disinvestment’s proposal called for selling a 51 per cent shareholding in Air-India to a strategic partner, who would eventually be given the job of managing it.

The Cabinet note was to have been taken up along with two other proposals to sell off 52.5 per cent stake in Pawan Hans Helicopter Ltd and 100 per cent stake in Hotel Corporation of India Ltd.

Officials said they were keen to push through the issue quickly but were also anxious that there was unanimity among coalition partners on the issue.

The reason why the government wants to push through this sale is because Air-India needs an immediate funds injection of Rs 1,000 crore to wipe out its losses and buy new aircraft. The finance ministry has already made it abundantly clear that it just cannot spare this kind of money.

The only way out, the government feels, is to bring in a financially strong partner who will inject funds to save the airline from going totally bankrupt as well as bring in experience in running global airlines.

These two pre-qualifications automatically means that foreign partners, especially airlines, may be the “right” kind of grooms for the ailing airline.

Earlier last year, former civil aviation minister Ananth Kumar had drawn up a strategy to sell off 26 per cent stake in Air-India to a strategic buyer and another 14-25 per cent to employees, financial institutions and the public. But this proposal never saw the light of day as then BJP government fell and elections were announced.

Air-India, which has been going through a bad patch, ended 1997-98 with a loss of Rs 181 crore and 1998-99 with a projected loss of Rs 165 crore. It has been withdrawing from several loss-making international routes, closing several stations and offering golden handshake to excess staff.

The airline which was profitable till 1994-95 has been steadily turning sick as increased competition has seen its share of air traffic out of India falling to 21.7 per cent. It has also been unable to attract high yielding first class and business class passengers.

While first class and business class revenues account for 11-15 per cent of A-I’s revenues, the industry average is 25 per cent. An ageing fleet coupled with a history of irregularity in schedules and timings and a shrinking network has not helped matters either.    


 
 
FOREIGN EXCHANGE, BULLION, STOCK INDICES 
 
 
 
 
Foreign Exchange
US $1	Rs 43.64	HK $1	Rs 5.55*
UK £1	Rs 69.33	SW Fr 1	Rs 26.50*
Euro	Rs 41.88	Sing $1	Rs 25.25*
Yen 100	Rs 42.12	Aus $1	Rs 25.95*
*SBI TC buying rates; others are forex market closing rates

Bullion

Calcutta		Bombay
Gold Std (10gm)	Rs 4555	Gold Std (10 gm)	Rs 4525
Gold 22 carat	Rs 4300	Gold 22 carat	Rs 4185
Silver bar (Kg)	Rs 7975	Silver (Kg)	Rs 8150
Silver portion	Rs 8075	Silver portion	Rs 8155

Stock Indices

Sensex	4880.71	-291.42
BSE-100	2650.96	-169.28
S&P CNX Nifty	1443.55	-75.10
Calcutta	120.84	-4.58
Skindia GDR	NA	NA
   
 

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