Market flat..

Some positive buying is seen in power, realty, PSU, capital goods, auto, oil & gas and metal sectors on BSE

The market remained flat in afternoon trade. At 2:38 PM (IST), S&P BSE Sensex is 1.59 points down at 19,780, while 50-share Nifty is 5 points up at 5,856.

BSE Mid-cap is 36 points up at 5,633, whereas BSE Small-cap is 40 points up at 5,516.

Some positive buying is seen in power, realty, PSU, capital goods, auto, oil & gas and metal sectors, while sectors such as consumer durables, IT, teck and FMCG are losing sheen on BSE.

BHEL, Coal India, M&M, Tata Power, Hero MotoCorp, L&T, NTPC, Hindalco, Bajaj Auto and Gail are up on BSE, whereas Wipro, Bharti Airtel, Infosys, ITC, HDFC Bank, HDFC, TCS and Tata Steel are showing some weakness.

Gold at 1-month low; demand slightly up

 Gold demand in India, the world's top consumer of the precious metal, slightly improved on Friday as prices fell to their lowest in a month tailing losses in the world market.

At 0921 GMT, the benchmark October contract on the Multi Commodity Exchange (MCX) was 1.19 per cent lower at Rs 29,690 per 10 grams. It hit a low of Rs 29,636 earlier in the day, a level last seen on Aug. 16.

"A few jewellers are comfortable in placing orders below Rs 30,000. Some buyers are still on the sidelines expecting a further drop in prices," said a Mumbai-based dealer.

In the overseas market, gold reversed early gains and fell to its lowest in more than a month on Friday as US futures extended losses on fears the United States would curb its stimulus soon.

The rupee plays an important role in determining the landed cost of the dollar-quoted yellow metal. It eased on Friday.

India's gold imports are likely to be around $38 to $40 billion in the current fiscal year to March 31, 2014, down from last fiscal year's $53.8 billion, C. Rangarajan, economic adviser to the prime minister, said on Friday.

Silver for September delivery on the MCX was 2.36 per cent lower at Rs 49,305 per kg.

July IIP: why there is little to cheer about economy

1. No reason to cheer yet: The rebound in industrial output was on account of a sharp jump in capital goods production, which rose for the first time in four months. However, the rebound in the sector was mainly driven by a nearly 84 per cent jump in the production of electrical machinery and apparatus. Of this, the volatile category of "rubber insulated cables" (with a weight of 0.1 per cent in industrial production) rose a staggering 336 per cent.
2. Lumpy data: The spurt might be seasonal (and hence will not sustain) or there might be an error in the data (which has happened in the past). Sonal Varma of Nomura said, "We don't see this as sustainable as it is driven by one volatile category, which will likely reverse." Gautam Chhaochharia, head of India Research at UBS said some items have been lumping causing the headline number to be positive. I would not call it a recovery. "It's just a one month number to begin with," he added.
3. Manufacturing a cause of worry: Excluding electrical machinery and apparatus category, manufacturing output actually fell by 0.9 per cent in July. This is a cause of worry because the manufacturing sector constitutes about 76 per cent of industrial production. Unless there is a sustained revival of the manufacturing sector, there will be no pick-up in corporate investments.
4. Rupee fall aided IIP: The growth was led by export oriented industries (textiles, leather products, refined petroleum, etc.) which together account for 37 per cent of the IIP manufacturing index and contribute to around half of India's total merchandise exports. The growth in these industries was fuelled because of rupee weakness. Domestic research agency Crisil said the cushion from export oriented industries will not be sufficient to offset the slowdown in domestic demand dependent manufacturing industries.
5. Weak discretionary demand: Consumer goods output in July fell by 0.9 per cent compared to a year ago, while basic and intermediate goods output growth were only marginally better than last month.

IT stocks decline

Volatility ruled the roost as key benchmark indices regained positive zone in early afternoon trade. The barometer index, the S&P BSE Sensex, was up 29.27 points or 0.15%, up 135.47 points from the day's low and off 88.22 points from the day's high. The market breadth, indicating the overall health of the market, was positive.

Auto stocks edged higher on fresh buying. IT stocks declined on recent strong rebound of the rupee against the dollar.

