Sensex leaps 101 points in relief rally
RBI sends low-rate signals
Banks to fund margin trading
Shaw Wallace set to pack off
Chauhan bottles up Bisleri sale plan
Bharti to pay Rs 490 cr T Mobile dues in 2 days
Skycell stake
Cars slow down, sales drop 7.2% in August
UB hopes to get Rs 500cr from 26% stake sale
Foreign Exchange, Bullion, Stock Indices

 
 
SENSEX LEAPS 101 POINTS IN RELIEF RALLY 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, Sept. 18: 
A relief rally on Dalal Street. That’s how many described the 101-point gain in the Bombay Stock Exchange (BSE) sensex after days of agony.

The leap in indices came against the backdrop of record losses on Wall Street and Nasdaq on their first day trading yesterday after the September 11 attacks on US landmarks.

The Dow Jones industrial average crashed by 684.81 points to 8,920.70 and the tech-heavy Nasdaq composite Index lost 115.75 points, or 6.83per cent, at 1,579.55. However, till midday today US stocks have posted modest gains with Dow hovering around 8962.08, up 41.38 points, and Nasdaq index pegged at 1587.59, up 8.04 points.

Today’s buying on the mumbai bourse was largely in the form of bargain hunting by local institutions. More heartening was the near 50 per cent increase in volumes — both on BSE and NSE — on hopes that the government would follow in footsteps of US regulators and announce market stimulants.

An upbeat John Band of Ask Raymond James said he would advise his clients to pick up anything, while Anand Tandon, head of Investment at Edelweiss Capital, would recommend investing 30 per cent of an individual’s kitty in equity; the ratio could go up gradually.

The 30-share index opened flat at 2,680.04. It gathered steam immediately as bargain hunters went after their favourites. It crossed the 2,800-mark to scale the day’s high of 2,814.07 just before noon. Fluctuating within 134 points, it ended with an overall gain of 101.49 points at 2,782.47. Mirroring the sentiment, NSE’s S & P CNX Nifty Index gained 29.60 points to close at 901.85.

Marketmen saw the recovery as a technical correction, attributing it to reports that the Reserve Bank (RBI) will allow banks to finance margin trading by brokers. Gains were recorded across old and the new economy stocks. An initial hiccup was experienced when a foreign institutional investor (FII) was reported to have sold heavily. Later however, renewed buying in technology and defensive stocks lifted the sensex from its dregs.

The major gainers were refiners like HPCL (up 10% to Rs 105.70) and Reliance Petroleum (up 9.51% to Rs 28.80).

They did well on reports that Organisation of Petroleum Exporting Countries (Opec) promised to adequate oil supplies, including a production boost if required.

Hindustan Lever was up 9.26 per cent to Rs 205.25 as investors reposed confidence in the stock. Defensive stocks like ITC were also in the spotlight, rising from Rs 622.65 to Rs 642.05; Colgate leapt from Rs 151.80 to Rs 154.90.

Pharmaceutical shares were big draws as well: Ranbaxy Laboratories was up 7.93 per cent at Rs 613.60, Cipla was up 4.19 per cent to Rs 1,115.70 and Dr Reddy’s Laboratories increased 3.64 per cent at Rs 1,844.80. Infosys Technologies recovered from its 52-week low of Rs 2,456 to Rs 2,798 before settling at Rs 2,651.95, up 1.29 per cent.

The losers included Reliance Industries, which lost 3.08 per cent at Rs 253.70. It had peaked at Rs 278.50 during the session but collapsed on selling at high prices; over 43.70 lakh shares were traded on BSE today.

World markets

Ignoring earlier gains in Asia where Tokyo shares gained 1.85 per cent, shares in Europe turned rapidly negative, with banking, chemical and technology stocks. “We see the market drift negatively because once you return to the real world, the news is still bad,” said Robert Kerr, European strategist at Bank of America.

Stocks across Asia performed better than they had done on Monday. Tokyo’s Nekkei 225 index closed with a gain of 175.47 points at 9769.88; Hong Kong’s Hang Seng ended with a modest loss of 11.45 points at 9307.90 and Singapore’s Straits Times index was off 10.15 points at 1324.30.

