Corporate bond street still dry, as yields trading high

The falling rupee has not only impacted bond yields but also issuance of corporate bonds

Since the time the Reserve Bank of India (RBI) tightened liquidity in mid-July, these have dried up as the cost of borrowing rose. Issue arrangers are not expecting primary issuances of corporate bonds to pick up unless liquidity  improves.

The yield on the 10-year AAA-rated public sector unit corporate bond was 8.52 per cent on July 1 and is now at 9.65 per cent. On July 15, RBI had announced a first round of liquidity tightening to arrest the depreciating rupee, due to which the yield had breached nine per cent, reaching 9.33 per cent the next day.

“Corporate bond yields are still high and liquidity in the system is tight. In such a scenario, investors are in the process of selling their investments in corporate bonds, due to which there is excess supply. Due to all these factors, we are not seeing primary issuances of corporate bonds through the private placement route,” said Ajay Manglunia, senior vice-president (fixed income), Edelweiss Securities.

Only tax-free bond issuances are expected to garner investors’ interest. “These are an attractive investment because the issuers are all highly rated corporates. Besides, for corporates paying high tax, investing in these bonds makes sense because they are tax-free,” said Manglunia.

Data from the Securities and Exchange Board of India  shows companies had raised Rs 110,785 crore through public placement of corporate bonds in April-June, the first three months of the financial year.

“The liquidity scenario has to improve for primary issuances to hit the market. Besides, there is no clarity on interest rates,” said Ramesh Kumar, senior vice-president (debt), Asit C Mehta Investment Interrmediates.

Though RBI announced a partial relaxation in its tight money policy last week, bond yields continue to be high. “Through the liquidity and interest rate tightening measures, we have ended up closely linking various segments of financial markets, namely, the money market, equity market, bond market and currency market. The various segments are feeding on each other. Volatility in one market influences the other and in turn impacts the third and so on,” said Mohan Shenoi, president, group treasury and global markets, Kotak Mahindra Bank.

BSE Sensex turns positive; LIC buying shares

 The BSE Sensex turned positive on Wednesday after earlier falling as much as 2.9 percent led by gains in software services exporters such as Tata Consultancy Services, while banks recovered from earlier falls on value buying.
Life Insurance Corporation was also spotted buying Indian shares on Wednesday.
Tata Consultancy Services Ltd  gained 3.3 percent while HDFC Bank Ltd rose 0.1 percent after earlier falling as much as 5.9 percent.
The benchmark BSE Sensex was trading up more than 100 points while the broader Nifty rose over 20 points at 15.04 IST.

RUPEE

   The rupee once again weakened against the dollar in today due to month-end dollar demand, said currency dealers.

At 2:20PM, the rupee was trading at Rs 67.98 per dollar compared to Tuesday's close of 66.24/25 on the Interbank Foreign Exchange. The currency touched an all-time low of Rs 68.75 in early trades.

The previous all-time low was Rs 66.19 per dollar, a level the rupee had ended on yesterday. The currency has fallen more than 8% so far this week.

GLOBAL MARKETS
  
Asian stocks fell while Brent crude surged to over 2-year high on brewing tensions between Syria and US.

Japan’s Nikkei fell 1.5% to 13,338, Singapore’s Straits Times fell 1% to 3,002, China’s Shanghai Composite index was down 0.1%  at 2,101 while Hong Kong’s Hang Seng fell 1.6 % to 21,52 4 today.

European markets also opened lower. France’s CAC was tad up 0.1% to 3,973, Germany’s DAX shed 0.4% to 8,204 while UK’s FTSE was down 0.3% to 6,422.

STOCK MOVERS
     
Domestically, barring IT and metal index, rest all declined with banks, realty, capital goods, oil & gas, PSU leading the drop on the BSE.

The gainers included counters such as Tata Power rising 3.4%, Wipro and TCS gained 3.2% each, Jindal Steel gained 3% while Hindalco Industries was up 1.9% on the BSE.

The laggards were ONGC declined 7.8%, HDFC shed 7%, GAIL fell over 4% while Bharti Airtel declined 2.8% on the BSE.

The key notable movers included counters such as ITC has moved higher by 2% at Rs 303, bouncing back over 6% from intra-day low, after the board of diversified company fixes a merger ratio.

Strides Arcolab is trading higher 4% at Rs 863 on reports that the Foreign Investment Promotion Board (FIPB) has cleared the long-pending $1.8-billion investment proposal by US generic drug maker Mylan Inc, to acquire Strides Arcolab’s injectible unit, Agila Specialities.

           

Oil hits 6-month high, world shares fall on anticipated Middle East upheaval

A scramble for safety sent MSCI's world equity index to a seven week low

Concerns that probable military strikes by Western powers against Syria could cause upheaval in the Middle East pushed oil up by over $2 a barrel on Wednesday, sent world shares lower for a second day and extended a rout in emerging markets.

Washington and its allies appeared to be gearing up for a strike against President Bashar al-Assad's forces, blamed for last week's chemical weapons attacks, a move which could prompt retaliatory action and hit crude supply in the region.

Brent crude traded above $117 at a six-month high and the US benchmark soared to its highest level in over two years.

A scramble for safety sent MSCI's world equity index to a seven week low led by a sharp selloff on Wall Street, while the safe-haven yen hit a two-week high against the dollar.

