Surging volumes raise hopes of stock rebound
Pro-industry stance in fertiliser policy
PowerGrid threatens to cut supply to errant state
Mauritius offers help in tainted OCB hunt
Mico to buy back 5.9%
Damodaran rules out redemption rush in US-64
Atal for stronger infotech ties in Asia
Guessing game on bourse setup
Foreign Exchange, Bullion, Stock Indices

Mumbai, Dec. 6: 
The champagne corks popped in New York, but Dalal Street enthusiasts could not wait for a celebration. As Wall Street picked itself up by the bootstraps and stocks across terror-scarred America bounced back, volumes on the Bombay Stock Exchange (BSE) swelled past Rs 2,000 crore to Rs 2,474.59 crore — a level not seen in the dreary days after March 13.

The mood across premier bourses was upbeat, share prices swung through the roof and operators swapped stocks in a session that was brimming with hope.

The figure, Rs 2,474.59 crore, is a landmark because it represents the highest tally since compulsory rolling settlement — panned by many as a volume buster —was introduced in July. Today’s count is also a big leap over Rs 1,796.98 crore clocked at Jeejebhoy Towers on Wednesday.

The scramble for shares was not mirrored in the sensex, which closed almost flat, with a gain of 21.93 points at 3431.57. But, the tame end to a gripping Thursday on the markets had more to do with profit hunters and bargain warriors looking to make a killing, rather than a sudden rush of despondency over the future.

John Band, CEO of ASK Raymond James, a premier stockbroking outfit, said the rally contained “an element of natural bounce-back” in a country where stocks are under-priced compared with those overseas. “US markets are up, and as a result, India is looking attractive too. Our bourses were laid low long before September 11, unlike their counterparts abroad.”

The Dow Jones Industrial Averages vaulted 220.45 points beyond 10,000 on Wednesday, the first time it did so since September 5; the Nasdaq closed above the 2000-mark in a gain of 83.74 points. The mood was also perked up by reports that Asian shares ended higher on Thursday.

The sensex got off to a head-start when it opened above 3,500, but surrendered much of the gains on bouts of profit-taking in technology bellwethers; even second-rung software scrips bore the brunt of the selloff.

What kept the main market barometer in positive territory was a late-session dash for the shares of Infosys Technologies, which zoomed the maximum possible 10 per cent on the back of brisk buying by foreign funds.

PSU stocks were up, Castrol plumbed its 52-week low, and index heavyweights such as Lever, Reliance, Zee and Ranbaxy ended with losses. In all, 118 shares, including 15 from the sensex, retreated while 53 advanced. Infosys remained the top traded scrip with a turnover of Rs 366.90 crore, followed by Wipro (Rs 270.39 crore), Satyam Computer (Rs 249.62 crore), Digital Global (Rs 149.73 crore) and Global Tele (Rs 111.70 crore).


New Delhi, Dec. 6: 
The government has drawn up a Cabinet note on a new fertiliser policy that seeks to relax capacity norms again.

Fertiliser companies which had, in the past, been accused of showing inflated capacities in order to garner huge subsidies from the government, are again likely to be allowed to claim money for over 100 per cent capacity. At present, a cap of 100 per cent capacity utilisation exists for fertiliser plants.

The draft Cabinet note, framed by ministry officials, will be discussed at a meeting between key officials and fertiliser minister S.S. Dhindsa on Friday.

The pro-industry note comes after hectic lobbying by several chief ministers in favour of the fertiliser industry. Among others, Andhra Pradesh chief minister Chandrababu Naidu is believed to have written to Prime Minister Atal Bihari Vajpayee seeking better terms for the industry, which has been under attack with demands for paying back excess subsidies and allegations of routinely inflating capacity utilisation reports.

Interestingly, it suggests a dilution of consumption norms which fixes prices of inputs for fertiliser plants. This could well help out some 13 fertiliser companies including Duncan Industries’ plant in Uttar Pradesh which has been asked to pay back some Rs 975 crore in excess subsidies, as higher consumption norms would mean higher actual subsidies and hence lowering of the government’s demands on them.