Traders in London said the FTSE failed to respond positively to the Bank of England’s rate cut because it came a day after those of Western peers and was only half as large. The FTSE was down 50.20 points at 4848.70.

   

 
 
RBI SENDS LOW-RATE SIGNALS 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, Sept. 18: 
The Reserve Bank of India (RBI) today signalled a lower interest rate regime through its open market operations (OMO) when it purchased key government securities at prices above the intra-day closing rates. A higher price on a security means a lower yield and vice versa.

It came out with another list of four securities to be purchased on Wednesday. The move is being seen as part of its plans to increase liquidity and boost sagging bond prices.

The cut-off price for buying the benchmark 10-year security has been fixed at of Rs 113.50. “This is a positive signal. It shows that the Reserve Bank is comfortable with buying at these rates. The move could send yields tumbling tomorrow,” a senior analyst said.

Money market operators say there is a possibility that the yields on key securities could fall to levels seen before the recent spell of uncertainty. Yields on the benchmark security have touched a low of 9.10 per cent. “With the cut-off yield set at 9.41 per cent, we are only 30 basis points away from the point,” said another dealer.

A cut-off price of 113.50 per cent was fixed for the 2008 paper, Rs 105.85 for the 2016 security and Rs 101.20 for the 2021 gilt. The RBI received bids of Rs 500 crore, Rs 976 crore and Rs 516 crore respectively for these bonds.

The Reserve Bank’s decision to offer higher prices had helped many securities recover from their troughs.

In early morning trading, the benchmark 11.50 per cent 2011 security was trading at Rs 113.35. up Rs 109.50 yesterday. Many in the market saw it as a sign that stability was returning to the money markets.

The central bank said it will buy four bonds on Wednesday — the 11.68 per cent 2006 paper, 11.99 per cent 2009 security, 11.03 per cent 2012 gilts and the 11.60 per cent 2020 security.

Rupee slips to 47.99

The rupee today again finished at a new closing low of 47.99 against the dollar following renewed demand for greenbacks from companies as worries over a possible attack by the US continued to spook the markets.

The currency had plunged to an intra-day low of 48.04 but recovered due to SBI-led dollar sales by banks. Dealers said a few exporters were also seen selling greenbacks.

Buoyed by the rally on stock exchanges, the forex markets are now waiting for figures on how much the FIIs invested today. “If the FII flows are positive, the sentiment could improve,” a dealer with a foreign bank said.

However, forward premia on the dollar crashed, indicating receiving interest (sale of forward dollars) among market participants. The six-month premium slumped to 5.80 per cent against 7.02 per cent on Tuesday.

Sources here said the market took heart from the comfortable liquidity in the money market, and optimism about a cut in interest rates by the Reserve Bank.

The rupee opened a little weaker at 47.86/91, fluctuated in a band of 47.90-97 in early morning deals, breached the 48-mark and plummeted to the day’s low of 48.04 per dollar on high dollar demand from importers.

The slide was cushioned by nationalised banks, whose intervention helped the currency bounce back 47.85. Concerns about a US strike in the neighbourhood persist, sending foreign banks on a dollar-buying binge.

The fact that it closed near the 48-mark indicated the pressure has not eased. Dealers said the movement of the rupee over the past couple of trading sessions has indicated the central bank does not want it to slip below 48.

   

 
 
BANKS TO FUND MARGIN TRADING 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, Sept. 18: 
Accepting a long-standing demand of stock brokers, the Reserve Bank of India (RBI) today decided to allow banks to finance margin trading.

The proposal is to permit banks to lend to brokers for margin trading in actively traded scrips which form part of the NSE’s nifty and BSE’s sensex.

The Reserve Bank has clarified that these loans will be extended within the overall ceiling for banks’ exposure to the capital market. In all, 53 scrips will be eligible for margin trading. The decision was taken today by the RBI-Sebi Technical committee which is examining the issue of on bank financing of equity.

Sebi chairman D R Mehta said he expected the guidelines to be implemented soon, but added that it was the central bank’s job to frame the norms. Detailed procedures will also be laid down separately by the Reserve Bank. These will be effective for an initial period of 60 days and will be updated with experience. Banks will be required to maintain a minimum margin of 40 per cent.