Emerging markets such as Syria's neighbour Turkey, pummelled by an expected reduction in US stimulus measures, were also hit, with some flows providing support in western Europe.

"The market feels an attack on Syria is highly probable but what they're concerned about is the retaliation," said Mike Gallagher, managing director of IDEAglobal.

In the Middle East, Dubai's stock index tumbled 5.2% after already plunging 7.0% on Tuesday, leaving it at a six-week low. It is still up 49% this year.

"We could see a wider spillover into the region which could easily push oil prices up, at least temporarily, to $120 or $125 a barrel," Gallagher said.

The heightened Middle East tension has come as markets were already on edge about an expected reduction in stimulus by the US Federal Reserve, which has seen US bond yields climb and triggered a shift by investors away from emerging markets.

Syria's neighbour Turkey has proved vulnerable on both fronts seeing its currency, the lira, hit a record low of 2.07 to the dollar in early trade. The main Istanbul share index was down 1.5%, after tumbling 4.7% on Tuesday to close at its lowest level in a year.

The rout in the emerging world has extended, with the Indian rupee losing 3.7% to hit a new record low of 68.75 to the dollar, while some southeast Asian currencies reached multi-year lows.

Indonesia's rupiah posted a new four-year low as investors wait for a hastily-convened Bank Indonesia (BI) board meeting set for Thursday. Speculation is mounting it will opt for another rate hike to defend the currency.

The selloff brought MSCI's broadest index of Asia-Pacific shares outside Japan down 1.7% to its lowest level since July 9, extending the previous day's 1.2% drop.

In Europe, the picture was steadier after a recent run of good economic data added to the region's appeal. The single currency had inched up 0.1% versus the yen to about 130.03 yen and was little changed against the dollar at $1.3380.

The flight to quality lifted German government bonds, sending the 10-year Bund yield down 3 basis points to 1.824% as it moves further away from Friday's 1-1/2 year highs of 1.98%.

However, European stocks were down for a third day as the concerns about a reduction in bond buying by the Fed, and a political crisis in Italy add tot he worries over military action fuelled profit taking on an 8% rally seen since late June.

The FTSEurofirst 300 index of top European shares was down 0.3% at 1,198.43 points in early trade after recording its largest daily drop in two months on Tuesday.

"The focus on Syria and the spike in oil prices was all that was needed to start the move (down)," said Nick Xanders, head of strategy at BTIG, who saw room for the market to fall further.

Gold shared in the safe haven buying, extending its gains into a fifth straight session and climbing over 1% to its highest in more than three months.

Spot gold traded around $1,425 an ounce having hit a high of $1,433.31, its highest since May 14. Silver was up 2.3% to $25.02 an ounce.

"We may be seeing a new trading paradigm setting in the next few days, one whereby investors sour on stocks and file back into commodities, with oil and gold likely being the two favourites in the group," INTL FCStone analyst Edward Meir wrote in a note.

Videocon Group’s telecom arm plans to launch 4G services

Videocon Telecommunications, part of the diversified $4 billion Videocon Group, is reportedly planning to launch fourth generation (4G) services by August next year. Further the company is in talks with Nokia Siemens Networks (NSN) for infrastructure. The company has a Unified Licence to provide all kind of services including 3G and 4G.

In November 2012, the company has won spectrum in six telecom circles- Bihar, Gujarat, Haryana, Madhya Pradesh, Uttar Pradesh East and West. This new service will be launched in all this circles. The 4G technology is based on FDD LTE, which enables operator(s) to gain more efficiency using the same spectrum resources.

Videocon Industries, established two decades ago, is a global conglomerate. Videocon’s businesses consist of manufacturing, marketing and distribution of consumer electronics products and oil & gas extraction.

Essar Projects bags Rs 700 crore worth order from BPCL

Essar Projects (EPL), part of Essar Group, has bagged Rs 700 crore worth engineering, procurement, construction and commissioning (EPCC) order from the public sector Bharat Petroleum Corporation (BPCL).

The order is for the Coke Drum Structure Package (CDSP) of the Delayed Coker Unit (DCU), which is being taken up under the Integrated Refinery Expansion Project of BPCL's Kochi Refinery. The scope of work includes project management, residual process design, detailed engineering, procurement, fabrication, construction, commissioning, and performance testing of the CDSP of the DCU.

BPCL is in the process of expanding its Kochi Refinery from 9.5 to 15.5 MMTPA. Further, Engineers India (EIL) has been appointed as Project Management Consultant (PMC) for the project.

Essar Steel, the group’s flagship company of Essar Group, which is a global corporation with investments in the sectors of steel, energy (oil & gas and power), infrastructure (ports, projects & concessions) and services (shipping, telecom, realty and outsourcing and technology solutions).

Man Industries bags orders worth Rs 525 crore

Man Industries (India), one of the leading pipe manufacturing company has received new orders worth approximately Rs. 525 crore from Domestic and Middle East customers for supply of large diameter pipes for Oil and Gas sector. With these new orders the Company's outstanding order book stands at approximately Rs 1025 crores. The orders are to be executed over a period of next 6 to 9 months.

