Sensex plunges 340 points on weak rupee, global cues

The Sensex and the Nifty plunged over 1.8 per cent at the end of the session on emergence of profit-booking in software exporting and pharma companies after the rupee fell to a record low.

The domestic unit slumped to 64.19 against the dollar at 3.49 p.m. local time as foreign investors continued to unwind their investments in Indian equity markets.

Marketmen said the selling pressure was more confined to companies such as software exporters and drug makers with their exposure to overseas markets.

Domestic sentiment was also dampened owing to weak global cues as investors awaited the release of minutes from Federal Reserve last policy meeting.

The 30-share BSE Sensex was down 340.13 points (1.86 per cent) at 17,905.91 and the 50-share NSE index Nifty was down 98.9 points (1.83 per cent) at 5,302.55.

Barring banking and consumer durables, all other BSE sectoral indices ended in the red.

Among them, realty, metal, oil & gas and FMCG and healthcare indices plunged the most by 3.63 per cent, 3.52 per cent, 3.34 per cent and 3.17 per cent, respectively. On the other hand, consumer durables index was up 0.74 per cent and banking 0.49 per cent.

Among 30-share Sensex, BHEL (+3.55 per cent), HDFC (+2.59 per cent), HDFC Bank (+1.84 per cent), ICICI Bank (+1.49 per cent) and SBI (+0.36 per cent) were the top five gainers, while the top five losers were Bharti Airtel (-5.87 per cent), Sterlite (-4.99 per cent), RIL (-4.58 per cent), Hindalco (-4.05 per cent) and ITC (-4.00 per cent).

European and Asian stocks were down as investors awaited the release of minutes from the Federal Reserve’s July meeting.

Stoxx 50 was down 3.88 points or 0.14 per cent at 2,784.10, FTSE 100 fell 34.88 points or 0.54 per cent to 6,418.58 and DAX was down 13.1 points or 0.16 per cent at 8,286.93.

Nikkei was up 27.95 points or 0.21 per cent at 13,424.30, Hang Seng shed 147.34 points or 0.67 per cent to 21,822.90 and S&P/ASX 200 was up 21.82 points or 0.43 per cent at 5,100.

Nalco plans to increase exports by 40% to 1.4 million tonne this fiscal

In a bid to help the country to increase its dollar inflow amid a plunge in the rupee, National Aluminium Company (Nalco) is planning to increase its alumina exports by 40% to 1.4 million tonne this fiscal year. Moreover, the overseas shipments of Nalco could raise about $400 million based on current prices.

Further, the India’s largest exporter of alumina is planning to raise its alumina output by about 19% to 2.15 million tonne for the fiscal. Its output of aluminium, produced by smelting alumina, would be about 300,000 tonne, out of which about 35-40% would be exported.

India looking at leasing gold bought from IMF

In what appears at first glance a throwback to 1991, India will consider leasing out the 200 tonnes of gold it bought from the International Monetary Fund (IMF) in 2009.

The gold will be leased in the international market for dollars so as to shore up the sagging rupee, which plunged below Rs 64 against the US dollar in Tuesday’s trade.

A final decision may be taken next month, Finance Ministry sources said.

The move can fetch around $23 billion, David Gornall, Chairman of the London Bullion Market Association, has estimated.

This marks a tidy increase in the Reserve Bank of India’s investment. In November 2009, the RBI purchased 200 tonnes of gold from the IMF, under the Fund’s limited gold sales programme, for $6.7 billion, cash.

BOOK TRANSFER

According to RBI sources, this gold was never brought into the country. It was just a book transfer.

Speaking at the India International Gold Convention in Jaipur last week, Gornall had said the RBI can organise a gold-dollar swap without divesting its holding or incurring any further interest charges.

“By swapping gold for a payable currency, you can benefit by having access to dollars for a period of your choice, while remaining a long-term holder of the gold, as the swap is a transfer of asset for a limited period. You will have bullion bank counter-party risk but this is successfully managed at the RBI, which has the strictest lending criteria of any central bank in the world,” Gornall had argued.

Finance Ministry officials agree.

LIQUID ASSET

Talking about the leasing arrangement, a Ministry official said that since gold was the most liquid of assets, it can be readily leased, and returned by the lessee to the lessor any time.