However, a dealer affiliated to Refco-Sify, a prominent player in the derivatives market, said it does not expected a formal launch before Diwali.

Broking circles welcomed the move but said it will not make much of a difference given the present slump in the markets. The Reserve Bank said banks can now fund up to 60% of transaction costs in the purchase of shares that are part of the 30 companies on the Bombay Stock Exchange Sensitive Index, and the 50 companies on the S&P CNX Nifty index.

Brokers felt that the liquidity in the stock market had dried up because there wasn’t much funds to buy stocks after carry-forward trading was banned.

Gold stays weak

Gold prices, scaling new highs since last week, turned weak on the bullion market here today due to poor demand in the wake of weak global advices. Silver, however, continued to rise smartly on increased buying activity coupled with better international advices. Standard gold opened sharply lower at Rs 4690 and later recovered marginally and closed at Rs 4700.

   

 
 
SHAW WALLACE SET TO PACK OFF 
 
 
BY A STAFF REPORTER
 
Calcutta, Sept. 18: 
Manu Chhabria-owned Shaw Wallace and Company will seek shareholders’ approval for shifting its registered office from Calcutta to Mumbai.

The company already operates out of the country’s financial capital having moved its corporate headquarters there some years ago. However, its registered office continued to be in Calcutta. Shaw Wallace was incorporated on January 1, 1886, and since then its registered office has been one of the best-known landmarks in central Calcutta.

A special resolution will be moved by the company at its forthcoming annual general meeting, seeking shareholders’ ratification to the proposed move. On obtaining the shareholders’ approval to the proposal, Shaw Wallace will have to apply for the permission of the Company Law Board for moving its registered office. A similar move earlier had been opposed by the employees of Shaw Wallace.

In order to uproot itself from the city, the company will also have to amend its memorandum of association that says the registered office will be located in West Bengal.

It may be mentioned, the other M.R. Chhabria group company that operates out of Calcutta, tyre-manufacturer Dunlop, has suspended work at its Sahagunj factory.

Shaw Wallace has an illustrious history of diversified businesses. Starting at the beginning of the last century, Shaw Wallace was the first importer of motor cars in India.

It was also the first agent of a wireless company – Marconi’s Wireless Telegraph. In 1926, Shaw Wallace acted as an agent of an airline, the Imperial Airways.

However, the Rs 609-crore Shaw Wallace’s core business now comprises liquor, wines and beers. It has interest in agrichem and gelatine as well, but it is trying to offload these businesses.

   

 
 
CHAUHAN BOTTLES UP BISLERI SALE PLAN 
 
 
FROM RAJA GHOSHAL
 
New Delhi, Sept. 18: 
Ramesh Chauhan has decided not to sell his mineral water brand Bisleri, which commands a 47 per cent share in the Rs 1,000-crore market.

“I am in no mood to sell the Bisleri brand to any domestic or international buyer,” said Ramesh Chauhan when asked about his earlier plans to sell the domestic water brand.

“It is true that earlier I had plans to sell the brand and had been in talks with a number of prospective buyers. But those plans have been cancelled,” Chauhan said.

Chauhan had been reported to be in talks with both Coca-Cola and Pepsi at one stage, but these broke down. Last year, Coca-Cola launched its brand Kinley and Pepsi entered the market with Aquafina.

Asked if he would revive plans to sell the brand, Chauhan said, “If that happens, the media will hear it from me.”

Chauhan, who is the chairman of the unlisted Parle Bisleri Limited, had earlier made a fortune by selling Thums Up, Limca, Gold Spot and Maaza to Coca-Cola.

According to a Coke spokesperson, the beverages giant had been in talks to snap up the Bisleri brand which did not fructify. “There have been no talks between the two companies since,” he added.

Media reports had also indicated that French owned Group Danone, the parent company of Britannia, had also been in talks to acquire the Bisleri brand. Britannia has been keen to make a foray into the bottled water segment, most probably through its fully-owned India subsidiary Danone India Ltd currently markets the premium brand of Evian. Bisleri was also reported to have held talks with Nestle.

Chauhan’s decision to back off from the talks to sell Bisleri caps all speculation in the media. However, the canny businessman could also be holding out for the right price—a strategy he has used with great aplomb in the past.