In addition to the above confirmed orders the Company has outstanding bids over Rs 5000 crore at various stages of evaluation for several other Oil, Gas and Water projects in India and abroad.

ITC board approves demerger of 2 Wimco units

The board of directors of ITC Ltd at its meeting today approved the demerger of the non-engineering business of subsidiary Wimco Ltd and the related scheme of arrangement.

The non-engineering business comprises safety matches and agri (forestry) businesses. ITC will merge these units with itself.

The scheme, which is subject to approvals as necessary, will take effect from April 1, 2013, the company said in a filing to the BSE.

Upon it becoming effective, the members of Wimco Ltd will be entitled to two ordinary shares of Re 1 each of ITC for every 77 equity shares of Re 1 each of Wimco Ltd held by them on such date as may be determined, the filing said.

Apart from the agri and matches businesses, Wimco has interests in manufacturing packaging machinery.

Recovery on the street; indices remain in red

Some positive buying is seen in IT, tech, FMCG and metal sectors, while PSU, oil & gas, realty, banking and capital goods sectors are showing some weakness

At 1:09 PM (IST), S&P BSE Sensex is 95 points down at 17,872, while 50-share Nifty is 43 points down at 5,243.

BSE Mid-cap is 88 points down at 5,189, whereas BSE Small-cap is 71 points down at 5,128.

Some positive buying is seen in IT, tech, FMCG and metal sectors on BSE, while PSU, oil & gas, realty, banking, capital goods and consumer durables sectors are showing some weakness.

TCS, Wipro, Jindal Steel, ITC, Infosys, Tata Power, Tata Steel and Hindalco are up on BSE, whereas ONGC, HDFC, Coal India, Gail, Bharti Airtel, Maruti Suzuki and M&M are showing some weakness.

The rupee has hit new record low at 68.70 against the US dollar. The Indian currency has dropped for the third day; Asia's worst currency. The Indian currency is 19.2% down in 2013 and has become the world's worst performing currency in August.

Reliance Industries, which is 1.01% down, has agreed to provide access to all records and cooperate unconditionally with the CAG for audit on investment in KG-D6 gas fields.

Reliance Group Chairman Anil Ambani has reportedly said that his telecom venture, Reliance Communications (RCom), would collaborate with Mukesh Ambani’s Reliance Jio in the coming months. Rcom is 0.98% down.

Rural Electrification Corp is planning to raise Rs50bn through issue of taxfree bonds. The scrip is 1.14% down.

Wipro will enter the National Stock Exchange’s 50-share Nifty index with effect from September 27, while Reliance Infrastructure would exit. Wipro is 2.59% up on BSE.

The National Commodity and Derivatives Exchange slashed transaction charges for members who register an average daily turnover of Rs. 2 billion.

SPML Infra secured new orders worth Rs. 18.02 billion.

Pratibha Industries has bagged a contract worth Rs. 2.31 billion awarded by PHED, Ajmer, Rajasthan. The scrip is 0.8% down on BSE.

Nikkei closed 208 points down at 13,338, while Hang Seng is trading 350 points down at 21,524.

Gold futures hit record high of Rs 34,246 per 10 gm

Continuing its rising streak, gold prices crossed Rs 34,000 per 10 gram level for the first time ever in futures trade today as the rupee tumbled to hit an all-time low of Rs 68.75 amid a firm trend overseas.

On the Multi Commodity Exchange, gold for delivery in October went up by Rs 531 or 1.57 per cent to trade at an all-time high of Rs 34,246 per 10 gram in a business turnover of 1,624 lots.

Similarly, the yellow metal for delivery in far-month December surged by Rs 511 or 1.52 per cent to Rs 34,161 per 10 gm in 505 lots.

Market analysts attributed the rise in gold prices at the futures trade to a sliding rupee which tumbled to a historic low of Rs 68.75, making dollar-quoted precious metal expensive, and pick-up in demand at the spot market for the festive and upcoming marriage season.

Besides, a firm trend in the global market as speculation that the US may lead military strikes against Syria spurred investors’ demand for a safe haven, influenced gold prices at the futures trade here, they said.

In the domestic market, gold prices closed at an all-time high of Rs 32,585 per 10 gram in Mumbai yesterday.

Meanwhile, the yellow metal advanced 0.3 per cent to $1,419.55 an ounce in Singapore.

How to get safe and sound returns

With FIIs rushing to the exit door, equity markets are tumbling and bond markets are gyrating too. But here are some debt options which today offer safety with excellent returns.

Not long ago, interest rates on bank deposits were thought to have peaked and were expected to decline.

Today, it is a different story. The RBI’s recent measures to tighten liquidity have led to a sharp rise in short-term interest rates.

As a result, as many as six banks have raised deposit rates this week. With this, the number of banks that have increased deposit rates since the beginning of this month has moved up to 27.

We sifted through rates offered by banks on deposits across various timeframes and compared these with top-rated corporate/non-banking finance company deposits and post office schemes.

Here are some safe options we arrived at for different investment needs, which would also maximise your returns.

FOR LONG-TERM INVESTORS

Although most banks have been increasing short-term interest rates (i.e. rates for deposits of less than a year) in response to the RBI’s moves, long-term investors too stand to gain from the rate revisions by banks.