A bout of volatility was witnessed as the key benchmark indices reversed initial losses triggered by weak Asian stocks. Key benchmark indices pared gains after striking fresh intraday high in morning trade. Key benchmark indices reversed intraday gains after Prime Minister's Economic Advisory Council (PMEAC) sharply trimmed India's GDP growth forecast to 5.3% for the year ending 31 March 2014 (FY 2014) from earlier estimate 6.4% and said that the current stance of monetary policy has to continue until stability in the rupee is achieved. Key benchmark indices regained positive zone in early afternoon trade.

Foreign institutional investors (FIIs) bought shares worth a net Rs 930.54 crore on Thursday, 12 September 2013, as per provisional data from the stock exchanges.

In the foreign exchange market, the rupee weakened against the dollar. The partially convertible rupee was hovering at 63.71, weaker than its close of 63.50/51 on Thursday, 12 September 2013.

At 12:15 IST, the S&P BSE Sensex was up 29.27 points or 0.15% to 19,811.15. The index gained 117.49 points at the day's high of 19,899.37 in morning trade. The index fell 106.20 points at the day's low of 19,675.68 in mid-morning trade, its lowest level since 10 September 2013.

The CNX Nifty was up 18.30 points or 0.31% to 5,869. The index hit a high of 5,884.30 in intraday trade. The index hit a low of 5,822.90 in intraday trade.

The market breadth, indicating the overall health of the market, was positive. On BSE, 1,193 shares gained and 880 shares fell. A total of 125 shares were unchanged.

The total turnover on BSE amounted to Rs 908 crore by 12:20 IST, compared to Rs 705 crore by 11:20 IST.

Among the 30-share Sensex pack, 20 stocks gained and rest of them declined. Bhel (up 4.78%), L&T (up 2.31%) and Coal India (up 2.31%) edged higher from the Sensex pack.

Auto stocks edged higher on renewed buying. Mahindra & Mahindra (M&M) rose 2.24%. The company on Tuesday, 10 September 2013, said that it has crossed yet another milestone with over 4 lakh sales of its special utility vehicle (SUV), Scorpio.

Tata Motors rose 0.62% to Rs 335. The stock had hit a record high of Rs 352 in intraday trade on 10 September 2013. The company's unit Jaguar Land Rover (JLR) on 10 September 2013 reported 28% rise in sales to 27,852 vehicles in August 2013 over August 2012.

Maruti Suzuki India shed 0.17%.

Two-wheeler stocks rose. Hero MotoCorp (up 2.27%) and Bajaj Auto (up 0.43%) gained.

IT stocks declined on recent strong rebound of the rupee against the dollar. A firm rupee adversely affects operating profit margins of IT firms as the sector derives a lion's share of revenue from exports.

Wipro lost 2.87%.

TCS shed 0.13%. The company on Tuesday, 10 September 2013, said it has bagged a five-year multi-million euros deal from Scandinavian Airlines (SAS) to help transform and optimise SAS' IT processes, applications and infrastructure. TCS will implement its proprietary cloud-based solutions to simplify and standardize the SAS IT landscape. The initiative is a part of the SAS "4 Excellence Next Generation" strategy, aimed at improving the competitiveness of the SAS Group. Through this partnership, SAS will also tap into TCS' Aviation and Digital Innovation Labs to develop solutions addressing the needs of the new digital consumer.

Infosys lost 1.01%. Infosys BPO during market hours on Thursday, 12 September 2013, announced that it has been selected by AkzoNobel, a leading global paint and coatings company and a major producer of specialty chemicals, to transform its finance and accounting (F&A) processes to deliver higher operational efficiencies and performance. Infosys BPO will play a key role in accelerating AkzoNobel's finance transformation program and streamline accompanying operations for AkzoNobel's decorative business in over 30 countries across Europe, the Middle East and Africa.

HCL Technologies declined 2.57%. HCL Technologies and Anglo American announced on Tuesday, 10 September 2013, that they have entered into an engagement whereby HCL will deliver IT services for Anglo American businesses across the globe. As a part of this contract, HCL will transform Anglo American's end user computing and data center landscape to improve operational efficiency, business agility and the user experience. The scope of the service covers end to end infrastructure services, including data centre and hosting services, email services, service desk, local area network and security management, end user computing and on-site IT services, utilizing hybrid on-premise and cloud delivery models.