According to H. Subramanium , head of content at Everything About Water.com, the portal on water industry, Bisleri is the clear market leader in the mineral water segment with about 47 per cent of the domestic market share.

It is followed by Kinley with a 19 per cent market share. Pepsi’s Aquafina trails in third place with 8 per cent. Parle Agro’s Bailey, which sells mostly in western India, has about 7 per cent. This company is owned by Chauhan’s brother Prakash.

While Danone and Nestle are other multinationals in the water market, about 200 small local players are also playing in the water market, which is growing at about 50 per cent, said Subramanium.

   

 
 
BHARTI TO PAY RS 490 CR T MOBILE DUES IN 2 DAYS 
 
 
FROM OUR CORRESPONDENT
 
New Delhi, Sept. 18: 
The government today directed Bharti Mobile Ltd to pay up Rs 490 crore in cash to clear the outstanding dues of JT Mobile, the cellular service provider in Punjab, before it is allowed to sign the agreements for eight new cellular circles that it won in a fresh round of bidding last month.

Reacting to the Cabinet decision Bharti group chief Sunil Mittal said, “We will make the full payment within the next 48 hours.”

JT Mobile, which was earlier run by the Essar group, was acquired by the Mittals of the Bharti group about five years ago.

However, the government has allowed Bharti Mobile to appeal before a sole arbitrator to be appointed in consultation with the law ministry to resolve the payment during the disputed period between April 18, 1996 to March 10, 1998. The company would have to pay Rs 57 crore in addition to Rs 490 crore.

The Bharti group claims that it was not responsible for the payment of dues covering 693 days (the period between transfer of licence from JT Mobiles to Evergrowth and cancellation of licence for non-payment of licence fee) and the government should waive the sum for that period.

The Cabinet today decided that the terminated Punjab circle licence of Bharti will be restored along with simultaneous migration to the National Telecom Policy-99 regime from the licence fee regime.

Mittal said, “Bharti respectfully accepts the Cabinet’s decision. We would like to point out that a bank guarantee was the fair and appropriate instrument to pay the dues.”

“We are pleased that after a gap of five years the government has accepted and upheld Bharti’s position that a genuine dispute exists on this whole case and are pleased to note that this case is now in the hands of an arbitrator not the licensor,” he added.

A company statement said while “we are pleased that a decision has finally been made, we would like to submit that we are pained by the amount of time this decision has taken. The back and forth and the apparent lack of fairness on DoT’s part has disturbed us on a ‘principle of business’ basis.

We are and continue to remain committed to build Indian telecom infrastructure.”

BSNL quota

The government today directed Bharat Sanchar Nigam Ltd to reserve 10 per cent of its orders to purchase telephone line exchanges, about 3.3 lakh each year, for Instrumentation Ltd. BSNL will also have to provide 50 per cent advance of the order placed with the company.

The government will give a counter-guarantee to Instrumentation Ltd without guarantee fee to raise Rs.28 crore from the market to bridge the additional working capital deficit.

   

 
 
SKYCELL STAKE 
 
 
FROM OUR CORRESPONDENT
 
New Delhi, Sept. 18: 
Bharti Enterprises has acquired a majority stake of 89.5 per cent in SkyCell Ltd, the mobile service provider in Chennai. However, the department of telecommunications (DoT) has yet to bless the acquisition as required by the licence agreement. The company has acquired the individual 24.5 per cent stakes of both Bell South International Inc. and Millicom International Cellular S.A. Bharti had earlier acquired a 40.5 per cent stake of Crompton Greaves.

   

 
 
CARS SLOW DOWN, SALES DROP 7.2% IN AUGUST 
 
 
FROM OUR CORRESPONDENT
 
New Delhi, Sept 18: 
After two little blips, it’s downhill once again. Car sales tumbled 7.2 per cent year-on-year in August with the industry able to push just 48,061 units into the market against 51,978 units in the same month a year ago.

Even sequentially, car sales were down from the level of 48,481 units in July this year.

Sales of market leader Maruti Udyog remained flat at 29,859 units against 30,168 units in July. Ford India and Hindustan Motors also reported a decline in the sales. However, General Motors, Hyundai Motors and Tata Engineering reported a marginal increase in sales.