While rates for periods less than a year are in the ramge of 6.5-9.25 per cent, recent revisions have seen Karur Vysya Bank (KVB) and Andhra Bank offering 9.5 per cent for one- to two-year deposits. Lakshmi Vilas Bank (LVB) offers 9.5 per cent for one-year deposits. After the revision on August 19, Tamilnad Mercantile Bank offers an interest rate of 9.5 per cent across maturities of twelve months-five years.

Those seeking regular return on investments too, can consider bank deposits over the post office Monthly Income Scheme, which offers only 8.4 per cent interest.

While most banks offer quarterly interest payouts, some offer monthly payouts, too.

FOR SENIOR CITIZENS

With most banks offering an additional 25-75 basis points on deposits by senior citizens, those above 60 years of age can now earn double-digit returns.

Andhra Bank (one to two year deposits) and LVB (one year deposit) for instance, now offer 10 per cent interest to senior citizens.

Seniors who don’t have taxable income and are particular about regular inflows can choose deposit options that offer more than the 9.2 per cent given by the Senior Citizens Savings Scheme (SCSS).

Like the SCSS, all banks today offer quarterly interest pay-outs.

Several banks such as Bank of India, IDBI Bank, Indian Bank, Indian Overseas Bank, Axis Bank, YES Bank, Karnataka Bank and Dhanlaxmi Bank offer 9.5 per cent on five-year deposits for senior citizens. You can invest in these or lock into deposits which offer higher rates than the SCSS for durations shorter than five years.

Deposits in all commercial banks are protected by the Deposit Insurance and Credit Guarantee Corporation.

In case a bank fails, each depositor is insured up to Rs 1 lakh for both principal and interest put together. This makes bank deposits a safe investment option.

But do note that investments in post-office schemes up to any amount are risk-free as it is backed by the Government.

FOR HIGHER RISK-TAKERS

Unlike bank deposits, corporate and other finance company deposits are not covered by insurance.

Hence these are considered more risky. Nevertheless, we consider only deposits with the highest AAA rating by various rating agencies.

Instruments with AAA rating are considered to have the highest degree of safety regarding timely servicing of financial obligations. They carry the lowest credit risk.

While many AAA deposits such as from Gruh Finance, LIC Housing Finance, Sundaram Finance and HDFC are open currently, only deposits of M&M Financial Services (cumulative) offer higher interest than banks in the two- to five-year time period. Others offer rates in the range of 8.75-9.5 per cent.

In this context, deposits from M&M Financial, a subsidiary of M&M, offer an attractive option at 10 per cent (two years), 10.25 (three years) and 9.75 per cent (four and five years).

It also has an offer for 18 months at 9.75 per cent, unmatched by any bank special deposits.

For those looking for regular payouts, the two- and three-year offers are attractive at differential rates of 9.75 and 10 per cent, respectively.

Those with a higher risk appetite can choose to invest in this non-bank deposits.

Senior citizens get additional 0.25 per cent in M&M Financial deposits, making the two- and three-year options (cumulative) and three-year option (non-cumulative) attractive.

Sundaram Finance is the only other non-bank offering 10 per cent returns (two, three years) to seniors, equal to that of banks such as Andhra Bank.

FOR TAX-SAVERS

If you are in the 20 and 30 per cent tax slabs and if tax efficient investment is foremost in your mind, then there is nothing to beat the humble five-year NSC.

Part of the small savings schemes of the post office, investments up to Rs 1 lakh in the NSC are also eligible for tax deduction under Sec 80C.

On first perusal, the 8.5 per cent interest rate on the five-year NSC is unattractive in comparison to rates on tax-saving deposits of banks, the best of which offer 100 basis points more (after recent revisions).

But where the NSC gains an edge is in the fact that only the interest earned in the last/fifth year is subject to tax. The interest of the first four years is assumed to be reinvested each year.

On the other hand, even if you invest in a cumulative deposit, FD interest earned each year is taxable. This pushes down the post-tax yields on FDs vis-à-vis the NSC (see accompanying table).

Therefore, the NSC, with post-tax yields of 13.4 per cent (for 20 per cent tax slab) and 16.4 per cent (for 30 per cent tax slab) is still a better investment option than tax saving bank deposits — whether you choose the highest 9.5 per cent tax-saver deposits of LVB, 9.25 per cent tax-saver deposit by City Union Bank or even 9 per cent tax-saver deposits offered by many others such as Dhanlaxmi Bank, Karnataka Bank and State Bank of Mysore.

Similarly, seniors in the 30 per cent tax bracket will still earn greater post-tax yields if they invest in the NSC, even in comparison with the tax-saver deposits of Axis Bank, which offers one of the highest rates of 9.75 per cent.

CCI clears Infrastructure projects worth Rs 1.83 lakh crore

In order to boost business sentiments in a slowing economy, the Cabinet Committee on Investment (CCI) has cleared infrastructure projects worth Rs 1.83 lakh crore including 18 power projects that were stuck due to delay in clearance. The 18 power projects worth Rs 83,773 crore, which were stuck due to lack of fuel linkages, will sign coal supply agreements with Coal India by September 6.