Sources said the new consumption norms for the period 1998-2000 would be based on actuals for the year 1997-98, while norms from April 2000 onwards would be based on actuals for 1998-2000. This would obviously give what the industry would describe as “ a more realistic picture” of input prices.

The new policy will also see reassessment of capacities in some 20 units. Capacities of some 12 others would, however, be assessed at their existing levels.

Sources said this means that capacity utilisation norms would go up to 100 per cent for all fertiliser units in a phased manner at the rate of 5 per cent a year. It is estimated that all gas-based units would be assessed at 100 per cent by April 1, 2003, and naphtha plants by April 1, 2004.

This could well spark off a battle between the finance and fertiliser ministries as the finance ministry wants to phase out payment of subsidies to the industry altogether.

Industry is also likely to gain in other ways too. Renovation and maintenance expenses would be allowed to be increased at the rate of 15 per cent over 1997-98, which would help companies jack up their costing both for calculation of subsidies as well as computation of taxes.

Similarly, depreciation will be permitted at a rate of 6.33 per cent, giving a plant life of 15 years. This is far better than the existing norms of about 5.25 per cent depreciation and should enable tax savings.


New Delhi, Dec. 6: 
Taking a cue from the National Thermal Power Corporation (NTPC), Powergrid Corporation (PGCIL) today issued a stern warning to Bihar, Uttar Pradesh and Delhi to clear their dues by month-end or face power cut.

These three states and Assam are the major defaulters with outstandings totalling Rs 855 crore. Bihar is at the top of the list with dues worth Rs 244 crore, R.P. Singh, PGCIL chairman and managing director said.

“We are proposing a stiff action against defaulting states if outstandings are not settled quickly,” Singh said. He added notices would be issued to these states soon.

Earlier this month NTPC threatened to cut power supply to at least three states — Uttar Pradesh, Madhya Pradesh and Orissa from December 7 if they failed to clear their oustandings and did not agree to sign a tripartite agreement to guard against future dues. During the current fiscal PGCIL had set a billing target of Rs 2,175 crore. Realisation till now has been about Rs 1,180 crore.

On its proposed foray into power distribution, PGCIL chairman said the company is likely to look for an international player to enter this segment in a big way.

“This proposal is with us for a long time and the board has also given the approval to go ahead. We will soon call international bids to form a joint venture company to enter distribution,” the chairman said.

Singh also made it clear that it was fully prepared to undertake this new business along with its foray into telecommunications.

The lengthy process of tariff notification by Central Electricity Regulatory Commission and provisional tariff has also been a cause of concern for PGCIL.

This has also contributed to accumulation of large outstanding dues and it is felt that stiff measures like regulation of power to major defaulters may become inevitable containing the outstanding dues.

Pgcil, which carries 32,000 mw electricity (40 per cent) on its transmission network, said it was negotiating with the private parties who had evinced interest in participating in the formation of transmission network either through joint venture route or independent private transmission company (iptc), singh said.

For the basket of eight projects with investment of rs 22,800 crore identified for iptc route, 17 companies had shown interest including eight multimationals, he said.

”We are taking up all the projects one by one and the final selection of party is expected by september next year,” singh added.


Mumbai, Dec. 6: 
Mauritius, the shimmering blue-water sanctuary for many a financial felon, says it will crack down on manipulators who use its liberal economic regime to salt away illicit gains from Indian bourses.

Fly-by-night operators pillaging stock investors under the garb of overseas corporate bodies (OCBs) were recently forbidden by the Reserve Bank of India (RBI) from investing in the secondary markets here.

Mauritius’ minister of economic development, financial services & corporate affairs, Sushil Khushiram, admitted OCBs have enormous nuisance value, describing them as a “headache”. He was speaking during a visit aimed at luring Mumbai-based companies to set up shop in his country, and to dispel misgivings that India’s stock scam had its roots in his country.

The minister, who met Sebi chief D.R. Mehta on Wednesday and was also likely to hold talks with RBI governor Bimal Jalan, said regulators in Mauritius would forge “closer ties” with Indian watchdogs.

