Warburg Pincus eyes stake in L&T Finance, stock up 9%

Shares of  L&T Finance Holdings climbed 9 percent intraday Tuesday. Sources told CNBC-TV18 that US private equity firm Warburg Pincus is in talks to buy 25 percent equity stake in the company. The deal with L&T Finance will trigger an open offer, if successful but L&T , the parent company, will continue to retain majority stake in company, said sources. The PE firm is also in talks with more than one financial services player and is keenly looking to acquire significant interest in business and finance services companies. Media report indicated that the financial services arm of L&T has pitched for a deal price of Rs 83 per share and the offer price translates to a deal size of Rs 3,574 crore for a 25 percent stake. However, L&T Finance said it does not comment on speculative news reports. "We regularly meet investors as part of our investor relations exercise," it reasoned. Larsen and Toubro holds 72.95 percent stake in L&T Finance Holdings (as of June 2015) that reported a profit of Rs 854.7 crore on revenue of Rs 6,196.2 crore in the financial year 2014-15. At 09:50 hours IST, the scrip of L&T Finance Holdings was quoting at Rs 71.85, up Rs 5.40, or 8.13 percent on the BSE.

Nifty at 8550, Sensex firm; Asian Paints, BPCL gainers

After a massive rally in late trade yesterday, the market has opened with gains on Tuesday. The Sensex is up 85.75 points or 0.3 percent at 28294.51 and the Nifty is up 28.55 points or 0.3 percent at 8550.70. About 657 shares have advanced, 107 shares declined, and 59 shares are unchanged. HDFC, Tata Steel Wipro, Cipla and Coal India are top gainers in the Sensex. Among the losers are Hindalco, Dr Reddy's Labs, Reliance, NTPC and ONGC. Asian Paints, BPCL are top Nifty gainers on weak crude prices. Crude tumbled over 7 percent overnight amid the Iran nuclear deal negotiations, the Greece debt drama and volatility in Chinese stocks. Nymex crude fell more than 7 percent to USD 52 per barrel after Greece’s rejection of debt bailout and China rolling out emergency measures to support its stock market. Brent crude fell 6.3 percent to USD 56.50/bbl, below 100 DMA, biggest slide in last three months. Adding to the pressure on oil markets, Iran and global powers were trying to meet a July 7 deadline on a nuclear deal, which could add more oil to oversupplied markets if sanctions on Iran are eased. The self-imposed deadline could be extended again, officials at the negotiations said. Asian markets are mixed bag after the sharp knock yesterday. Nikkei has bounced back smartly though the yen is hovering sub 123. The Kospi has come off 0.7 percent from day’s high while the rest of Asia is trading in the green. US stocks closed mildly lower, recovering from sharp opening losses on selloff overseas, as traders shook off concerns of contagion from the Greece debt crisis. Bond yields held lower, with the 10-year yield near 2.30 percent. In Europe, equities closed lower, after Greece voted "no" to reform proposals in the country's referendum on Sunday and the Greek finance minister Yanis Varoufakis resigned. Peripheral indices suffered the most, with Italy’s FTSE closing around 4 percent lower.

BPCL, HCPL Rise as Crude Oil Prices Fall Amid Greece Crisis

Oil marketing companies BPCL, HCPL, Indian Oil gained on Monday after oil prices are also under pressure amid the Greece crisis. US benchmark West Texas Intermediate for delivery in August plummeted $1.88 to $55.05 a barrel and Brent crude tumbled 50 cents to $59.82 in late-morning Asian trade.

Oil prices fell after Greek voters overwhelmingly rejected the bailout terms demanded by international creditors, with official figures from Sunday's referendum showing 61.31 percent voting "No" and 38.69 percent voting "Yes".

"The result of the Greek referendum has thrust the world into uncharted territory," Singapore's DBS Bank said in a market commentary.

Lower crude oil prices could help reduce the under-recoveries of Indian oil marketing companies on sale of LPG and kerosene at controlled prices. However, a fall in the rupee could reduce the benefit from lower crude prices.

Oil marketing company BPCL and HPCL shares have witnessed a stellar run in past one year. BPCL has surged 51 per cent in one year while HPCL shares have jumped over 87 per cent in last one year. In comparison, Nifty rose 10 per cent during the period.

The deregulation of diesel prices in October 2014 lifted the sentiment of these oil marketing companies, which used to bear a huge subsidy burden for selling the fuel below market prices. Edelweiss Financial Services has a positive outlook on these oil marketing companies.