The banks have already disbursed as much as Rs 30,000 crore for these power sector projects. Besides this, the CCI cleared hurdles for projects like Reliance Power's 4,000 MW ultra mega power project at Sasan in Madhya Pradesh, L&T's Metro Rail project in Hyderabad, Essar Power's Jharkhand project and Hindalco Industries project. The Cabinet Committee on Investment (CCI) has also set a 60- day deadline for ministries to clear various infrastructure projects in the power, coal and highways sectors.

Country’s infrastructure development is crucial to boost the economy’s growth and thus the government has recently set up the Cabinet Committee on Investments (CCI) to clear the bottlenecks holding back mega infrastructure projects. For the 12th Five Year Plan (2012-17), the government has set the $1-trillion investment target for the infrastructure sector. Further, in order to speed up the implementation of infrastructure projects, the government has also set up special cell, special project monitoring group, which is meant to supplement CCI's efforts and has been tasked with monitoring the progress of projects cleared by CCI.

Reliance Capital plans to invest Rs 100 crore in wind energy venture

Reliance Capital, one of India’s leading & amongst the most valuable financial services companies in the private sector is planning to invest Rs 100 crore in a wind energy joint venture (JV) in the country, partnering with China's Ming Yang Wind Power Group. Last year on July 2, 2013 the company had entered into definitive agreements with Ming Yang Wind Power Group, a leading wind turbine manufacturer in China, through Ming Yang Holdings (Singapore), its Singapore subsidiary.

Under the agreements, Ming Yang Singapore plans to establish a joint venture (JV) with Reliance Capital by subscribing to a significant stake in the share capital of Global Wind Power (GWPL), a leading wind power solutions provider in India, in which Reliance Capital and related entities are currently the largest shareholders. This agreement would be closed soon and an investment of Rs 100 crore would be made through the joint venture.

Reliance Capital is part of Reliance Capital, one of India’s largest financial services companies with over 20 million customers. The company is the only AMC in India to have been chosen to manage both public funds sponsored by the Indian government - the Provident Fund and Pension Fund.

Silver prices rise 46.6% in March series so far

At 11:00 hrs MCX Silver September contract was trading at Rs 58629 up Rs 1339, or 2.34 percent. The Silver rate touched an intraday high of Rs 59580 and an intraday low of Rs 57500. So far 6315 contracts have been traded. Silver prices have moved up Rs 1310, or 2.29 percent in the September series so far.

MCX Silver December contract was trading at Rs 59880 up Rs 1347, or 2.30 percent. The Silver rate touched an intraday high of Rs 60701 and an intraday low of Rs 59103. So far 1124 contracts have been traded. Silver prices have moved up Rs 12711, or 26.95 percent in the December series so far.

MCX Silver March contract was trading at Rs 61097 up Rs 2107, or 3.57 percent. The Silver rate touched an intraday high of Rs 61332 and an intraday low of Rs 60095. So far 30 contracts have been traded. Silver prices have moved up Rs 19447, or 46.69 percent in the March series so far

Resolving impasse on iron ore, coal mining tops FinMin’s 10-point plan

Resolving the judicial impasse on iron ore and coal mining is one of the 10 steps the Government will undertake in the coming weeks to strengthen the economy.

Finance Minister P. Chidambaram’s 10-point action plan includes a commitment to keep the fiscal deficit for the current fiscal at 4.8 per cent of GDP, contain the current account deficit at $70 billion, capitalise public sector banks, quicken the capex programme of public sector enterprises, re-think the food bounty of the monsoon, as also encourage exports and manufacturing sector.

Replying to a discussion in the Lok Sabha on the current economic situation, the Minister sought support of Members of Parliament to resolve the “impasse” caused by judicial intervention in coal and iron-ore mining that is seen holding up projects.

The impasse relating to “coal, iron ore, environment and land acquisition issues” is going to affect “any government in the future,” Chidambaram said . “We have to find a way to resolve this impasse,” he said.

Chidambaram made a specific reference to the Supreme Court-appointed Central Empowered Committee on whose recommendation significant curbs have been imposed on mining activity in States such as Goa and Karnataka.

Chidambaram said that it was getting difficult for the Government to go before the committee for every single clearance. The Finance Minister concurred with the remark of an MP that judicial intervention should not lead to a blanket ban, but must focus only on the areas where irregularities have been detected.

“If irregularities are in certain blocks, why stop new blocks from being auctioned?” Chidambaram said.

ECONOMIC SCENE

In the discussion on the economic situation, the ruling UPA combine came in for a scathing attack from the Opposition for mismanaging the economy.

The Opposition leaders slammed the Government for its reckless economic policies, which they said had created this “gloom and doom” situation.

BJP leader Yashwant Sinha said the UPA Government has lost control over the economy and, therefore, it must go.

ALL OPTIONS OPEN

To a question from Sinha on whether a sovereign bond issue was being contemplated to help finance the CAD, Chidambaram said all options (FDI, NRI, ECB) to finance the deficit were on the table.

“I cannot open a debate on sovereign bonds now. All options are on the table. Which option is a judgment call of the Government. If that requires consultation, we will look at it. I have taken note of what you (Sinha) have said,” Chidambaram said without delving into the issue.

Wipro to enter Nifty from Sep 27; Reliance Infra to exit

IT major Wipro will enter the National Stock Exchange’s 50-share Nifty index with effect from September 27, while Reliance Infrastructure would exit.

