US debris engulfs markets worldwide
Yellow metal firms up at home
Rupee overcomes early loss
Haldia Petro spooked by naphtha price spike
Sinha cool, sees no threat to economy
FIPB spanner in Ford India’s plan
Govt approves Rs 101 cr FDI
Exide plans to integrate dealer network
Delayed payments hold up growth: CII study
Foreign Exchange, Bullion, Stock Indices

Sept. 12: 

Sensex dips below 3000, but claws back

Spooked by the plunge on Asian and Australian bourses, stock markets at home went into a tailspin that clobbered the Bombay Stock Exchange (BSE) sensex to a 33-month low at 3032.71 points. National Stock Exchange’s nifty shed 41.2 points to end at 982.2.

The sensex was down 3.74 per cent over its previous close and the nifty had surrendered 4.03 per cent. Much of the decline was the result of the beating taken by technology stocks, most of which gave up 10 per cent of their value when measured against Tuesday’s their closing quotes.

The 30-share index on Dalal Street opened about 20 points off its previous close of 3150 and plumbed an intra-day low of 2954.35 points. Similarly, the nifty slipped to 957.95, down more than 6 per cent over its previous close, as investors moved away from high-risk options like equity to safe-haven instruments like bonds and bank deposits.

The selling spree was witnessed in shares across the spectrum, though some were more affected than others. BSE clocked a turnover of Rs 1086.73 crore, an increase of Rs 142 crore over its previous trading session. Much the trading volumes came from the technology stocks. Wipro and Infosys lead the pack with trading volumes of Rs 156 crore and Rs 127 crore respectively.

Market watchers and analysts said the selling came from investors of all classes. The institutional investors that have traditionally propped up the market in times of difficulty, were not as active as in the past. The mood among the foreign institutional investors was sombre.

Earlier in the day, the Securities and Exchange Board of India (Sebi) decided to lower the order verification limit on the 53 index stocks from 20 to 10 per cent. This meant that prices of these 53 scrips could vary by maximum of 10 per cent from its previous close. The Sebi board went into a huddle this morning to decide whether or not to keep the markets open.

There were only four stocks in the Sensex that advanced today – ITC, Dr Reddy’s Laboratories (DRL), Glaxo and Gujarat Ambuja Cement (GACL). The most significant gainer of the day was DRL – it closed Rs 25.85 higher at Rs 1,874. ITC advanced by Rs 3.40 to close at Rs 674.30, while Glaxo closed Rs 1.85 higher at Rs 283.65. GACL gained Rs 2.75 to close at Rs 157.75.

The worst losers of the day were the technology stocks – Infosys Technologies, Satyam Computers, NIIT and Zee Telefilms. Each of these scrips lost close to 10 per cent. Satyam was the biggest loser in percentage term - 9.99 per cent - while Infosys, down by Rs 321.70 today, was the worst loser in absolute term. Satyam closed Rs 17.45 lower than its previous close at Rs 157.20, while Infosys closed at Rs 3179.35, down 9.19 per cent. NIIT lost Rs 15.50 to close at Rs 140. It was down by 9.97 per cent. Zee Telefilms lost 9.78 per cent or Rs 10.20 to close at Rs 94.10. Wipro closed Rs 28.65 lower at Rs 1460.80. The technology stocks hit the circuit filter early in the day, and could not recover.

On the back of rising crude prices, the other prominent losers were the government-promoted petroleum companies – Bharat Petroleum, Hindustan Petroleum, Indian Oil and IBP. The worst loser was Bharat Petroleum: it lost Rs 15.57 or nearly 10 per cent to close at Rs 141.75.

Hindustan Petroleum, the only petroleum stock in the sensex, lost over 7.6 per cent to close at Rs 102.35, down Rs 8.43.

lower than its previous close. IBP and Indian Oil closed marginally lower at Rs 292.50 and Rs 130 respectively. Reliance Petroleum was down by Rs 2.50 to close at Rs 32.25.


Mumbai, Sept. 12: 
Domestic bullion markets remained strong today, with gold prices firming up by Rs 115 and silver also recording considerable gains even as international bullion markets remained highly volatile.

