Mayhem on Monday: Markets mourn
Rupee rebounds from 48.45 on rescue effort
Move to prop up gilts
North Block throws FI lifeline to sensex
Mutuals brace for massive redemptions
Bilt to go ahead with Rs 250-cr rights issue
Mitsubishi to strike at grey market handsets
Foreign Exchange, Bullion, Stock Indices

Mumbai, Sept. 17: 
Stock markets, waiting for America to get back to work, were swept away by a selling avalanche even as money managers in the world’s largest economy cut interest rates to shore up confidence.

Dalal Street could hear the rumblings of war: it sank to 2640.58, an eight-year low, and ended the day with a loss of 149.14 points at 2680.98 against 2830.12 on Friday.

It had plumbed 2636.90 on November 5, 1993. Between Monday last and today, 502.65 points were shaved off the index; shareholder wealth worth Rs 26,387 crore has been lost as market capitalisation of BSE shares plunged from Rs 4,61,500 crore on Friday to Rs 4,34,113 crore today.

Dealers say the domestic market is looking for direction from New York, where stock exchanges are re-opening after their longest hiatus since the Great Depression.

The Federal Reserve, America’s central bank, slashed rates hours before Wall Street reopened in an effort to reassure markets it was ready to do everything to keep the economy from tipping into a recession.

Investors and fund managers had their eyes glued to the Dow and Nasdaq, the key barometers of US’ industrial health. “It doesn’t look good to me. But, it all depends on how the Nasdaq and Dow Jones move,” Ramesh Damani, a prominent BSE broker, told The Telegraph.

Others, like John Band of Ask Raymond James, were more optimistic: “In all probability, the markets here have bottomed out,” he said in remarks which indicated the worst for the Indian capital markets is over.

The early selloff by FIIs here followed the slump in Tokyo, Hong Kong, Singapore and Sydney. Safe-haven stocks like Hindustan Lever bore the brunt of it, falling by Rs 13.10 to Rs 187.85. However, Nestle, another FMCG firm, rose by Rs 10.80 to Rs 529.55 on the back of whispers that a creeping acquisition was in the works.

However, the market regained some of its composure when a few domestic and foreign funds made moderate purchases following reports that the government might raise the FII investment limit to 74 per cent, and introduce margin trading over the next few days.

The fall in key indices would have been steeper, had it not been for the sharp recovery in the Reliance share. The country’s leading conglomerate was savaged on bourses last week, sliding to Rs 234. The remarkable rebound this afternoon lent credence to rumours that its much-anticipated share buyback plan was on.

The buzz died soon enough when there was no customary intimation sent to stock exchanges about the move. Still, FIIs like Templeton were reported to have bought the share; last week, they were seen selling it.

Earlier, the sensex opened weak at 2758.16, dipped to 2640.58 and later recovered marginally to close at 2680.98. down 5.27 per cent. The BSE-100 lost 87.81 points to 1249.21 compared with its previous close of 1337.02.

US-based FIIs, many of which had offices in the devastated World Trade Center, are reluctant to pour in funds until they recover from the shock of the September 11 attack.


Mumbai, Sept. 17: 
First a gut-wrenching plunge and then a spectacular comeback. That’s the rupee story today. Rebounding from 48.40/45 against the dollar, it closed at 47.80/85 in a reassurance that calmed frayed nerves and brought hope to those who feared the worst.

The rally was, in large part, the result of an aggressive Reserve Bank of India (RBI) trying to stave off losses through an indirect intervention in the forex market.

The 60-paise recovery from its intra-day low brought the rupee close to its previous close of 47.82/84. The events also set the tone for a resurgence in government security prices, which had plumbed new depths last week.

The Reserve Bank is believed to have stepped in through a clutch of banks, including State Bank of India and Canara Bank. Conservative estimates put dollar sales by the them at $ 50 million; others said it could be $ 100 million. The rescue prompted dollar sales from other quarters of the market too, helping the battered rupee edge up.

Despite the turnaround, dealers are still not sure whether the gains made by the rupee will endure. They feel it will continue to remain under pressure as long as the threat of US strikes on Afghanistan persists.

“The volatility will continue. As long as that happens, the currency will be swayed by developments abroad. Till the events unfold, it could hover around the 48-mark,” said a senior analyst with a foreign bank.