Khushiram told The Telegraph that his country had furnished all the information sought by Sebi on the antecedents of OCBs. The regulator, probing the murky dealings of these bodies in its efforts to hunt down the real culprits of the recent stock scam, has been crippled by confidentiality clauses in Mauritian laws that prevent it from ferreting out the veiled villains.

The controversy surrounding OCBs was a dampener for Mauritius, and it came at a time when the country is in the process of writing out new laws that will be enforced by a West-style, all-powerful regulator.

Khushiram reeled off figures to back his case that OCBs form a small part of his country’s overall business. According to him, bulge-bracket investment funds account for 85 per cent of the money flows; only the remaining 15 per cent can be traced to entities like the OCBs, involved in share manipulation in Indian markets.

“OCBs are not good for our reputation,” Khushiram said, as he listed the steps the island state was taking to regulate financial intermediaries in a manner that would give countries like India no chance to complain.

“There have been gaps due to a lack of knowledge from our side,” the minister. He said the new regulatory norms would ensure that such problems do not recur.

Contending that banning such outfits in Mauritius was not the answer to the problems, he said a bar would only force them to shift base to other tax-havens like Malta or Cyprus.

Under the new information-exchange arrangement, Mauritius will share information in tune with international laws.

He pointed out that his country is one of the signatories to the Edmond Treaty — under which regulators from the world over share information to pin down hot money sources and snuff out money laundering.

The minister sent a reminder that India, which is yet to sign up to the pact, should frame its own set of laws, such as enacting a money laundering Bill quickly.

In its quest for growth, Mauritius is setting up regulatory systems comparable to the best in the world. The country is also diversifying its interests by promoting itself as the Gateway to Africa. It boasts of more than 30 flights per week to neighbouring African countries.


Mumbai, Dec. 6: 
Leading auto-ancillary major Motor Industries Company Ltd (Mico) today approved the buyback of up to two lakh equity shares of the company at a price of Rs 2,500 per share.

The Mico board said the aggregate number of shares not exceeding 5.87 per cent of the existing paid-up equity capital of the company will be financed out of its free reserves at a price of Rs 2,500 per equity share.

Brokers point out that the the company’s buyback price is an attractive one, considering that the scrip closed today on the Bombay Stock Exchange at Rs 2,184.90, a fall of 16 per cent from Wednesday’s close. The share fell on Mico’s buyback plan.

The aggregate consideration for the shares bought back shall not exceed 10 per cent of the capital and reserves of the company, it informed the BSE.

The Mico board has also constituted a committee of its board of directors which has been authorised to take all necessary steps to implement its decision, the company added in the notice to the stock exchange.


New Delhi, Dec. 6: 
The Unit Trust of India (UTI) today sought to allay apprehensions on redemption pressure for US-64, saying it has been low last month. Rather, the mutual fund major expects the market to improve, edging up its net asset value to par value soon.

UTI chief M. Damodaran, who came here to meet finance minister Yashwant Sinha regarding the mutual fund’s performance, restructuring plans and the reports it is submitting to the Joint Parliamentary Committee on the stock scam, told newspersons that redemptions in November had been normal and cost the company Rs 43 crore.

Further, Damodaran said he felt the UTI’s net asset value was moving up and would touch par levels soon. Ministry officials added he had been quizzed on the mutual fund’s ability to meet the heavy redemption pressures expected next year on other key UTI schemes. The finance ministry is keen that it does not have to face any further cash crunches and officials said it would prefer to pre-empt such a problem with budgetary support if such a situation is anticipated.

The mutual fund, which has some 2 crore investors, mostly from the middle class, was bailed out earlier this year after its top scheme US-64 went bust and the government is facing considerable flak for having allowed it to sink into a financial mess.

A joint parliamentary panel is currently probing the mutual fund’s purchase of dud shares while the CBI is conducting another probe into allegations of collusion between the fund’s top management, shady brokers and companies, especially Reliance Industries Ltd, in which UTI has invested heavily..


New Delhi, Dec. 6: 
Prime Minster Atal Bihari Vajpayee today called for greater co-operation among countries in Asia and the Oceania region to tap the large domestic markets for information technology.