The decision regarding these changes was announced  by the India Index Services & Products Ltd, a joint venture of NSE and Crisil, which manages the various indices at the exchange.

Earlier, Wipro was dropped from the CNX Nifty index from April 1 as its non-IT businesses were hived off into a separate unit.

As part of periodic review, the new changes would become effective from September 27, 2013.

A host of changes have also been made in various other indices of NSE such as CNX Nifty Junior Index, CNX 100 Index, CNX 200 Index CNX 500 Index, Nifty Midcap 50 Index, CNX Midcap Index and CNX Smallcap Index by its Index Maintenance Sub-Committee during a periodic review, it said.

Besides, sectoral indices for IT, auto, realty, media, PSE and service would also see some changes.

The stocks being excluded from Nifty Junior index are Ashok Leyland, Indian Hotels Company, while Mahindra & Mahindra Financial Services Ltd and Oil India would be included in the index.

In the CNX 100 index, Ashok Leyland, Indian Hotels and Reliance Infrastructure would be replaced by Mahindra & Mahindra Financial Services, Oil India and Wipro.

Those being dropped from CNX 200 Index include GVK Power & Infrastructures, Gujarat Gas Company, IVRCL, Lanco Infratech, Torrent Power, Amtek Auto, City Union Bank, Core Education & Technologies, Dewan Housing Finance Corporation, India Infoline and Jindal Saw.

The stocks that being added to CNX 200 index include Wipro, Bharti Infratel, Berger Paints, Crisil, MMTC, CMC, Coromandel International, Oberoi Realty, Page Industries, Thermax and Torrent Pharmaceuticals.

F&O total turnover stood at Rs 2,93,345.97 crore on August 27

Future & Option (F&O) total turnover stood at Rs 2,93,345.97 crore on August 27 and the total numbers of contracts traded on the day were 1,11,46,605.

Of the total turnover, Index Futures contributed Rs 23,779.46 crore, Stock Futures Rs 31,542.82 crore and Index Options Rs 2,29,133.92 crore, while the contribution of the Stock Options was of Rs 8,889.76 crore.

For the day, the total F&O PutCall ratio stood at 1.09, while Index Options PutCall ratio was 1.11 and that of Stock Options was 0.64.

The top five scrips with highest PCR on OI were Bharat Forg 2.39, MRF 1.50, Infosys 1.47, Wipro 1.42, and Power Grid 1.33.

Among most active underlying, SBI witnessed   contraction of 1.26 million of Open Interest in the Aug month futures contract followed by ICICI Bank which witnessed contraction of 1.14 million of Open Interest in the near month contract; United Spirits witnessed  contraction of 0.66 million in the Aug month futures. Also, Reliance Industries witnessed contraction of 0.26 million in Open Interest in the Aug month contract and DLF witnessed  contraction of 9.46 million of Open Interest in the near month futures contract.

Pratibha Industries bags contract worth Rs2.30bn

Pratibha Industries Ltd has announced that the Company has bagged a contract worth Rs 230.90 Crore awarded by PHED, Ajmer, Rajasthan. Contract awarded for work of Cluster Scheme of 151 villages of Banera and Hurda Tehsils along with augmentation of UWSS of Gulabpura town from Danta Pyara Headworks under CHAMBAL - BHILWARA WATER SUPPLY PROJECTS PHASE - Il with operation and maintenance for 10 years on Single point responsibility turnkey basis.

The Contract is scheduled to be completed in 36 months from the date of commencement.

The Company is engaged in the business of integrated infrastructure solutions. As Pratibha moves ahead, the Company have laid increased emphasis on devising business strategy on aggressive top line growth, a de-risked business model and increased operational efficiencies

Govt to set up task force on currency swap pacts to stabilize Rupee

Minister of Commerce and Industry, Anand Sharma has said that the government is considering currency swap deals with some of the its key trading partners, to stabilize the Rupee, which logging the biggest percentage fall in 18 years and hit a new all-time low of 66.12 against the dollar.

A currency swap deal takes place between the central banks of two partner countries, under which banks of both the countries would give each other dollars to stabilize their local currencies, in case of need. With this arrangement, India will need to identify two or three more countries and regions.

As per Commerce Minister, setting up a task force will not only help in stabilizing the Rupee but also increase availability of credit for the exporters, especially, in the SME sectors besides, pushing project exporters and supporting the labour intensive sectors.

Further, the minister soon plans to take up proposal with finance minister P. Chidambaram, although it announced the formation of a task force on the matter under the chairmanship of commerce secretary SR Rao. The task force has been asked to submit the report within a month.

Rupee hits record low below 68 per dollar

The rupee fell below the psychological 68 per dollar mark, a record low, in the mid-morning session with a sharp fall in domestic shares adding to concerns of foreign fund withdrawals from the equity market as well.

The partially convertible rupee was trading at 68.00/68.05 per dollar, after hitting a record low of 68.05 and down more than 2.6 percent from its close of 66.24/25 on Tuesday.

Axis Bank launches ‘Axis Bank- ISIC Forex Card’ for Students

Axis Bank, India’s third largest private sector bank, has launched in association with the International Student Identity Card (ISIC), a unique co-branded Travel-Currency Card for students. With this exclusive association, the ‘Axis Bank- ISIC Forex Card’, would be the first photo Travel Currency Card available in USD, Euro, GBP and AUD currencies and can be used across 34 million merchant locations and at over 2 million MasterCard ATMs globally. The validity of this card is 2 years.