With the full impact of the US crisis just beginning to unfold, and in view of the approaching festival season, bullion traders expect prices to remain firm. However, they are looking forward to some movement in international gold prices after the much-awaited sale of the metal by the Bank of England (BoE).

Standard gold opened Rs 160 higher today at Rs 4620 per 10 gram, but dropped towards the close of trading to Rs 4575, showing a steep rise of Rs 115 over the previous close of Rs 4460.

On the other hand, ten-tola gold bar (.999 purity) opened the day Rs 2000 higher at Rs 54,200 and later closed at Rs 53,500, a gain of Rs 1,300 over the previous day’s close of Rs 52,200.

Ready silver opened higher at Rs 7250, but dropped towards the end and finished at Rs 7220, a rally of Rs 80 over the previous close of Rs 7140.

Gold lost ground on the international markets, returning some of the massive gains made on Tuesday.

Prices of the yellow metal in Europe fluctuated on Wednesday, shooting up to a three-and-a-half month high of $ 285.15 per ounce, as the UK gold auction failed to lend direction to the market, the day after the attacks on the US sent the metal’s prices soaring. Gold prices rose in early trade, but later shed part of the gains due to some restrictions in buying ahead of the BoE’s gold sale.

Despite this, the final closing prices were higher than the previous day’s close. For instance, in Hong Kong, gold opened sharply higher at $ 282.00-287.00 an ounce against the previous close of $ 271.30-271.80, but later closed at $ 277 per ounce.

Bullion circles here believe the international prices of the metal in the short-term would depend on what course the US adopts after making some headway in its investigations. They add that till such time, gold prices may be volatile.

“Apart from the domestic factor, prices of gold in India would also depend on the international trends, which, in turn, could be dictated by what action the US adopts,” said K.N. Shah, secretary, Bombay Bullion Association.

Moreover, gold demand is likely to be strong in the months to come, as the good monsoon is expected to boost rural incomes and the spending power of Indian households.


Mumbai, Sept. 12: 
It was the Reserve Bank of India (RBI) again which came to the aid of a distressed rupee today, as the currency plunged to a new intra-day low of 47.50/53 to the dollar in a knee-jerk reaction to the terrorist attacks in the US.

The RBI saved the day by indirect intervention through a band of nationalised banks led by the State Bank of India (SBI), which brought the rupee back from the brink. Dollar selling by the banks saw the rupee recover to finish at Rs 47.43/44 per dollar, which, however, is a fresh low for a closing quote.

However, apprehensions on the debt markets, regarding a fall in government security prices proved to be unfounded. On the other hand, prices of key gilts recovered substantially from yesterday’s lows.

“The money markets were stable today. Probably the stable exchange rate gave it the comfort, indicating that the central bank will not allow markets to go haywire,” commented N. Balasubramanian, general manager, ICICI Ltd.

Prices of the benchmark 10-year 2011 11.50 per cent security rallied to close at Rs 115.20, from yesterday’s low of Rs 114.90. Debt market circles said call money rates also ruled stable at around 7 per cent.

Though early morning trading indicated that the rupee was headed for a major fall, the unprecedented manner in which the RBI rallied around it took the markets by surprise.

The Indian currency breached the psychological barrier of 47.50 in the opening bell itself and soon touched the day’s low of 47.53 per dollar in early morning deals.

However, the situation changed with sellers emerging on the central bank’s directions. What followed was a very narrow movement of the rupee for a large part of the day, indicating the intensity of dollar sales by the nationalised banks.

“While there was a constant demand for dollars, the rupee was later trading in a range of 47.42-47.44 per dollar, indicating the selling could have been huge,” an analyst from a foreign bank said. Forex circles contend though corporate buying of dollars is likely to continue, the rupee will hold steady at present levels for some time till the central bank withdraws from the market. Analysts here added the Indian currency is likely to hover around the Rs 47.40-47.50 range.

in the days to come.

However, it is feared with FII inflows not expected to improve drastically and corporates continuing to bid for dollars, the rupee may face a bearish future in the short-term.


Calcutta, Sept. 12: 
Haldia Petrochemicals (HPL) is already counting the potential damage from the strikes at the heart of America: soaring naphtha prices.