Further, a lease transaction means the RBI’s gold holding will not come down even as it unlocks the asset’s value.

LESSONS FROM 1991

Government sources said leasing the gold did not imply a return to the 1991 situation, when a looming balance of payments crisis had forced the government to pledge its gold reserves with the IMF to secure a line of credit to pay for imports.

Currently, India has foreign exchange res
erves of around $278 billion, sufficient to fund the import bill for over six months.

CHEER FOR GOLD TRADE

The lease move will also cheer the gold trade.

The world market for gold is heavily impacted by demand from India, world’s largest market for the yellow metal.

The global gold industry has been worried that the Government will impose a blanket ban or place severe cubs on imports leading to a turmoil in the world markets.

Petronet LNG’s second Terminal receives LNG Cargo at Kochi

Petronet LNG's second LNG Terminal, located at Kochi in the state of Kerala has received its first LNG Cargo. This commissioning cargo has come from RasGas, Qatar, a reliable supplier and world leader in LNG which supplies 7.5 mmt per year of LNG to Petronet at its Dahej Terminal. Being a commissioning cargo, the vessel would be berthed at PLL's jetty till the whole terminal including storage tanks are cooled down to cryogenic temperatures. This one-time operation is a slow and meticulous process and would take six to seven days to complete.

Commercial supplies from the terminal may start in a week's time. FACT and BPCL refineries will be among the first consumers of R-LNG from PLL's Kochi terminal.

Petronet LNG is one of the leading players in oil and natural gas industry space. It has India’s first and largest LNG supply terminal located at Dahej.

Praj Industries surges on plan to set up a demo ethanol plant worth around 150 crore

Praj Industries has emerged as the first company in South Asia to set up an integrated second generation (2G) cellulosic ethanol demo plant with an estimated project cost of $ 25 million (Rs 145-150 crore). The plant will come up in Shirala in Sangli District in Maharashtra. The ethanol demo plant will operate on bio-mass with a capacity of 100 dry tonne of biomass per day, which includes agricultural waste such as corn stover, cobs and bagasse. The demo plant will enable Praj to consolidate its 6 years of R&D efforts, starting with laboratory trials to pilot scale trials. The same plant will also enable the company to develop various biochemicals and bio-products. This new facility will try to demonstrate various technical parameters including optimisation of water and energy integration and its impact on the capex and opex of the company. The plant will also develop the entire value chain including biomass handling and biomass composition and its impact on the operations. For this project, it will associate with Viraj Alcohols & Allied Industries Limited (VAAIL), an existing ethanol producer. VAAIL will provide the land and allied services for the completion of the project.

Ground breaking of 2G cellulosic ethanol plant is a giant leap in biotechnology and towards a more sustainable world. The greenhouse gas savings from cellulosic ethanol is greater than those from 1st generation crop-based biofuels as well as fossil-based fuel and hence this project will play a vital role in reducing carbon footprints. The project site at Shirala gives them a locational advantage in terms of sourcing of biomass, utilities and manpower.

Dollar slips against euro, yen and rupee

The dollar slipped against the euro and yen on Wednesday, while India's rupee rebounded from a record low as traders await the release of minutes from the US Federal Reserve's July meeting.

Trade was cautious ahead of the release of the minutes, with analysts expecting the Fed to soon announce the end of its year-long stimulus, which has helped fuel a global equity and forex rally.

In early Asian trade the greenback bought 97.25 yen, against 97.32 yen in New York on Tuesday, while the euro sat at $1.3423, against $1.3420.

The European unit broke $1.34 in New York for the first time since January after US Treasury yields fell to 2.81% from a two-year high of 2.88% reached Monday, as bonds appeared oversold after sinking for more than three months.

The single currency was also trading at 130.67 yen, from 130.60 yen.

Investors will be poring over the Fed minutes to find out "what kind of discussion took place over (the) possibility of reducing" its bond-buying known as quantitative easing (QE), Shinichiro Kadota, currency analyst at Barclays Capital, said in a statement.

But while expectations are high that QE is coming to an end India's rupee, Asia's worst-performing major currency this year, edged up to 63.37 against the dollar on Wednesday after falling to a record low 64.1 on Tuesday.