All the car manufacturers, with the exception of Tata Engineering which has increased production from 4,904 units in July to 4,977 units, have brought down production of vehicles to clear their swelling inventories.

While Maruti cut production by 3,673 units in August against July, General Motors pared production by 200 units.

Car exports, however, increased by 231.4 per cent month-on- month at 4,902 units over 1,479 units last year.

Other segments of the automobile industry like multi-utility vehicles (MUVs), motorcycles and commercial vehicles went up while scooters and mopeds continued to post negative growth.

Sales of commercial vehicles, which is recognised as a good indicator of economic growth, increased by 10 per cent month-on-month at 10,454 vehicles as against 9,500 vehicles.MUV sales rose by 12.5 per cent at 10,075 units in August 2001 against 8,954 units in the year-ago month with Mahindra & Mahindra leading with sales of 4,513 vehicles.

Sales for Toyota Kirloskar fell to 2,555 units to 3,107 units but Tata Engineering in sector also revved up the sales to 2,052 compared with 1,847 units they sold in July.

Scooter sales fell by 4.9 per cent at 73,787 units against 77,628 units in August 2000, but motorcycle sales increased by 28.9 per cent month-on-month at 2.10 lakh units over 1.62 lakh units.

But sales of mopeds fell 30.9 per cent at 40,661 units against 58,910 units sold in August 2000. Three-wheeler sales also declined by 6.2 per cent at 18,565 units as compared with 19,796 units.

   

 
 
UB HOPES TO GET RS 500CR FROM 26% STAKE SALE 
 
 
BY A STAFF REPORTER
 
Calcutta, Sept. 18: 
United Breweries (UB) is expecting to rake in over Rs 500 crore by selling 26 per cent to a foreign ally. There are six to seven leading foreign beer companies in race to acquire the stake in the country’s leading beer company.

The leading beer manufacturers known to have expressed willingness to pick up the 26 per cent stake in UB are South African Breweries, Carlsberg of Denmark, Heineken of the Netherlands, and San Miguel Corporation of the Philippines.

Kotak Mahindra Capital Company has been given the mandate to look for the strategic partner. Alongside, UB is restructuring its operations for which it has appointed Infrastructure Leasing & Financial Services (IL&FS) and Deloitte Haskins & Sells to draw up a recast plan.

Under UB’s ongoing restructuring plan, the diversified company will separate its brewery business from other operations. The UB board decided in a meeting on August 9, that its brewery business would be transferred to a dedicated company, Brewco, which is at present a 100 per cent subsidiary of UB. The UB board has recommended issuing four new equity shares of Brewco for every 10 shares held in UB.

The restructuring of UB is aimed at making the beer company, Brewco, a leaner organisation with focused operation, UB chairman Vijay Mallya said. The money raised through divestment would be used to retire the borrowings of Brewco.

Speaking on the company’s expansion plans, the UB group chairman said: “We are looking at opportunities in south-east Asia. We are keen to have a strong presence in the far east, for which we have a number of options.”

   

 
 
FOREIGN EXCHANGE, BULLION, STOCK INDICES 
 
 
 
 

Foreign Exchange

US $1	Rs. 47.48	HK $1	Rs.  6.05*
UK £1	Rs. 70.40	SW Fr 1	Rs. 29.30*
Euro	Rs. 44.30	Sing $1	Rs. 27.20*
Yen 100	Rs. 40.33	Aus $1	Rs. 23.45*
*SBI TC buying rates; others are forex market closing rates

Bullion

Calcutta			Bombay

Gold Std (10gm)	Rs. 4775	Gold Std(10 gm)	Rs. 4700
Gold 22 carat	Rs. 4510	Gold 22 carat	NA
Silver bar (Kg)	Rs. 7400	Silver (Kg)	Rs. 7465
Silver portion	Rs. 7500	Silver portion	NA

Stock Indices

Sensex		2782.47		+101.49
BSE-100		1295.98		+ 46.77
S&P CNX Nifty	 900.20		+ 27.95
Calcutta	  95.11		+  2.35
Skindia GDRx	   NA		    -
   
 

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