The Rs 5,170-crore project is spooked by the spike in global prices of the feedstock as a result of the terror blitzkrieg.

There are mounting concerns that convulsions in the world’s largest economy will have an impact on it even though HPL has piled up enough naphtha to last it till the second week of October. The stockpile has been pegged at 80,000 tonnes.

“We feel that the spurt in prices is a knee-jerk reaction. We expect that the situation will stabilise in the long run. However, what will happen remains uncertain. We are currently negotiating with our suppliers. In this situation, if naphtha continues to turn dearer, it will have an adverse impact on our business,” senior HPL officials said.

According to market sources, a $ 3 spurt in the cost of crude is accompanied by a $ 30 surge in the price of naphtha.

Reports from London say North-West European naphtha prices roared on Tuesday as spot cargoes were purchased in a bid to prepare for any eventuality. Trades for parcels ranging between 12,000 to 15,000 tonnes were closed at prices ranging from $ 245 per tonne to $260 per tonne —sharply higher than Monday’s quotes.

However, officials were of the opinion that the rising naphtha prices will have no impact on the restructuring programme of Haldia Petrochemicals. “HPL is not an isolated case. All companies across the world will face a similar crisis,” the officials further added.

The price of naphtha, something that is used as a raw material by HPL, will play a major role in the restructuring exercise. The company’s assurances about a quick turnaround made to the financial institutions and banks have been based on the assumption of low naphtha prices and better quality products.

Oil companies had slashed prices of naphtha for the second time in July by Rs 1,270 per tonne. The cuts were in line with the declines in the international prices, which had declined to below $ 200 per tonne from $ 235.

per tonne ruling in the last week of June.


Mumbai, Sept.12: 
Finance minister Yashwant Sinha today ruled out any direct impact of the terrorist strikes in US on the Indian economy and said the spike in global crude prices will not push up the country’s oil bill.

Sinha, on a day’s visit here, described the fall in stock markets as expected, but said any plunge in the rupee would be insulated by the swelling forex reserves.

Explaining why the oil imports would not cost more, the minister said long-term contracts already forged with suppliers abroad would keep the price of crude stable for a country that sources the bulk of its petroleum requirements from the international market.

Later, speaking at a function organised by the Life Insurance Corporation (LIC), Sinha said the insurance behemoth should spearhead the efforts to set up a social security net for people who have lost their jobs. He said it was futile to institute labour reforms without introducing schemes designed to protect employees.

On the government’s plan to step up recovery-inducing investments, he said several ministries have been asked to spend their budgetary allocations quickly. In addition, the government would provide more funds if they are required to ramp up investments.

“The attacks in the US will have no immediate direct impact on Indian economy and on the value of rupee,” Sinha told a function organised by the Indian Banks Association.

He said he was repeatedly asked about the repercussions of the terror strikes on the Indian economy. But his reply was that there was no reason to turn skittish because India — not a major player in the world market — would escape the global maelstrom.

“We do not expect any adverse impact as our economy is basically of a continental size, and developments on the domestic front have a larger bearing than those which occur internationally,” the minister said.

Asked about exports, Sinha said they have been affected by the global slowdown, but he expressed hope that the US would do everything to minimise the adverse impact of Tuesday’s assaults and normalise its economy — something that would help India sell more abroad.

Referring to the fiscal deficit, Sinha said the government’s effort would be to keep it close to the target set in the budget for 2001-02. “It is a difficult year and the bottomlines of companies have been squeezed. However, we are confident of achieving satisfactory results from the measures initiated in June.”

Talking about the review of tax collections conducted on Tuesday, Sinha said the government would strive to reach the revenue mop-up goal mentioned in the budget. On interest rates, he conceded that the Reserve Bank was in favour of more softening but said a final decision on the issue would be taken after taking into account an entire range of factors.

More Sebi hands

The government has initiated process of inducting two members in the Securities and Exchange Board of India (Sebi) to help the capital market regulator cope with growing responsibilities, the finance minister said.

The process of selecting two members on the board to fill the vacancies is under way, Sinha told reporters on the sidelines of the IBA function. The watchdog’s responsibilities have grown manifold and an amendment to the Sebi act is necessary to expand its board, he added.