However, the Indonesian rupiah continued to fall, trading at 10,685 to the dollar on Wednesday, from 10,495 rupiah Tuesday, while the Thai baht was at 31.72 from 31.69.

Expectations the Fed will wind down QE has seen foreign investors repatriate the vast sums of cash that poured into emerging economies when the scheme was unveiled in September 2012, hammering currencies and equities.

Banking shares pare early gains as rupee crosses 64 mark

The BSE banking index, Bankex up 94 points, has lost nearly 533 points from intra-day high.


Banking shares are trading lower by up to 4% erasing their early morning gains after the Indian rupee crosses 64 mark in noon deals today.

Union Bank of India, Bank of India, Canara Bank, Federal Bank and Kotak Mahindra Bank are trading lower by 2-4% on the Bombay Stock Exchange (BSE) at 1401 hours.

YES Bank currently trading higher by 5% at Rs 255, declining 10% from day’s high. Shares of the private sector bank hit high of Rs 284 in morning trades. State Bank India was down 1.2% at Rs 1,535, falling nearly 7% from intra-day’s high of Rs 1,650.

The BSE banking index, Bankex up 94 points, has lost nearly 533 points from intra-day high. The index currently quoting at 10,605, hit high of 11,138 in early morning trades.

The rupee was at 63.9725 versus Tuesday's close of 63.23. The rupee hit low of 64.10 and high of 63.115 so far.

Most of these stocks rallied between 7-15% after the Reserve Bank of India (RBI) has decided to allow banks to transfer SLR (statutory liquidity ratio) securities to HTM  (Held to Maturity) category from available for sale (AFS) / held for trading (HFT) categories up to the limit of 24.5% as a one-time measure.

In addition, RBI has also allowed the banks to spread over the MTM (mark to market) losses on the remaining AFS/HFT book over the next three quarters equally.

Analyst at Angel Broking believe these measures are only sentimentally positive for the banks, other basic fundamental negatives remains largely unchanged except for the RBI intention to not let long term yields go too high.

Orient Paper & Industries’ Fan production stood at 5, 51,514 units in July

Orient Paper & Industries has reported operational performance of Fan Division of the company for the month of July, 2013. The production of Fan for July, 2013 stood at 5, 51,514 units, while the Export Sales of Fan for the same period stood at 96,055 units.

Orient Paper & Industries is part of the C K Birla Group. Today it has emerged as a multi-product, multi-location company. The company manufactures and markets range of fans under the name Orient Fans. It manufactures ceiling fans, desk fans, wall-mounted fans, pedestal fans, exhaust fans and multi-utility fans. It has production capacity of over 3 million units per annum.

Geometric shines on launching standalone DFX validation solution

Geometric, a leader in Product Lifecycle Management (PLM), Global Engineering Services, and Offshore Software Product Development (OSPD) solutions and technologies has launched Geometric DFX, a standalone application for carrying out DFX validation of product designs. Geometric DFX is powered by Geometric's award-winning design for manufacturability solution DFMPro and leverages the CGM 3D modeling kernel from Spatial Corp., a leading provider of 3D components for technical application development. Spatial's 3D InterOp is also used to enable data reuse for native CATIA V5 and other leading CAD formats.

DFX stands for Design for X where X represents various downstream process checks related to manufacturability, assembly, quality, warranty, penalty, serviceability, environment, reliability and so on. It is essential to incorporate various DFX guidelines early in the product development phase to reduce defects, cut down rework, eliminate waste, shorten time to market and save costs. Traditionally, organizations have been using manual DFX checks, which are time consuming and error prone. Geometric DFX addresses this problem by enabling designers to validate 3D CAD data using design rules based on global best practices for various downstream issues as listed above.

Geometric DFX supports CAD formats from CATIA V5, Inventor and others. Geometric DFX comes prepackaged with around 100 design rules based on global best practices and can be customized to add organization specific best practices too. The various manufacturing processes currently supported include machining, casting, injection molding, and sheet metal fabrication. Geometric DFX will benefit manufacturing companies in domains such as automotive, consumer durables, aerospace, high-tech, medical equipment, and contract electronics manufacturing.

Coal India falls as unions give strike notice

Five central trade unions have served a strike notice for three days starting September 23.