Tech Mahindra dropped 1.2%. The company during market hours on Thursday, 12 September 2013, said it has been chosen as a strategic partner for application maintenance and development by Volvo Car Corporation. This partnership will provide Volvo Car Corporation with a service to maintain and develop a wide range of applications across the business and to develop and implement new applications as part of its drive to increase efficiency and reduce costs, Tech Mahindra said in a statement.

Prime Minister's Economic Advisory Council (PMEAC) today, 13 September 2013, sharply trimmed India's GDP growth forecast to 5.3% for the year ending 31 March 2014 (FY 2014) from earlier estimate of 6.4% and said that the current stance of monetary policy has to continue until stability in the rupee is achieved. The full impact of various measures taken over the last six months will be reflected later in this year, PMEAC said. Depreciation of the rupee may put some upward pressure on inflation, it said. On balance, WPI inflation by end March 2014 will be around 5.5% as against the average of 7.4% in 2012-13 and 5.7% at end March 2013.

Controlling current account deficit (CAD) remains main concern at present, the council said. Current account deficit is projected at $70 billion (3.8% of GDP) in 2013-14 against an estimated $88.2 billion (4.8% of GDP) in 2012-13, it said. The CAD may go even below $70 billion in 2013-14 if the recent trends in exports and imports are maintained through the year, the PMEAC said.

For India, the short-term problem is of financing the large CAD. The medium term objective should be to compress CAD to 2.5% of GDP and ensure price stability, the council said. Containing fiscal deficit within the budgeted estimate could be a challenge, it said adding discretionary expenditure budgeted may need to be compressed, and subsidies restructured.

Industrial production rose 2.6% in July 2013 as against a contraction of 1.8% in June 2013, data released by the government after trading hours on Thursday, 12 September 2013, showed. The manufacturing sector registered a growth of 3% and electricity generation rose 5.2%. Mining sector output registered a contraction of 2.3%. As per use-based classification, production of basic goods rose 1.7% in July 2013. Capital goods production jumped 15.6% and production of intermediate goods rose 2.4%. Production of consumer goods declined 0.9%. Within the consumer goods sector, production of consumer non-durables rose 6.8% whereas production of consumer durables witnessed a contraction of 9.3%.

Industrial production for June 2013 was revised upwards to de-growth of 1.8% from de-growth of 2.2% reported earlier. Industrial production growth for April 2013 was revised downward to 1.5% from 1.9% reported earlier. On cumulative basis, industrial production registered a contraction of 0.2% for the period April-July 2013 over the corresponding period of the previous year.

The rate of inflation based on the consumer price index decelerated in August 2013, data released by the government after trading hours on Thursday, 12 September 2013, showed. The rate of inflation based on the combined consumer price index (CPI) for urban and rural India decelerated to 9.52% in August 2013 from 9.64% in July 2013. Inflation for the category 'food and beverages' stood at 11.06% in August 2013, the data showed.

The Reserve Bank of India on Thursday, 12 September 2013, announced the details of its committee constituted to examine the current monetary policy framework and recommend ways to revise and strengthen it to make it more transparent and predictable. RBI Governor Raghuram Rajan, who took over on Sept. 4, had announced the committee would be headed by Deputy Governor Urjit Patel. The panel will review the objectives, structure, operating framework and instruments of monetary policy, particularly the multiple indicator approach and the liquidity management framework, the RBI said. It will also identify regulatory, fiscal and other impediments to monetary policy transmission, and recommend measures to improve transmission. The committee is expected to submit its report within three months, the RBI said.

Asian shares edged lower on Friday, 13 September 2013, as investors fretted stronger-than-expected US jobless-claims data on Thursday has increased the odds the Federal Reserve would begin trimming its monetary stimulus at next week's meeting. Key benchmark indices in Taiwan, Hong Kong, China, South Korea and Singapore fell by 0.1% to 0.89%. Key benchmark indices in Indonesia and Japan rose by 0.12% to 0.21%.