Prior to diesel deregulation, gross marketing margins of IOC, BPCL and HPCL were capped at Rs 0.71 paise/litre. However, post deregulation of diesel the margin since April 2015 till date has been Rs 1.2/litre, which is 70 per cent higher than the previous margin and will flow through their earnings, said Jal Irani, oil and gas analyst at Edelweiss Financial Services.

Mr Irani expects these margins to improve further to around Rs 1.60 per liter, which is going to drive profits. "Over a 3-year period we are looking at earnings doubling for BPCL and HPCL," said Mr Irani.

At 11:30 a.m., BPCL was up over 3 per cent to be the biggest Nifty gainer while HPCL gained 2 per cent and Indian Oil 1.5 per cent. In comparison, the Nifty was down nearly 0.90 per cent.        

RBI clarifies in investment in firms engaged in tobacco-related activities

RBI has clarified that the prohibition applies only to manufacturing of the products mentioned therein and foreign direct investment in other activities relating to these products

According to RBI, foreign direct investment is prohibited in manufacturing of cigars, cheroots, cigarillos and cigarettes, of tobacco or of tobacco substitutes.

It is clarified that the prohibition applies only to manufacturing of the products mentioned therein and foreign direct investment in other activities relating to these products including wholesale cash and carry, retail trading etc. shall be governed by the sectoral restrictions laid down in the FDI policy framed by the Department Of Industrial Policy & Promotion, Ministry of Commerce and Industry, Government of India and in the Schedule 1 of Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) Regulations, 2000 as amended from time to time.

AD Category – I banks may bring the contents of this circular to the notice of their constituents and customers concerned.

The directions contained in this circular have been issued under sections 10(4) and 11(1) of the Foreign Exchange Management Act, 1999 (42 of 1999) and are without prejudice to permissions / approvals, if any, required under any other law.

Top corporate news of the day- July 6, 2015

Maruti Suzuki India, known for its small cars, is establishing a new setup of retail outlets under Nexa brand to sell premium products starting with its upcoming S-Cross model.

In its bid to crack the big vehicle segment, Maruti Suzuki India, known for its small cars, is establishing a new setup of retail outlets under Nexa brand to sell premium products starting with its upcoming S-Cross model.

Micro-finance institution Bandhan Financial Services, which got the final license from Reserve Bank of India to start universal banking, would formally start operations as a banker from August 23.

Fair trade regulator CCI is in an advanced stage of taking a final decision on cartelisation allegations made against five carriers, including market leaders IndiGo and Jet Airways, with respect to introduction of fuel surcharge for cargo transportation.

Shoppers Stop has tied up with Hybris software, a SAP company and a commerce platform provider. The retailer plans to invest Rs. 600mn over the next three years in technology, supply chain and talent to strengthen its omni-channel play.

Larsen & Toubro Heavy Engineering has delivered its first indigenously designed pressurised heavy water reactor for the nuclear plant being developed by Nuclear Power Corporation in Gujarat.

Realty player Mahindra Lifespaces, part of Mahindra Group, is looking at setting up residential projects in states like Andhra Pradesh, Rajasthan, Madhya Pradesh under the affordable housing space.

Riding on the booming e-commerce space and increasing adoption of non-cash transactions, the combined share of SBI and its five associate banks in the debit cards space has touched 25% in the financial year 2015.

The Unit-I (2x250 MW) of Neyveli Lignite Thermal Power Station-II Expansion has completed its continuous operation for 72 hours starting from June 30 to July 03 and qualified for Commercial Operation

Euro, Stocks Hit by Greek Vote; China Bounces After Rescue Moves

 Asian stocks and the euro stumbled on Monday after a Greek vote against austerity measures endangered its future in the single currency and raised the risk of a full-blown crisis in the euro zone.

US equity futures dropped around 1.2 per cent though they were off early lows. Japan's Nikkei share index fell 1.4 per cent while MSCI's broadest index of Asia-Pacific shares outside Japan dropped 0.5 per cent.

Bucking the global trend was China's stock market as a salvo of rapid-fire support measures from Beijing over the weekend prompted a much-needed rally.

The CSI300 index of the largest listed companies in Shanghai and Shenzhen jumped 4.2 per cent in early trade, while the Shanghai Composite Index soared 5 per cent.

The gains only recouped some of the recent steep losses and it was far from clear if panicky investors who borrowed heavily to speculate on stocks would refrain from selling.

While the early price action was choppy across Asia, dealers emphasised that markets were orderly with no signs of financial strain and many assuming the European Central Bank would step in with a pledge of extra liquidity at some point.