The vacancies, which arose from the departure of full-time member J R Varma and the end of Kumar Mangalam Birla’s tenure this month, have not been filled.


New Delhi, Sept. 12: 
The Foreign Investment Promotion Board (FIPB) has spiked Ford India’s plans to import a range of models from its overseas parent and affiliates/subsidiaries like Volvo, Jaguar, Mercury and Lincoln. The board has also nixed Ford’s plans to become the first carmaker to import second-hand cars into India.

The government had allowed second-hand imports to India in the recent exim policy announced in April with the proviso that they should not be over three years old and at a customs duty of 180 per cent. All second-hand car imports are required to be imported through the Mumbai port.

In its application dated July 11, the carmaker had applied for FIPB permission to import new and second hand vehicles and to introduce additional models, initially by importing completely built units (CBUs) of vehicles developed or manufactured by Ford Motor Company or its subsidiaries or affiliates.

The Ford proposal was cleared by the department of heavy industries, the administrative ministry. However, the FIPB at its meeting in early August had deferred a decision on the proposal by two weeks and subsequently spiked it.

In its application, Ford had reasoned that the move to import second hand vehicles was due to the recently amended import policy of the government which had allowed import of new and second hand vehicles subject to prescribed conditions.

Speaking to The Telegraph, Ford India representative, Vinay K. Piparsania, vice-president external affairs, said, “Customers who buy high priced cars are too style conscious and want branded cars which are recently being launched in the international market. Without assured volumes, these cars cannot be produced in India. So, we had applied for FIPB approval to bring in a host of cars.”

Piparsania said, “We wanted to give customers who want to own C segment and super luxury cars a wide choice from Jaguar, Volvo and Mazda Pacific cars.”

The 33 per cent stake that Ford international has in Mazda will enable the local outfit to choose from a range of minivans and pick-ups like Tribute—a luxury SUV, Maita—a two-seater, Millenia—a D segment sedan, and Mazda 626—a C-segment sedan.

Piparsania also said they were interested in testing the market for Lincoln—a 2-wheel drive SUV hybrid pick-up from Jaguar and Mercury—and a luxury offering from Volvo. Both Jaguar and Volvo are 100 per cent subsidiaries of Ford.


New Delhi, Sept. 12: 
The government today approved 21 foreign direct investment (FDI) proposals worth Rs 101 crore, pertaining to the pharmaceutical products, software development, transport and port sectors.

Among the proposals cleared by commerce and industry minister Murasoli Maran is the Rs 85.83 crore proposal of Dutch company Organon to turn its local subsidiary into a fully-owned unit. The subsidiary manufactures and markets pharmaceutical products. At present, the overseas parent has a 50.43 per cent stake in the company.

The proposals were cleared by the minister on the advice of the Foreign Investment Promotion Board (FIPB).

The board also approved Haldia Petrochemicals’ proposal to amend the foreign currency component of its existing equity without any fresh inflow of funds.

The Rs 5.20-crore proposal of Toshiba Corporation of Japan, to set up a 100 per cent subsidiary for marketing support and consultancy services, was also cleared.

A Rs 4.41-crore proposal of P&O Ports India for conversion of loan into equity as well as a Rs 2.77 crore proposal of Emery Worldwide (India) to increase the foreign stake from 80 to 100 per cent for multi-modal transport business was also cleared.

A 2.21-crore proposal by India International Marketing Centre Ltd, for wholesale trading in the country was also approved today. Toyota Kirloskar got the nod for its proposal to manufacture passenger cars in the country.

Other proposals approved today include the Rs 10 crore proposal of Forbes Sea Consortium India to establish, acquire and upgrade shipping agencies, the Rs 10 crore plan of the Hong Kong based USF Asia Group for freight forwarding and logistics services and the Rs 0.62 crore proposal of United Conveyor Corp for design, manufacture and supply of ash handling equipment.

Among proposals which did not involve any fresh FDI inflow include one from AVL-Oil India Ltd for lubricants.


Calcutta, Sept 12: 
The city-based battery major Exide Industries has chalked out an ambitious plan to integrate its 4200-strong countrywide dealer network.

The move will enable the company meet all auto-related requirements of the customer.