Trading in US index futures indicated that the Dow could fall 10 points at the opening bell on Friday, 13 September 2013. US stocks declined on Thursday, 12 September 2013, with the S&P 500 snapping its seven-session winning streak, as investors worried about developments related to Syria and Federal Reserve policy moves.

First-time claims for unemployment benefits declined by 31,000 to 292,000 in the week ending Sept. 7, but processing glitches involving two states clouded the reading, the US Labor Department reported on Thursday, 12 September 2013.

The US and Russia began talks on Thursday on Moscow's plan for Syria to surrender its chemical weapons as Damascus formally applied to join a global poison gas ban, but US Secretary of State John Kerry held fast to the position that the US may still use military force if diplomacy fails. Separately, Syria's President Bashar al-Assad reportedly said that the US needs to give up "its policy of threats" and stop shipping arms to Syrian rebels before his government surrenders its chemical weapons.

Investors across the globe are eyeing the next policy meeting of the Federal Open Market Committee (FOMC) scheduled next week, considered by many to provide an indication on the timing and size of the Fed's cutbacks in its bond-purchase program. The FOMC holds a two-day policy meeting on Tuesday 17 September and Wednesday 18 September 2013 to decide on interest rates in the United States. The US central bank currently buys $85 billion a month in US debt and mortgage-backed securities in a bid to hold interest rates low and encourage economic growth. Federal Reserve Chairman Ben Bernanke has on several occasions stressed that the tapering process is dependent on an improvement in data. Fed's bond-buying program has kept global markets flush with liquidity in recent years.

US President Barack Obama reportedly plans to name former US Treasury Secretary Lawrence Summers as the next chairman of the US Federal Reserve Board of Governors. An announcement is expected as early as late next week, following the conclusion of the Fed's policy meeting on Wednesday, 18 September 2013, a Japanese newspaper report said. Treasury Undersecretary Lael Brainard, who served as an economic adviser under the Clinton administration, will likely be named the central bank's vice chairman, the report said. Summers would succeed Fed Chairman Ben Bernanke, whose term expires in January 2014. Summers and current Fed Vice Chairman Janet Yellen had been considered the front-runners to become the Fed's next chief.

Uncertainty over Joseph Massey’s tenure as MCX-SX chief

Can Joseph Massey continue to be the chief of the MCX Stock Exchange? The question cropped up a day after capital markets regulator Sebi said its recognition of the bourse was incumbent upon key management personnel like its MD being in compliance with the Stock Exchanges & Clearing Corporations (SECC) Regulations 2012.

Massey, who is the MD & CEO of MCXSX, is also a director of MCX, the commodity exchange that has jointly set up the stock bourse with Financial Technologies (FT). He is also a director on the boards of other FT group ventures such as the Singapore Mercantile Exchange (SMX) and the Dubai Gold & Commodities Exchange (DGCX). Clause 25 (4)(C) of SECC regulations states that the MD of a recognised stock exchange shall not "hold any position concurrently in the subsidiary of a recognised stock exchange or a recognised clearing corporation, or in any other entity associated with a recognised stock exchange or a recognised clearing corporation."

While MCX is not a subsidiary of MCXSX, it is, according to two securities lawyers, associated with MCX-SX as its promoter.

This, they feel, may be reason enough for Massey to either resign as the chief of the stock exchange or give up directorships of other group ventures to hold his office in MCX-SX, they added. They declined to be quoted terming the matter as "sensitive."

Incidentally, Chitra Ramkrishna, MD & CEO, NSE, is also a director on NSCCL, the clearing arm of the exchange and Ashish Chauhan, MD &CEO, BSE, is on the board of the exchange's clearing arm ICCL. An NSE official clarified Chitra had stepped down from the CEO position of NSCCL in April and currently held a director position.

Asked whether Massey would resign as MD & CEO given the Sebi directive, an MCX-SX spokesperson said, "We would not like to comment on this at present and would comply with the regulations and directions."

Huzefa Nasikwala, founder partner of Nasikwala Law Office, said, "Sebi's directive is correct given the crisis that has engulfed the FT group. Decision making of any person could be affected by virtue of his or her holding directorships across promoter group ventures."