‘Axis Bank- ISIC Forex Card’ combines unique features of Travel Currency cards and ISIC, which provides special student offers and discounts across 125 countries on a wide range of spending categories such as travel, accommodation, museums and cultural sites, retail shopping restaurants, cafes, entertainment and many more.

Axis Bank is the third largest private sector bank in India. Axis Bank offers the entire spectrum of services to customer segments covering Large and Mid-Corporates, SME, Agriculture and Retail Businesses.

Dhanlaxmi Bank to raise Rs 37.75 crore through issue of equity shares

Dhanlaxmi Bank is planning to raise Rs 37.75 crore through issue of 75.5 lakh equity shares of Rs 10 each with a premium of Rs 40 per share. The bank will allot equity shares of 10.5 lakh, 12.5 lakh and 52.5 lakh to investors B K Raveendran Pillai, Mohanachandran Nair B and and N V George respectively.

The allotment is as per rules of the Securities and Exchange Board of India, Capital and Disclosures Requirement, Reserve Bank of India, Union Finance Ministry and other relevant statutory authorities.

Dhanlaxmi Bank is an 84-year old bank with a network of over 275 branches and 460 ATMs covering 160 centers across 14 states, the bank services a broad customer base of 1.6 million. The bank provides a suite of banking products and services to its customers across Retail Banking, Wholesale Banking, Microfinance and Agricultural Lending and Small and Medium Enterprises Group.

RPower to double power generating capacity to 5,000 mw

"We are on our way to complete Sasan ultra mega power project (UMPP), " Anil Ambani reported.

Addressing the annual general meeting, Anil Ambani said , "Reliance Power is planning to double its power generating capacity to 5,000 mw in a year despite the sector's problems such as delays in land acquisition and environment clearances, Ambani said.
"We are on our way to complete Sasan ultra mega power project (UMPP), " Anil Ambani  reported.
Reliance Power has a capacity of 2,545 mw and two projects totalling 6,400 mw are stuck.

"We will start work on the Tilaiya UMPP shortly," said JP Chalasani, chief executive officer.

CCI sets 60- day deadline to clear 36 mega infrastructure projects

In a move to boost the infrastructure development in the country and to enhance business sentiment in a slowing economy, the Cabinet Committee on Investment (CCI) headed by Prime Minister Manmohan Singh, has set a 60- day deadline for ministries to clear 36 mega infrastructure projects including 28 power plants that were stuck due to delay in sanctions.

The government had set up the CCI, to clear the bottlenecks holding back big infrastructure projects. Recently, the CCI cleared the proposal of setting up two hydro power projects in Arunachal Pradesh. The panel has so far cleared 171 projects worth Rs 1.69 lakh crore.

Further, in order to speed up the implementation of infrastructure projects, the government has also set up special cell, special project monitoring group, which is meant to supplement CCI's efforts and has been tasked with monitoring the progress of projects cleared earlier by CCI.

Further, a web-based information system has also been put in place wherein firms can provide details of their project as well as the issues that are restraining smooth implementation of projects. Meanwhile, for the 12th Five Year Plan (2012-17), the government has set the $1-trillion investment target for the infrastructure sector.

Asian shares hit 7-week low, oil at 6-month peak on Syria worries

Washington and allies gearing up for possible military action against Syria

Jitters over a possible US-led military strike against the Syrian government knocked Asian equities to a seven-week low on Wednesday and pushed oil prices and safe-haven gold to multi-month highs.

An acute 'risk-off' mode also boosted the appeal of the Japanese yen, which held near a one-week high against the dollar and euro after having posted its biggest rally in more than two months.

Washington and its allies were gearing up for a probable military action against President Bashar al-Assad's forces, which were blamed for last week's chemical weapons attacks.

Western officials told the Syrian opposition to expect a strike within days, and US Defence Secretary Chuck Hagel said American forces in the region were "ready to go" if President Barack Obama gives the order.

The news on Syria overshadowed improving economic indicators, such as rising US home prices and Germany's Ifo business survey hitting its highest in 16 months.

Overnight, US and European stocks suffered their worst day since June, and investor nervousness was reflected in a nearly 12% jump on the CBOE volatility index, Wall Street's so-called fear gauge, to a two-month high.

"(The Syrian issue) is adding a layer of nervousness on top of the debate of US tapering which is having a very big impact on carry trade globally and having a very big impact on emerging markets," a senior trader at a foreign bank in Tokyo said.

Tokyo's Nikkei share average sagged 2.3% to a two-month low on Wednesday, while the yen was largely steady at 97.135 to the dollar and 130.075 to the euro after climbing more than 1% overnight.

MSCI's broadest index of Asia-Pacific shares outside Japan shed 1%, hitting its lowest level since July 9 and extending the previous session's 1.2% drop.

Emerging markets have been reeling for the past few weeks on expectations that the US Federal Reserve will reduce its $85 billion a month bond-buying programme as soon as next month.

As the selloff in deficit-stricken emerging market nations deepened, Indonesian exchanged traded funds saw heavy redemptions from US investors overnight.