The Japanese government said it was ready to respond as needed in markets and was in close touch with other nations.

"A lot depends now on what the ECB does with liquidity support for the Greek banks," said Antonin Jullier, head of equity trading strategy at Citi. "The ECB has the capacity to limit the spread of contagion."

The euro was down 0.5 per cent at $1.1055 but well above an early low of $1.0967. It had initially dropped around 1.5 per cent on the safe-haven yen only to find a big buy order waiting, which vaulted it back to 135.48 yen.

Likewise, the dollar recouped its early drop on the yen to be all but steady at 122.57. The dollar index added 0.2 per cent to 96.279.

Demand for highly rated sovereign debt saw the US 10-year Treasury yield fall 10 basis points to 2.29 per cent.

Fed funds futures also rallied as investors wagered the endless uncertainty in Europe would make the Federal Reserve more wary of raising US interest rates, or at least to tighten more gradually once it began.

In commodities, gold got a lift to $1,1680.30 an ounce but Brent crude lost 52 cents to $59.80 a barrel.

The latest reports from Greece said around 61 per cent of those voting in the referendum had backed the government and rejected the bailout conditions.

Following the outcome, calls mounted in Berlin to cut Athens loose from the currency union, raising the risk of a full-blown crisis in the euro zone.

German Chancellor Angela Merkel and French President Francois Hollande will meet in Paris on Monday afternoon as the European Union's grand single currency project faces the biggest challenge since its inception.

Stunned European leaders called a summit for Tuesday to discuss their next move as investors fear "Grexit" could encourage anti-euro sentiment in other countries.

The ECB, which holds a conference call on Monday morning, is likely to maintain emergency funding for Greek banks at its current restricted level, sources said.

Though Greek government officials have vociferously denied any plans to issue a parallel currency, some investors suspect Athens could have no choice in the matter.

Emergency Eurozone Summit on Greece on Tuesday

 Eurozone nations will hold an emergency summit on Tuesday to discuss the Greek referendum "No" result after the German and French leaders called for a meeting, EU president Donald Tusk said.

The special meeting comes as Brussels reels with the implications of what the head of the Eurogroup of finance ministers from the 19-country block, Jeroen Dijsselbloem, called a "very regrettable" decision.

"I have called a EuroSummit Tuesday evening at 18h (1600 GMT) to discuss situation after referendum in Greece," Tusk said on Twitter on Sunday after Greek voters said a resounding "No" to creditor demands for further austerity in return for bailout funds.

It will come just 15 days after another eurozone summit called by Tusk failed to seal a deal between Greece and its EU-IMF creditors.

The Eurogroup will also hold a meeting on Tuesday before the summit to "discuss the state of play", Dijsselbloem said, while deputy finance ministers from the eurozone will meet on Monday.

"I take note of the outcome of the Greek referendum. This result is very regrettable for the future of Greece," Dijssebloem, the hardline Dutch finance minister, said in a statement.

"For recovery of the Greek economy, difficult measures and reforms are inevitable. We will now wait for the initiatives of the Greek authorities."

The Eurogroup on June 27 rejected Greece's appeal for an extension to its 240-billion-euro international bailout after Tsipras called the referendum, leaving Athens unable to pay a huge International Monetary Fund bill.

The European Commission, the powerful executive arm of the 28-nation EU, meanwhile said it said it "takes note of and respects" the result of the bailout referendum.

Commission president Jean-Claude Juncker will hold a teleconference on Monday morning with European Central Bank chief Mario Draghi, Tusk and Dijsselbloem, it said in a statement.

Juncker will also be "consulting tonight and tomorrow with the democratically elected leaders of the other 18 eurozone members as well as with the heads of the EU institutions," it added.

Juncker was a key broker during months of talks between Greece and its EU-IMF creditors, but hit out at Greek Prime Minister Alexis Tsipras after they broke down and said he felt "betrayed."

Oil Tumbles in Asia as Greek Vote Shakes World Markets

Singapore: Oil fell in Asia Monday as investors digested the implications of Greece rejecting tough austerity demands from creditors which could send the debt-strapped nation crashing out of the eurozone, analysts said.

Greek voters overwhelmingly rejected the bailout terms demanded by international creditors, with official figures from Sunday's referendum showing 61.31 per cent voting "No" and 38.69 percent voting "Yes".

"The result of the Greek referendum has thrust the world into uncharted territory," Singapore's DBS Bank said in a market commentary.

US benchmark West Texas Intermediate for delivery in August plummeted $1.88 to $55.05 a barrel and Brent crude tumbled 50 cents to $59.82 in late-morning Asian trade.