Coal India  (CIL) is trading lower by over 2% at Rs 257 in otherwise firm market after the company said  five central trade unions (CTUs) operating in the company and its subsidiaries have served a strike notice for three days starting September 23.

"Five Central Trade Unions operating in Coal India Limited and its subsidiaries have served strike notice for 3 days with effect from 23rd September’2013 to 25th September’2013 against proposed divestment of 5% of CIL shares and other demands,” CIL said in a regulatory filing.

The company also said that it is understood that All India Coal Workers’ Federation (CITU) has decided to withdraw their 3 days strike in CIL and its subsidiaries commencing from 19th September, 2013 and join other unions for 3 days strike from 23rd September’2013 to 25th September’2013.

The stock opened at Rs 262 and hit a low of Rs 256 on NSE. A combined 336,181 shares change hands on the counter so far on NSE and BSE.

Sebi revises disclosure norms for exceptional items

Exceptional items are usually one-off gains or losses outside the usual scope of business

The market regulator, Securities and Exchange Board of India (Sebi), is contemplating a proposal on the treatment of exceptional items in the way companies present their accounts.

Exceptional items are usually one-off gains or losses outside the usual scope of business. The regulator is looking to bring in greater visibility and more consistency to disclosures, it said in a discussion paper on a revision in Clause-41 of the Equity Listing Agreement that provides the framework for preparation, authentication and submission of financial results by listed companies.

Exceptional items are highly judgmental and it was observed that many companies follow divergent and inconsistent practices. The exceptional items shall be disclosed as a line item in the main table instead of in the 'Notes' to enhance visibility. More, the definition of exceptional items has also been modified to bring more clarity in disclosures, said the paper.

Other suggestions that it is looking to bring into practice include putting all results in 'Rs crore' till two decimal points, disclosure of book value and cash flow on a six-month basis and greater transparency in reporting of foreign subsidiaries and discontinued operations.

The Sebi Committee on Disclosures and Accounting Standards reviewed the current practices and made recommendations on the same.

It has suggested a similar format for reporting for finance companies and banks as well as disclosure of half-yearly consolidated financial statements when there is a variation of 20 per cent or more in the revenue, total assets, total liabilities, or profits and loss in the consolidated financial results of 20 per cent or more vis-à-vis the corresponding amounts in the standalone financial results according to the last annual audited financial statements.

Also, the consolidated results are to include the audited results of foreign subsidiaries which with Indian subsidiaries or joint ventures would constitute not less than 80 per cent of the consolidated turnover, net worth, or profit and loss.

The option of publishing consolidated results only in International Financial Reporting Standards (IFRS) will be discontinued and listed companies will be required to file consolidated financial results in line with Indian Generally Accepted Accounting Principles.

Listed companies will have the option to submit consolidated financial results in line with IFRS notified by the relevant body.

If there are any changes in the accounting policies during the year, the impact of the same on the prior quarters of the year, included in the current quarter results, shall be disclosed separately by way of a note to the financial results of the current quarter, without restating the previously-published figures.

The move is also to bring clarity to non-manufacturing companies which are required to make disclosures in line with that of manufacturing companies, said the Sebi discussion paper.

SMS tipsters 

Sebi on Tuesday took action against entities involved in circulating market tips and stock advisories through SMSs.

It barred Imtiyaz Hanif Khanda and Vali Mamad Habib Ghaniwala from access to the capital markets. Sebi's preliminary investigation revealed they were giving investment advice through their proprietary concerns, Right Trade, Sai Traders, Bull Trader and Laxmi Traders, without being registered with Sebi.

Tata Teleservices’ launches ‘Thalaivaa recharge’ in Tamil Nadu

Tata Teleservices’ mobility and business services brand - Tata DOCOMO has tied up with Vijay starrer Thalaivaa movie in Tamil Nadu by launching ‘Thalaivaa recharge’ for its pre-paid GSM subscribers. The ‘Thalaivaa recharge’ priced at Rs 46 allows Tata DoCoMo GSM pre-paid customers to make local mobile calls to any network in Tamil Nadu at just 1 paise/2 seconds. The offer is valid for 30 days.