Indonesian shares tumbled as much as 3.3% to a 14-month trough on Wednesday, while Philippine stocks sank 5.6% to a nine-month low.

Growing pain

Indonesia's central bank board will meet on Thursday in a surprise move amid widespread speculation it will have to raise interest rates again to defend the fast-falling rupiah, now its lowest since April 2009.

The Indian rupee hit a record low on Tuesday and posted its biggest single-day fall in nearly 18 years after the lower house of Parliament approved a nearly $20 billion plan to provide cheap grain to the poor, raising concerns the fiscal deficit will blow out even further.

The Thai baht fell to as much as 32.20 per dollar, its weakest level in three years.

Against a basket of major currencies, the dollar held steady at a one-week low.

The heightened geopolitical risk in the Middle East drove the prices of gold and oil higher, however.

Brent crude prices advanced 1.8% to a six-month high of $116.37 a barrel, extending Tuesday's 3.3% surge - the biggest one-day%age gain in nearly 10 months.

Gold was steady after climbing as much as 1.4% on Tuesday to a more than three-month high.

Nifty hits one-year low as Re above 67, oil prices rally

Benchmark indices lose over 1% each in opening deals; Nifty nears 5,200

Markets cracked in the opening trades with the benchmark indices opening lower by over 1% each as Rupee collapsed to a new record low of 67.98/dollar.

At 0916 hrs, the Sensex was down 220 points at 17,747 and the Nifty slipped 78 points to trade at 5,209.

In the broader markets, the fall was minimal as compared to the loss on the BSE benchmark index. The smallcap index was down 0.3% and the midcap index gave of 0.8%, both outperforming the Sensex which was down 1.2%.

In Asia, too, jitters over a possible U.S.-led military strike against the Syrian government knocked Asian equities on Wednesday, with Japan's Nikkei hitting a two-month low, and pushed oil prices and safe-haven gold to multi-month highs.

Tokyo's Nikkei share average sagged 2.4% to a two-month low, while the yen was largely steady at 97.00 to the dollar and 129.870 to the euro after climbing more than 1% overnight.

MSCI's broadest index of Asia-Pacific shares outside Japan shed 0.5% on Wednesday, extending the previous session's 1.2% drop.

Overnight, U.S. and European stocks suffered their worst day since June, and investor nervousness was reflected in a nearly 12% jump on the CBOE volatility index, Wall Street's so-called fear gauge, to a two-month high.

RBI suggests banking sector overhaul

Discussion paper moots continuous banking licence regime; 4-tier structure; says less govt stake in PSBs is a good idea

The Reserve Bank of India (RBI) has proposed a comprehensive overhaul of the country’s banking structure, to increase competition and growth, and for further financial inclusion.

At present, only a universal banking structure is allowed; there is no separate licencing for niche activities as in developed nations. The central bank still thinks the universal model is the preferred model, particularly in the aftermath of the global financial crisis. However, it acknowledges the need for differentiated banking licences — for infrastructure financing, retail banking, wholesale banking and investment banks.

In a discussion paper issued on Tuesday, titled ‘Banking structure in India — the way forward’, the regulator has provided a road map for the reorientation. It proposes a four-tier structure, with the first tier of three to four large banks, with sizable international presence.

“The second tier is likely to comprise several mid-sized banking institutions, including niche banks with economy-wide presence. The third tier may encompass old private sector banks, regional rural banks and multistate urban cooperative banks,” the discussion paper said. The fourth tier might embrace many small privately owned local banks and cooperative banks.

For the creation of large banks, consolidation seems the way forward, the paper suggests. “The issue has assumed significance, considering the need for a few Indian banks to cater to global needs by becoming global players, and the growing corporate and infrastructure funding needs,” it said. Adding that such activities should be based on synergies and cannot be imposed.

Breaking away from the tradition of ‘stop and go’ licensing, RBI has also proposed a continuous authorisation policy. Till now, the country has seen three phases in bank licences — in 1993, 2001 and the present process which started in 2010.

“There is a case for reviewing the current ‘stop and go’ licensing policy and consider adopting a ‘continuous authorisation’ policy, as continuous authorisation keeps the competitive pressure on existing banks and also does not strain the banking system as ‘block’ licensing may do,” RBI said.

However, it says such a policy could only be adopted after ensuring the entry norms are stringent, to encourage only well-qualified entities.

While acknowledging the need for large banks, the regulator has also kept in mind the need for smaller banks to cater to small borrowers. “Small local banks play an important role in the supply of credit to small enterprises and agriculture, and banking services in unbanked & under-banked regions,” RBI said.

The issues surrounding capital requirement, corporate governance and exposure norms, among others, of smaller banks needs to be addressed, it said, while permitting these entities.

RBI has also suggested the government consider reducing its stake in public sector banks. PSBs have two-thirds of the market in India. The paper says this would improve their performance. The current norms stipulate the government should hold at least 15 per cent in PSBs. The government is also challenged in infusing capital in these banks, also straining its fiscal position.

“As regards the reduction in fiscal burden on account of recapitalisation of PSBs, the government may consider options from a menu of choices available, such as issue of non-voting equity shares or differential voting equity shares, adopting FHC (financial holding companies) structure or diluting stake in PSBs,” the discussion paper said.