The Sebi circular on Wednesday said, "In order to further secure the management of the exchange and clearing corporation, shareholders of MCX-SX and MCX-SX-CCL in AGM/EGM would examine conflict of interest and compliance issues in terms of the SECC Regulations 2012 by the directors and key management personnel, including managing director, and take appropriate action, including reconstitution of board, reappointment of any key management personnel and will report to Sebi within 30 days from the date of renewal of recognition (September 16, 2013)."

The problems of the FT group relate to suspension of trading on spot exchange NSEL in which it is the dominant shareholder.

Twenty four counterparties on NSEL have defaulted in payout of Rs5,500 crore to thousands of investors after the government in July ordered the exchange to stop offering contracts which were in violation of the spot exchange norms.

Equity mutual funds register a net inflow of Rs458 crore in August

While equity mutual fund sales continue to disappoint, redemptions fall to their lowest in 52 months, resulting in a net inflow

For just the third time in the past 12 months, equity mutual fund schemes reported a net inflow of assets. Both equity mutual fund sales and equity mutual fund redemptions have fallen to their lowest since April 2009. In that month, equity funds registered a net ouflow of Rs106 crore with sales of Rs1,994 crore and redemptions which amounted to Rs2,100 crore. In August 2013, sales which have averaged around Rs3,500 crore over the last twelve months fell to Rs2,784 crore and redemptions which averaged Rs5,000 crore declined by more than half to Rs2,326 crore. With the volatile market conditions of the last one month investors must have been confused whether it was a good time to buy or sell.

In the three months from May 2013 to July 2013 these was a decline of 11.70 lakh folios, averaging a reduction of nearly 4 lakh folios a month. In August 2013, in line with the lower redemptions, the number of folios declined by 0.63 lakh to 3.17 crore folios.
Moneylife has been continuously highlighting the decline in number of folios. This along with the continuous outflow of assets is a major concern for the industry.

Investments in equity linked savings schemes (ELSS) showed an improvement with sales in the first five months of the financial year amounting to a total of Rs683 crores compared to Rs662 crore seen in the same period last year. Other equity oriented schemes disappointed with total sales amounting to just Rs14,333 crore in the five month period compared to Rs14,940 crore seen last year.

This is despite the fact that the regulator has taken steps to improve penetration of mutual fund schemes beyond the top 15 cities and has even introduced a direct plan with a lower expense ratio for investors, who wish to skip the distributor and invest directly. While the direct plan is the preferred route for corporates investing in liquid mutual fund schemes, this route has failed to lure investors to put their money in equity schemes.

Industrial output at a four-month high of 2.6% in July 2013

The IIP data for June 2013 was revised from 1.78% to 2.2% dip in production

The General Index for industrial output for the month of July 2013 stands at 171.5, which is 2.6%  higher  as  compared  to  the  level  in  the  month  of  July  2012.  The cumulative growth for the period April-July 2013-14 over the corresponding period of the previous year stands at (-) 0.2%. This is based on the Quick Estimates of Index of Industrial Production (IIP) with base 2004-05 for the month of July 2013 which have been released by the Central Statistics Office of the Ministry of Statistics and Programme Implementation.

After contracting for two consecutive months, the industrial output grew at a four-month high of 2.6% in July against contraction of 0.1% in same month last year. This will pump some confidence in the economy as the IIP fell 1.1% in the first quarter of 2013-14 against a decline of 0.2% in the corresponding period of 2012-13.

The IIP data for June 2013 was revised from 1.78% to 2.2% dip in production.

In terms of industries, eleven (11) out of the twenty  two (22) industry groups (as per 2-digit NIC-2004) in the manufacturing  sector have shown positive growth during the month of July 2013 ascompared to the corresponding month of the previous year.

Some of the important items showing high positive growth during the current month over the same month in previous year include ‘Fruit  Pulp’ (50.5%), ‘Cashew Kernels’ (23.2%), ‘Apparels’ (39.8%), ‘Leather  Garments’ (62.6%), ‘Purified Terephthalic Acid’ (29.6%), ‘Vitamins’ (61.8%), ‘Ayurvedic Medicaments’ (44.6%), ‘Cable, Rubber Insulated’ (336.0%) and ‘Ship Building & Repairs’ (58.7%).