Tata Teleservices Maharashtra (TTML) is a part of the Tata Group. This telecom services company has its presence all over Maharashtra and Goa.

IOB to raise $500 million through MTN program

Indian Overseas Bank (IOB) has decided to raise $500 million through a Medium Term Note (MTN) program in the third quarter of the current financial year. MTN is a debt instrument with a 5-10 year maturity period. Chennai-headquartered bank has recently opened its 3,000th branch at Vaniankudi in Sivaganga district.

The bank had also raised a similar amount through MTN last year. If its business continues to grow at 14%, for its domestic operations it will require a capital of Rs 2,300 crore by the end of the year.

CARE reaffirms ratings of Dena Bank’s Long Term Debt Instruments

Credit rating agency, CARE has reaffirmed ‘AA+’ rating to Dena Bank’s Lower Tier II Bonds worth Rs 1610.00 crore  and ‘AA’ rating to company’s Perpetual Bonds worth Rs 125.00 crore.

CARE has rated the aforesaid Perpetual Bonds one notch lower than the Lower Tier II Bonds in view of their increased sensitiveness to the Dena Bank’s Capital Adequacy Ratio (CAR), capital raising ability and profitability during the long tenure of the instruments.

Dena Bank was established in 1938 and was nationalized in July 1969. As on March 31, 2012, the bank has 1,342 branches and 543 ATMs with 57% branches in rural and semi-urban areas. More than half of the bank’s branches are in the states of Gujarat and Maharashtra.

Rupee recovers from historic low, still ends weaker for the day

Indian rupee slumped to its historic low in Tuesday’s trade. It was some speculated RBI intervention that helped the domestic currency make some recovery otherwise the government and RBI looked helpless despite all their efforts to protect it. Rupee continued to bear the brunt of a large current account deficit and concern of stimulus tapering by the US Federal Reserve. Bond yields too surged with the 10-year yield nearing the 9.50 mark. However, there was some report of dollar selling by banks that helped the rupee to recover from its record low. There was weakness in most of the regional currencies before the announcement of US FOMC Minutes. In the global markets euro firmed up against dollar.

Finally the rupee ended at 63.25, weaker by 13 paise from its previous close of 63.13 on Monday. The currency has touched a high and low of 64.11 and 63.12 respectively. The Reserve Bank of India’s (RBI) reference rate for the dollar stood at 63.73 and for Euro it stood at 85.06 on August 20, 2013. While, the RBI’s reference rate for the Yen stood at 65.51, the reference rate for the Great Britain Pound (GBP) stood at 99.7875. The reference rates are based on 12 noon rates of a few select banks in Mumbai.

Tata Steel gains as its JV firm - TSML secures permission for land use in Canada project

Tata Steel’s joint venture firm - Tata Steel Minerals Canada (TSML) has secured key permission in the last week for land use related to its proposed iron ore project in north-eastern Canada. For the direct shipping ore (DSO) project, TSML has signed agreement with the appropriate aboriginal council of the south Labrador, which has powers to authorize use of land in the vast Millennium Iron Range area containing undeveloped magnetic iron deposits.

Tata Steel, the flagship company of the Tata group is the first integrated steel plant in Asia and is now the world’s second most geographically diversified steel producer and a Fortune 500 Company.

MRPL resumes crude oil imports from Iran

Mangalore Refinery and Petrochemicals (MRPL), has resumed crude oil imports from Iran after a gap of four months. The company, on August 17, received a ship carrying 75,000 tonnes of crude oil from Iran and has also booked at least three other similar sized cargoes for delivery this month and the next.

MRPL, which imported 3.9 million tonnes of crude oil from Iran in 2012-13, had not imported any oil from the Persian Gulf nation, as insurance companies declined to extend full coverage to refiners processing Iranian crude due to US sanctions.

MRPL is a joint venture oil refinery promoted by Hindustan Petroleum Corporation (HPCL), a public sector company and IRIL & Associates (AV Birla Group). It has a design capacity to process 9.69 million metric tonnes per annum and is the only refinery in India to have two hydrocrackers producing Premium Diesel (High Cetane).