Inaugurating the 19th General Assembly of the Asian Oceanian Computing Industry Organisation (ASOCIO), Vajpayee said, “In addition to developing our own home markets, we should also explore and expand businesses in each other’s countries.” “This will no doubt act as a cushion against the temporary loss of Western markets. But, equally important, it will strengthen the ties of economic cooperation in our region.”

Vajpayee emphasised upon broader collaboration between research and development establishments in the region and called for the removal of visa restrictions and favoured easier work permits for knowledge workers.

ASOCIO 2001 was organised by the National Association of Software and Services Companies (Nasscom).

Earlier, IT minister Pramod Mahajan said the recent terrorist attacks in the US and events thereafter would not affect the future of the IT sector which has emerged as the fastest growing business.

Recapping policy measures and achievements in the IT and communications sectors, he said with the passage of the Convergence Bill, India would emerge as the only country to provide IT and communication licensing and other facilities under a single window.


Calcutta, Dec. 6: 
Demutualisation of bourses may not lead to brokers being stripped of the ownership of stock exchanges, though finance minister Yaswant Sinha had indicated that trading rights, ownership and administration of bourses would be separated.

The Securities and Exchange Board of India (Sebi) will meet next week to make up its mind on the issue. At this point, however, the regulator is likely to make corporatisation mandatory for exchanges, but the ownership rights of brokers will not be taken away.

All regional exchanges are promoted by brokers, who had a say in their administration until the last scam in March. Sebi removed the broker-directors from the boards of leading bourses, such as CSE and BSE.

The only exception is National Stock Exchange (NSE), promoted by financial institutions like IDBI, ICICI, IFCI, Unit Trust of India and State Bank of India, among others. Initially considered as a model for demutualised bourses, it was later written off by senior executives of Sebi as a case that did not fit the bill. “It is unlikely that the government or financial institutions will invest in acquiring the ownership of exchanges in the present situation,” a Sebi board member said.

The NSE, he said, could not be held up as an ideal even for administrative purposes. “The promoter institutions have representatives on its board, and their subsidiaries are members of the exchange. Strictly speaking, the institutional representatives on the board of the bourse are interested parties,” he added.

Asked about the possible models being considered by the market regulator, Sebi executive director in charge of legal affairs, Dharmishta Rawal, said: “To put it simply, it is a toss-up between ‘with’ or ‘without’ brokers.” The two benchmarks to have been considered so far are NSE and the New York Stock Exchange (NYSE).

The NYSE is promoted by brokers, but their role in the administration of the exchange is limited. A similar structure is likely to be prescribed for India, where Sebi could define the brokers’ role in running bourses.

At present, there is an imbalance in favour of independent officials in the management of stock exchanges. Tempted by public representatives who have remained indifferent, broker-directors wielded more than their share of clout in the management of bourses.

One of the key issues up for discussion at the crucial Sebi board meeting on December 14 will be the pricing of public offer after disinvestment in public sector companies. The ministry of disinvestment has recommended that the price of the offer be determined by what the government received for selling its equity stake.

Sebi regulations require the price to be higher than what the government received for its shares, or the average market price of the company’s stock in the last six months. In CMC’s case, TCS paid an open offer price higher than what it forked out for the government’s stake.



Foreign Exchange

US $1	Rs. 47.88	HK $1	Rs.  6.05*
UK £1	Rs. 67.79	SW Fr 1	Rs. 28.50*
Euro	Rs. 42.51	Sing $1	Rs. 25.85*
Yen 100	Rs. 38.41	Aus $1	Rs. 24.45*
*SBI TC buying rates; others are forex market closing rates


Calcutta			Bombay

Gold Std (10gm)	Rs. 4630	Gold Std (10 gm)Rs. 4550
Gold 22 carat	Rs. 4370	Gold 22 carat	NA
Silver bar (Kg)	Rs. 7175	Silver (Kg)	Rs. 7270
Silver portion	Rs. 7275	Silver portion	NA

Stock Indices

Sensex		3431.57		+21.93
BSE-100		1643.08		+ 2.59
S&P CNX Nifty	1110.45		+ 5.90
Calcutta	 112.24		- 0.20
Skindia GDR	 530.09		+15.13

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