“The integration will assure the customer of a ‘delivery-at-your doorstep’ for all types of car batteries. Though we will initially deal only with batteries, the facility will later be extended to car accessories and services. Most importan, these services will be provided with minimum human intervention,” Jayabrata Ghosh, manager for e-integration said.

The first phase will connect 400 dealers and is expected to be functional in the next six months. A total of 1500 dealers in the five major metros will be connected in a year’s time. The company will test the viability of the project in September with one dealer each in Calcutta and Mumbai.

“We will focus on three areas — information, services and e-commerce — all related to the auto industry,” says Ghosh.

“The portal will cater to the information and services segments. The success of the e-commerce venture will depend on how far we are able to connect the dealer network to provide a back-up for online transactions.”

The customer will make the payment only on delivery of the product. The company is also exploring other payment alternatives like e-cards or a debit card system.

Abhijit Chatterjee, chief internet officer said, “We are not considering payments through credit cards because of the high rate of commission taken away by credit card companies.”

Exide also plans to provide a one-stop shop for automotive requirements, right from finance, maintenance, services, car interiors and consultation on auto-related issues through its portal


Calcutta, Sept. 12: 
Delayed payments are the biggest obstacle to the growth of enterprises, according to a business outlook survey conducted by the Confederation of Indian Industry (CII).

The CII survey, which includes responses from 352 small and medium enterprises (SME), covers a broad spectrum of industry groups and activities from all over the country. While taking into consideration industry performance during January-June, the survey predicts the course it will take in the second half of this year.

The survey has listed factors such as collateral requirements from banks, high interest rates, time delay and reluctance in clearing loan applications and bureaucratic red tape as other factors that hamper growth.

Despite the bottlenecks, 58 per cent believed there will be no change in traditional banking methods. Only 59 of the total 352 companies surveyed resort to alternate sources like venture capital, factoring services, credit guarantee fund schemes and capital markets for raising funds. Moreover, though Sidbi has launched the credit guarantee fund as a substitute for collateral security, 68 per cent said the scheme is unlikely to take off, while 75 per cent feel that the limit of Rs 25 lakh set for the scheme is insufficient.

Next were the problems faced by exporters. About 203 firms of those surveyed were engaged in exports. The companies outlined international competition, prices, procedural bottlenecks, high credit costs, exchange rates, delay in payments, non-tariff barriers, delay in clearances by ports, shipping, railways and customs and anti-dumping duties levied by importing countries as the main factors affecting growth.

While 50 per cent of the participants experienced no change in export volumes, 31 per cent said they experienced an increase in exports. The remaining 19 per cent have experienced a decline in exports over the past six months.

The SME industry, however, foresees an improvement in the business situation in the next six months. An increase is expected in turnover, production, profit margins, capacity utilisation and exports. This is despite the fact that output has been affected by a lack of orders from both the government and private sectors.

The CII survey also reveals that 38 per cent are not planning a fresh capital infusion, 29 per cent say they will authorise capital investments of 5-10 per cent, 20 per cent will bring in 10-20 per cent, and 9 per cent expect to authorise between 20-50 per cent. Only 4 per cent said they will authorise investment of over 50 per cent.

Though industry has predicted an increase in turnover, a majority feel that employment opportunities would decrease.



Foreign Exchange

US $1	Rs. 47.44	HK $1	Rs.  6.00*
UK £1	Rs. 69.53	SW Fr 1	Rs. 28.45*
Euro	Rs. 42.98	Sing $1	Rs. 26.95*
Yen 100	Rs. 39.66	Aus $1	Rs. 24.30*
*SBI TC buying rates; others are forex market closing rates


Calcutta			Bombay

Gold Std (10gm)	Rs. 4680	Gold Std(10 gm)	Rs. 4575
Gold 22 carat	Rs. 4420	Gold 22 carat	NA
Silver bar (Kg)	Rs. 7150	Silver (Kg)	Rs. 7220
Silver portion	Rs. 7250	Silver portion	NA

Stock Indices

Sensex		3032.71		-117.69
BSE-100		1440.69		- 55.83
S&P CNX Nifty	982.20		- 41.20
Calcutta	 104.18		-  2.25
Skindia GDR	 502.52		-  9.40

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