NMDC plans to set up 500-MW power plant at Gonda

NMDC is planning to set up a 500-MW power plant at Gonda, Uttar Pradesh. With this, the company will make its maiden venture into thermal power generation. In this regard, the company will invest around Rs 3,016 crore on the project. The power plant will comprise two units of 250 MW and about 300-350 MW electricity will be used at NMDC’s upcoming 3 million tonnes steel mill in Chhattisgarh's Nagarnar, which is more than 1,100 km away from Gonda.

Meanwhile, the company has roped in IL&FS Energy Development Company (IEDCL) as a partner for the project with a 74% stake and the remaining 26% stake, will be held by NMDC Power, a wholly owned subsidiary of NMDC.

NMDC, India's top ore miner, accounts for about 15 per cent of iron ore mined in the country, with annual production capacity of 30 million tonnes.

L&T gains as consortium signs contract for Western Dedicated Freight Corridor project

Larsen & Toubro's consortium with Japan's Sojitz has signed an EPC rail contract with the Dedicated Freight Corridor Corporation of India (DFCCIL) for the construction of 626 km of a double track corridor from Rewari in Haryana to Iqbalgarh in Gujarat, via Rajasthan. The engineering, procurement and construction order secured by the Sojitz-L&T Consortium involves construction of 626 km of a double track corridor from Rewari in Haryana to Iqbalgarh in Gujarat, via Rajasthan, spanning three states.

The consortium’s scope includes construction of 1388 track km of railway line, 112 major bridges, 1188 minor bridges, 20 stations along with supply of equipment. The project will be executed using mechanized means of sleepers and track lining machines using the latest technology in railway construction. Adopting advanced construction technologies, the consortium is expected to complete the project in 48 months.

Global mkts mixed; RBI to ease liquidity, eyes on banks

It was a mixed close for the US markets on Tuesday as investors stayed cautious ahead of the release of FOMC minutes. European markets closed in the red.

Indian equities fell for the third consecutive session yesterday, but closed off day’s low. The BSE Sensex crashed 336.54 points intraday trimmed losses to close at 18246.04, down 61.48 points and Nifty that touched an intraday low of 5306.35 also managed to close above 5400 level at 5401.45, down 13.30 points from previous close.

Asian markets were down in morning trade today. Emerging markets are expected to remain in focus after a brutal sell-off over the past two days.

Back home, the 10-bond yields also made a sharp recovery in trade yesterday. After hitting a five-year high of 9.4 percent, bond yields clawed back to end the day way below 9%.

Stocks to watch

The Reserve Bank swings into action with another set of measures to rescue the rupee, bonds, and bank stocks. The RBI said that it will purchase Rs 8,000 crore worth of bonds via open market operations on Thursday. It added that it will calibrate its purchases in the future, when needed.

It has allowed banks to shift a part of their AFS portfolio to HTM. The measures will restrict a sharp rise in long-term yields and reduce MTM losses on banks' investment portfolios banks will benefit more from the reduction in MTM losses, with OBC and Canara Bank the biggest beneficiaries of these measures. Lower wholesale rates will also benefit private banks.

The Reserve Bank has disallowed any further FII investment in the Federal Bank stock after the foreign institutional holding in the stock reached the trigger limit of 49 percent.

The Patiala house court is set to hear Tina Ambani's plea in the 2G spectrum case. This after Ambani filed a plea seeking deferral of her appearance as a CBI witness.

The JBF Industries board will consider buy-back of equity shares today.

In what will come as a positive trigger for Fortis Healthcare , it has announced the completion of the divestment of their subsidiaries in Singapore for USD 80 million.

Newspaper reports suggest that the Apollo Tyre cooper acquisition is facing opposition from Chinese workers.

US

Stocks eased off their highs in the final minutes of trading to close narrowly mixed with the Dow logging its fifth-straight day lower. But losses were limited owing to a handful of retailers and as bond yields receded from two-year highs. Investors also awaited further indications over the timing of the Federal Reserve’s widely expected reduction in asset purchases. The CBOE volatility index finished below 15.

The 10-year treasury yields recovered a tad but still remain at elevated levels of 2.82% as the market awaits details of the Fed's tapering programme.

In key data to watch out for - existing home sales are expected to rise to 5.15 million units. Also the Federal Reserve will be releasing the minutes of its last meeting today.