The posture adopted by the central bank, he said, will hold the key to stability and influence the magnitude of dollar demand from companies and importers.

The rupee opened at 47.85/87, a little weak compared with is previous close, but went into a tailspin early on.

It plummeted to 48 around the same time stock exchanges were reeling under the effect of panic sales.

It hit 48.40/45 in late noon deals and wobbled until nationalised banks stepped in to sell dollars at RBI’s behest.

This was the trigger for the rebound, as corporate demand for dollars diminished and foreign banks joined others in offloading greenbacks. The rupee surged past the 48 mark and ended the day at 47.80/85.


Mumbai, Sept. 17: 
Swinging into action to prop up prices of government securities, the Reserve Bank of India (RBI) today announced that it would purchase bonds through auctions over the next four days.

The central bank’s move, coupled with the fact that the US Federal Reserve has brought down interest rates by 50 basis points, is expected to impart some buoyancy to the bond market tomorrow. In fact, gilt prices showed some recovery today itself.

The RBI explained that in view of the “extra-ordinary circumstances in the government securities market,” it will open a purchase window for select securities through daily auction from tomorrow. The window will remain open till September 21.

RBI said it would purchase four government securities that include the 11.40 per cent 2008 bond, 10.71 per cent 2016, 11.50 per cent 2011 bond and 10.25 per cent 2021. The central bank said on the basis of the tenders received, it would determine the maximum price up to which tenders would be accepted, adding that the settlement would be on the next day.

The minimum bid amount, it said, should be Rs 1 crore and in multiples of Rs 1 crore thereafter.

Following the Reserve Bank of India announcement and with the rupee recovering, government securities showed a turnaround with prices creeping up by as much as Rs 3 in some cases.

However, sources felt that the movement in bond prices will continue to be influenced by the rupee. Few others opined that in the immediate term, yields could soften.

Terming today’s RBI decision as positive, N. Balasubramanian, manager, ICICI Ltd, said, “the intervention by RBI in the bond market will result in government security prices bouncing back.

Unless there is a major action on the political front, the markets are likely to remain calm.”

The US Fed rate cut has also raised expectations about a similar move by RBI. But many felt that an immediate reduction in the Bank Rate is unlikely as the rupee continues to be under pressure.


New Delhi, Sept 17: 
The finance ministry today ordered state-run financial institutions to try and boost the falling sensex. The orders given orally after the sensex fell by over 5 per cent were, however, denied by an official spokesperson of the ministry. The government had earlier been accused of trying to prop up the stock market through concerted buying action of the FIs under its control , but had consistently denied this.

In what seemed to be a vindication of the oft-repeated accusation, UTI chief M. Damodaran confirmed to a news agency, “We (UTI) are buying (equities).”

Finance ministry officials said other state-run financial institutions like LIC which traditionally play the bourses have also been instructed to buy heavily into shares which have a heavy weightage in the sensex to arrest the stock market crash.

The move to buy equities in a falling market could well prove dangerous for UTI. With its flagship scheme US-64 still reeling under a 60 per cent weightage on equities, the falling market coupled with further buying could mean a further erosion in its asset values.

Damodaran, however, reassured UTI investors saying “every thing is fine with us. US-64 investors need not panic and redeem their units now on the fears of a lower net asset value, which will be announced in January, 2002.”

The sensex today nosedived almost 180 points during the intra-day trade to fall to 2,644.56 from Friday’s close of 2,830 points, mainly on account of heavy selling by foreign institutional investors.

Indian financial institutions’ attempt to push up the sensex seemed too little, too late in the face of the heavy selling pressure.

An analyst with Schroeder Investment said most FIs were pulling out on war fears and in a bid to consolidate their positions back home. A decision taken yesterday to allow FIIs to hike their stake in Indian companies to 74 per cent did not help at all, admitted finance ministry officials.


Calcutta, Sept. 17: 
Mutual funds are apprehensive that the sharp fall in the prices of government securities (gilts) and corporate bonds could trigger a redemption rush.

Sources in the industry say the volume of redemptions that took place today in debt-oriented schemes was marginally higher than the normal.

The fall in prices of gilts and corporate bonds have punched a hole in the net asset value (NAV) of mutual fund schemes. Some have seen their NAVs decline by as much as 3 per cent.