Some of the other important items showing high negative growth are:
‘Grinding Wheels’ [(-) 29.4%], ‘Boilers’ [(-) 36.6%], ‘Air Conditioner (Room)’ [(-)  30.8%], ‘Earth  Moving Machinery’ [(-)  42.6%], ‘Sugar Machinery’ [(-) 27.9%], ‘Plastic Machinery Incl. Moulding  Machinery’ [(-)  40.7%], ‘Transformers (Small)’ [(-) 22.7%], ‘Generator/ Alternator’ [(-)  42.0%], ‘Telephone  Instruments (incl. Mobile Phones & Accessories)’ [(-) 21.5%] and ‘Gems and Jewellery’ [(-) 20.5%].

SKS Micro gets nod to shift registered office to Maharashtra

The Ministry of Corporate Affairs has approved shifting of the registered office of SKS Microfinance Ltd from Andhra Pradesh to Maharashtra.

The move by SKS to shift the reistered office is probably a fallout of the AP Government’s stringent regulations for the microfinance sector.

The State Government tightened regulation about three years back to rein in microfinance institutions, which were charging very high interest rates from borrowers and resorting to strong arm tactics for recoveries.

The Regional Director, Ministry of Corporate Affairs, South East Region, Hyderabad has approved shifting of the Registered Office of the company from AP to Maharashtra, SKS Microfinance said in a notice to the BSE

The microfinance institution’s members had passed a special resolution on August 27, 2012, through a Postal Ballot approving submission of application to the Regional Director, Ministry of Corporate Affairs, South East Region, Hyderabad for shifting its Registered Office from AP to Maharashtra.

In light of shifting of the Registered Office, the company has been granted three months extension of time up to December 31, 2013 for holding the 10th annual general meeting of the shareholders of the company for the financial year ended March 31, 2013, the notice said.

DLF awards Rs 1,450 crore contract to Leighton Welspun Contractors

DLF, the country’s largest realty firm has given Rs 1,450 crore contract to Australian construction firm Leighton Welspun Contractors to build the super luxury residential development ‘The Camellias’. The company has taken this step to outsource the construction to third parties in order to accelerate the delivery of projects.

The Camellias will occupy about 16.15 acres and a tentative built up area of approximately 4.5 million square feet. The project will have 429 apartments, including 14 penthouses. The construction will commence in the third quarter of 2013 and will be completed by third quarter of 2017.

Leighton Welspun Contractors is part of Leighton Group, one of the world’s largest EPC and contract mining organization. Its Indian operations commenced with the first contract in 1998.

Forward Markets Commission to move next week on MCX ‘fit & proper’ test

All eyes are now on Forward Markets Commission (FMC). What it says will sway the fortunes of Jignesh Shah and his boys. The verdict from FMC, the commodity market regulator, will determine whether Shah will face a new battle to save his empire or salvage it by putting the blame on a few managers. After Sebi's conditional lifeline to MCX-SX — the stock exchange promoted by the group Shah founded — the ball is now in FMC's court. And, indications are that next week FMC will make the final move.

The commodity market regulator will have to rule whether the promoters and board members of the troubled NSEL are "fit and proper" to run and remain stakeholders in MCX, the futures exchange promoted by Shah-led FT Group. Till now, no regulator in India has had to take such a decision. Ironically, it will now have to be taken by a regulatory body that has inadequate powers, limited mandate and little resources. It's certainly the least known. Nonetheless, it was the first to alert the government a year ago about the monkey business in NSEL.

Sebi, while staying clear of the fit and proper issue, has said that "any adverse findings by any other regulator may result in withdrawal of recognition" of MCX-SX. Withdrawal of recognition is easier said than done as closing down a bourse, just as shutting down a bank or an insurance company, would put thousands of investors in the lurch. A regulator can only change the management, replace the board and make sure that promoters, who are not considered "fit and proper", are left with little or no control. It's for FMC to decide when it wants to pull the trigger.

It could be messy. Any move that disqualifies the promoter of MCX, the country's only listed bourse, is likely to be challenged in court. While some will argue that frauds and chicanery at NSEL were confined to the exchange and did in no way boil over to MCX, FMC has the tricky job of establishing that the managers who committed them had the blessings, either explicit or tacit, of the NSEL board; and, therefore, the men on NSEL board should distance themselves from MCX. This will require information and evidence that's more than what FMC, within its powers, has gathered. It's thus likely to wait for the government-constituted committee probing the NSEL scam to submit its report.