Europe

Markets closed broadly lower on Tuesday amid continuing concerns over a potential reduction in asset buying by the US central bank. BHP Bilton fell 2 percent after an earnings miss leading miners to exert pressure on markets.

Currency

Dollar weakened to trade sub 81 levels. The euro-dollar saw a smart upmove to a 6-month high of 1.34 levels as the yield premium that 10-year US treasury notes offer over German bunds narrowed.

Commodities

Brent continued to trade at USD110/barrel. However, Nymex has slipped to USD105/bbl levels ahead of the futures contract expiration and in reaction to halting of shipments to the Gulf coast.

From precious metals space, after falling as much as 1 percent in the session, gold settled higher above USD1370/oz as the dollar weakened ahead of the Fed minutes. Silver too recovered after initially tumbling 4 percent.

8,000 Cr ...RBI announces OMO Purchases

RBI on Tuesday took steps to ease long-end bond yields after it crossed 9% on Monday

On July 15, 2013, the Reserve
Bank of India had announced measures for liquidity tightening in order to raise the short-term interest rate and thereby curb volatility in the exchange rate. These measures were recalibrated on July 23, 2013. A review of these measures suggests that the immediate objective of raising the short-term interest rates has substantially been achieved as evidenced by the money market rates anchoring to the marginal standing facility (MSF) rate of 10.25 per cent. Going forward, the Reserve Bank will calibrate the issue of cash management bills (CMBs), including scaling it down as may be necessary, to keep the money market rates around MSF rate until the volatility of rupee eases.

It is important to address the risks to macroeconomic stability from external sector imbalances. At the same time, it is also important to ensure that the liquidity tightening does not harden longer term yields sharply and adversely impact the flow of credit to the productive sectors of the economy. It may be recalled that in its first quarter monetary policy statement of July 30, 2013, the Reserve Bank had said that the stance of its monetary policy is intended, among other things, “to manage liquidity conditions to ensure adequate credit flow to the productive sectors of the economy.” In pursuance of this objective, it has been decided that:
The Reserve Bank will conduct open market purchase operations (OMOs) of long dated Government of India Securities of Rs. 8,000 crore on August 23, 2013, and thereafter calibrate them both in terms of quantum and frequency, as may be warranted by the evolving market conditions.

The hardening of long term yields has resulted in banks incurring large mark-to-market (MTM) losses in their investment portfolio. Since these MTM losses are partly resulting from abnormal market conditions and could be expected to be largely recouped going forward, the Reserve Bank has decided to provide the following prudential adjustments for a limited period:

Current regulations require banks to bring down their statutory liquidity ratio (SLR) securities in held to maturity (HTM) category from 25 per cent to 23 per cent of their Net Demand and Time Liabilities (NDTL) in a progressive manner in a prescribed time frame. The requirement stood at 24.5 per cent as at end June 2013. It has now been decided to relax this requirement by allowing banks to retain SLR holdings in HTM category at 24.5 per cent until further instructions.

Further, banks will now be allowed to transfer SLR securities to HTM category from available for sale (AFS) / held for trading (HFT) categories up to the limit of 24.5 per cent as a one-time measure. Such transfer of securities from AFS/HFT category to HTM category should be made at the lower of the book value or market value. Banks have the option of valuing these securities for the purpose of such transfer as at the close of business of July 15, 2013.
In addition, banks can spread over the net depreciation, if any, on account of MTM valuation of securities held under AFS/HFT categories over the remaining period of the current financial year in equal instalments.

Petroleum Ministry examining RIL gas supply issue

RIL failed to deliver in past three years at old rate of $ 4.2.

Media report said that Petroleum Ministry is “examining” suggestions that Reliance Industries gas supply issue.
RIL failed to deliver in past three years at old rate of $ 4.2.
Minister of State for Petroleum and Natural Gas Panabaaka Lakshmi told Lok Sabha that the issues mentioned in the July 4 office memorandum of finance ministry “are under examination.”

She reported that the finance ministry asked her ministry to examine if “there must be ceiling under the formula.
Earlier Cabinet approved pricing of domestic gas at an average of cost of imported LNG into India and international hub rates.
Last fiscal, the gas production of 27 mmscmd was short of target of 86.73 mmscmd