A number of fund managers conceded they were suffering losses, but most were quick to point out that these were commensurate with the overall decline in the markets.

The gilt markets extended its losses on Saturday to Monday. All eyes are now set on the open market operations to be conducted by the Reserve Bank of India (RBI) on Tuesday.

“We expect purchases by the Reserve Bank to set a floor for the gilt prices and help stem the fall,” ICICI Prudential mutual fund managing director Shailendra Bhandari said.

From the beginning of this year, retail investors and high net-worth individuals have switched investments from equity to debt instruments.

What has fuelled the surge in debt investments is the fact that they have outperformed the equity market and bank deposits in terms of returns.


New Delhi, Sept. 17: 
Ballarpur Industries today played the Braveheart and announced plans to go through with its Rs 250-crore rights issue of fully convertible debentures—on a day when the sensex sank to an eight-year low. Several companies have already mothballed plans to access the capital markets after the market began its downhill course in March.

Asked if the skittish nature of the markets would force the company to review its decision, Bilt vice-president and chief financial officer B. Hariharan said the issue would hit the market only around February or March after it goes through the necessary processes, including the approval of the Securities and Exchange Board of India.

The Bilt decision comes in the wake of the recommendations of the three-member committee of directors set up by the board at its meeting on July 27 to evaluate various options, including the means of financing for the consolidation of Bilt Graphic Paper Limited (BGPL).

Today’s announcement was made after a meeting of the board of directors of the company which approved the merger of BGPL with Bilt.

BGPL is the new name given to the erstwhile Sinar Mas India which was acquired by Bilt Paper Holding Limited (BPHL), a company of the Lalit Mohan Thapar group, on May 11. Bilt Paper Holdings Limited (BPHL) currently holds 83 per cent of BGPL’s equity and 17 per cent by ICICI.

The consideration for the transfer of equity shall be the acquisition cost of Rs 293 crore (which is the equity component of the Rs 530 crore deal in which Sinar Mas was bought) plus the holding cost from the date of acquisition and will be subject to valuation by an independent valuer.

The board has also directed the company to consider the option of sale of shares held by it in Janpath Investments and Holdings Limited, a wholly owned subsidiary, to BPHL as part consideration subject to independent valuation and statutory approvals. This will constitute the remaining Rs 43 crore of the Rs 293 crore, apart from the Rs 250 crore to be raised through the rights issue.


Calcutta, Sept. 17: 
Mitsubishi Electric has geared up to aggressively take on the threat from handsets in the grey market.

S.S. Bassi, the company’s country manager, said extensive plans have been drawn up to strengthen and spread its dealer and distribution network across the country.

It intends to set up 20 centres each in the north and south regions, 22 in the west and 10 “avenues” in the east. At present, there are 500 dealers, which Bassi said, would also be categorised as Trium Avenues and Junctions.

Bassi says his company aims to set up around 500 Trium Avenues and Junctions by the end of this month. The entire project is expected to be completed by the year-end.

Mitsubishi, with 7 to 8 per cent of the market now, expects to increase it to 8-10 per cent by the end of this year.

Handsets from the grey market can save a customer 75 to 100 per cent on the price of an original one. This happens largely because most of them are sold with duplicate batteries, spurious chargers and faulty software.

Mitsubishi sells three handsets — Geo, Airya, Cosmo — under the Trium brandname. It plans to launch three more versions, all low end, by next month.



Foreign Exchange

US $1	Rs. 47.85	HK $1	NA
UK £1	Rs. 70.55	SW Fr 1	NA
Euro	Rs. 44.53	Sing $1	NA
Yen 100	Rs. 40.91	Aus $1	NA
*SBI TC buying rates; others are forex market closing rates


Calcutta			Bombay

Gold Std (10gm)	NA		Gold Std(10 gm)  Rs.4725
Gold 22 carat	NA		Gold 22 carat	 NA
Silver bar (Kg)	NA		Silver (Kg)	 Rs.7415
Silver portion	NA		Silver portion	 NA

Stock Indices

Sensex		2680.98		-149.14
BSE-100		1249.21.	- 87.81
S&P CNX Nifty	 872.25		- 47.45
Calcutta	  92.76		-  4.90
Skindia GDR	 450.66		- 41.33

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