The money trail and possible diversion of funds tracked by the central agencies together with other sharp transactions they have reported to the committee will strengthen the regulatory stand that FMC takes.

As things stand, FMC will issue a showcause notice next week on whether promoters and the board of MCX are "fit and proper". It's uncharted territory and the regulator will tread carefully. Over the next few days, FMC will take legal advice before shooting the notice, and chances are by then the committee's findings would also be known to it. The regulator believes that it's in a position to act. A series of defaults at NSEL, the exchange's failure to act as custodian of the commodity stocks, more than Rs25,000 crore trading positions taken by a group entity on MCX, and a board proposal that could have had financial implications for a promoter company are some of material with which FMC has built its case. Lawyers will differ on whether these are strong enough reasons to strip a group of men of their board positions and loosen their control over a company, but the regulator may think it has enough to go on. No matter how the story unfolds, it would go down as a test case in Corporate India.

MTNL shares rally as GoM clears spectrum refund; stock up over 50% in September

Shares of public sector telecom operator, Mahanagar Telephone Nigam LtdBSE 4.10 % (MTNL) which have been in an uptrend so far in the month of September rallied another 5% in trade on Friday, a day after the GoM decided to refund an amount paid in 2010.

The Group of Ministers (GoM), headed by Finance Minister P. Chidambaram, on Thursday, decided to refund over Rs 11,000 crore to BSNL and MTNL, the two state-run players, for returning broadband wireless access (BWA) spectrum.

At 09:30 a.m.; MTNLBSE 4.10 % pared some of the morning gains and was trading 2.5 per cent higher at Rs 15.75. It has hit a low of Rs 15.41 and a high of Rs 16.20 in trade today.

MTNL has rallied over 50 per cent so far in the month of September as compared to over a 40 per cent fall in the year 2013. Shares have rallied from Rs 9.94 observed on 30 August to Rs 15.35 recorded on 12 September.

"The Group of Ministers took firm decisions - one in relation to pension of MTNL employees, the second in relation to the spectrum that was allocated both to BSNL and MTNL in the 2.5 GHz band, and one other small issue," Telecom Minister Kapil Sibal said.

ONGC gets nod for $560 million Rajasthan project

Oil and Natural Gas Corporation (ONGC) has received its board’s approval for $560 million project for enhancing oil recovery at the prolific Rajasthan oilfields. Post ONGC approval, the proposal will now go to the block oversight panel, called the Management Committee headed by oil regulator DGH.

Cairn India, which owns 70 percent of the fields, had in June last year submitted a draft Enhanced Oil Recovery (EOR) plan for the Mangala oilfield, the largest among the 26 oil and gas find it has made in the Barmer district block.

ONGC, which holds the remaining 30 percent interest in the block, did extensive studies before approving of the EOR investment plan.

Karur Vysya Bank wins Best Banker Growth-Mid Sized award

Karur Vysya Bank has been adjudged as the Best Banker Growth-Mid Sized award in the second edition of The Sunday Standard Best Bankers’ Awards 2013. The bank received the award from Minister for Urban Development in New Delhi on September 11, 2013.

Karur Vysya Bank is among six old generation private sector banks that have been identified by the Reserve Bank of India (RBI) to implement Speed Clearing at Mumbai.

Sensex down 40 points on weak Asian cues

Indian markets opened the session marginally in the red on continued selling by funds and retail investors owing to weak Asian cues.

At 9.15 a.m., the 30-share BSE index Sensex was down 40.34 points (0.2 per cent) at 19,741.54 and the 50-share NSE index Nifty was down 23.3 points (0.4 per cent) at 5,827.40.

Asian stocks fell, with the regional benchmark index on course to snap an 11-day rally, as the US and Russia hold talks on Syria and investors await the outcome of a Federal Reserve meeting next week.

US Secretary of State John Kerry is in Geneva to meet with Russian counterpart Sergei Lavrov over a deal for the removal of Syria’s chemical weapons.

The Federal Reserve has said that any reduction in stimulus will be tied to a sustained recovery in employment. It will take a decision to reduce its $85-billion-a-month bond-buying programme during its policy meeting on September 17 and 18.

The euro zone industrial output fell more than analysts estimated in July as the region struggled with high unemployment. Investors await Japan’s factory output data to be released today.

In the Asian trade, Nikkei fell 45.13 points or 0.31 per cent to 14,342.10, Hong Kong's Hang Seng shed 149.82 points or 0.65 per cent to 22,803.90 and Australia's S&P/ASX 200 was down 19.94 points or 0.38 per cent at 5,222.60.

Aurobindo Pharma to acquire 25% equity stake in Silicon Life Sciences

Aurobindo Pharma has received an approval to acquire 25% equity stake in Silicon Life Sciences (Silicon), a company engaged in manufacture of non-sterile penems, from the existing shareholder - ABS Mercantiles. Post this acquisition, the equity holding of the company would increase to 100%, thereby making Silicon a wholly owned subsidiary of the company. This acquisition will benefit the company in consolidating its operations. The board of director at its meeting held on September 12, 2013 has approved for the same.

The board has also decided to acquire 100% of the equity stake in Hyacinths Pharma (Hyacinths), a company incorporated to manufacture APIs, from the existing shareholders. Hyacinths is having land admeasuring 52 acres and 80 cents and is located in Srikakulam District, Andhra Pradesh which is near to the existing unit of the company at Pydibhimavaram, Srikakulam District, Andhra Pradesh.

Hyacinths’ is yet to commence its project but has the necessary statutory approvals in place. The location of the land is strategically ideal and convenient for expansion plans of the company in future. Post this acquisition, Hyacinths will become a wholly owned subsidiary of the company.

Further, in order to strengthen and provide focused growth to the injectables business, the board also approved the transfer of Injectables Unit IV as a going concern to Curepro Parenterals, a wholly owned subsidiary of the company pursuant to a scheme of arrangement. The Scheme is subject to requisite consent, approval of the shareholders, the High Court of Judicature at Hyderabad, Andhra Pradesh, Stock Exchanges, SEBI, the permission or approval of any other statutory or regulatory authorities, which by law may be necessary for the implementation of the Scheme.

Government okays buy of $4.3 bn WB bonds

RBI to dip into foreign exchange reserves to fund the govt's proposed investment.
       
  As part of a two-pronged strategy to deal with the excessively high current account deficit (CAD) and infrastructure woes, the government has confirmed on Thursday that it  would invest $4.3 billion, or Rs 27,000 crore, in special private placement bonds (SPPBs) issued by the World Bank, in order to stay eligible for low-cost funding by the latter for domestic infrastructure projects.

With the help of this first-of-its-kind investment, India can borrow $4.3 billion over and above the single borrower limit of $17.5 billion.

The Reserve Bank of India will utilise the country’s foreign exchange reserves to buy SPPBs from the International Bank for Reconstruction and Development (IBRD), an arm of the World Bank group. As on August 30, India’s foreign exchange reserves stood at $275 billion, lower by $15 billion as compared to same period last year.

The Union Cabinet, which cleared the investment, said the additional borrowing space will enable the government to commit to new projects with IBRD assistance.

“This is a confidence-enhancing measure. Keeping all funding sources accessible at a time when government finances are tight is a good move,” said Dharmakirti Joshi, chief economist at leading ratings agency Crisil.

He said the move will help alleviate funding constraints, particularly for infrastructure investment and increase supply of dollars.

A finance ministry official said, “Since the bond buy will also be an investment, the returns will help the country on the current account deficit front.”

India’s eligibility for World Bank funding has come down over the last few years due to the country’s higher income levels. These loans are typically concessional or interest-free and spread over longer tenures; thus, they are a cheaper avenue compared to other sources of international funding.

Buying the bonds will help India become eligible for higher levels of funding from the World Bank, which will subsequently be utilised for the infrastructure spend that is estimated to be $1 trillion till 2017.

The proposed investment would enable India to leverage World Bank’s knowledge base and global reach for transfer of knowledge, adoption of good practices, reforms of processes and systems and capacity building, said a government statement.