"With the No result announced in early Asian trade, we are seeing big mark downs as markets open," said Nicholas Teo, market analyst at CMC Markets in Singapore.

He said the result of the Greek vote could lead to either a watering down of the bailout demands by creditors or to a "full blown" exit by Athens from the eurozone currency union.

"From a market point of view, both alternatives carry risks," he said in a market commentary.

Oil prices are also under pressure from continued high US crude output which is adding to the already oversupplied global market and last-ditch negotiations between Western powers and Iran on curbing Tehran's nuclear ambitions.

"A report by Baker Hughes on the increase in (US) oil rigs added to the woes of the benchmark prices, which are already under pressure from the ongoing Greek crisis and Iran nuclear negotiations," said Sanjeev Gupta, head of the Asia-Pacific Oil and Gas practice at professional services firm EY.

"With the Greek referendum voting against acceptance of the bailout and the new deadline of 7 July for reaching an agreement with Iran, oil markets will continue to remain bearish," he said.

Greeks Reject Bailout Terms in Rebuff to European Leaders

Greeks delivered a shocking rebuff to Europe's leaders on Sunday, decisively rejecting a deal offered by the country's creditors in a historic vote that could redefine Greece's place in Europe and shake the continent's financial stability.

As people gathered to celebrate in Athens' central Syntagma Square, the Interior Ministry reported that with more than 90 percent of the vote tallied, 61 percent of the voters had said no to a deal that would have imposed greater austerity measures on the beleaguered country.

The no votes carried virtually every district in the country, handing a sweeping victory to Prime Minister Alexis Tsipras, a leftist who came to power in January vowing to reject new austerity measures, which he called an injustice and economically self-defeating. Late last month he walked away from negotiations in frustration at the creditors' demands, called the referendum and urged Greeks to vote no as a way to give him more bargaining power.

While Tsipras now appears to have his wish, his victory in the referendum settled little, since the creditors' offer is no longer on the table. There remains the possibility that they could walk away, leaving Greece facing default, financial collapse and expulsion from the eurozone and, in the worst case, from the European Union.

Tsipras went on television briefly to say he would resume negotiations immediately. He said that the vote was not a mandate for "rupture" with Europe and that it would strengthen his ability to negotiate a "viable'' future for Greece in the eurozone.

"The people today replied to the right question," he said. "They did not answer to the question in or out of the euro. This question needs to be taken out of the discussion, once and for all."

At stake, however, may be far more than Greece's place in Europe, as experts have offered wildly differing opinions about what the referendum could mean for the future of the euro and the world's financial markets.

Even before the voting was over, some European leaders began making efforts to contain the potential damage. Chancellor Angela Merkel of Germany said she would travel to Paris on Monday to meet with the French president, Francois Hollande, for a "joint assessment of the situation after the Greek referendum." Later, the two leaders called for a European Union summit meeting on Tuesday.

To some, the vote was virtually a point of no return. Germany's economy minister, Sigmar Gabriel, who is also the leader of the Social Democrats, said it was now hard to see how talks could resume on a bailout deal.

"Tsipras and his government are leading the Greek people on a path of bitter abandonment and hopelessness," he told the daily Tagesspiegel, adding that they have "torn down the last bridges on which Greece and Europe could have moved toward a compromise."

The vote took place under what some analysts called a financial carpet bombing. The European Central Bank severely limited financial assistance to Greek banks, forcing them to close a week before the referendum, making it hard for retirees to get their money and raising widespread fear here that people would lose their deposits.

The news media, dominated by Greek oligarchs, saturated the airwaves and the newspapers with stories about losing gasoline and medicines, while the plight of elderly pensioners was afforded far more attention than in the past, media experts said.

Nonetheless, many voters, tired of more than five years of soaring unemployment and a collapsing economy, said they could not accept the terms of the European offer, which imposed yet more pension cuts and tax increases, without any hint of debt relief.

As word spread of a likely victory for the no vote, people began gathering in Syntagma Square. They streamed out of the metro - which is free in this week of capital controls - and drove by, honking horns. Vendors sold Greek flags, and there was a peaceful, celebratory atmosphere.

People made speeches. Some remembered that at the beginning of the crisis in 2011 Syntagma became a gathering place for protesters. But in those days it was a scary place, they said, in contrast to Sunday night.

While there had been speculation about Tsipras stepping down in the event of a yes vote, the man he succeeded as prime minister, Antonis Samaras, the leader of the New Democracy Party, announced his resignation, saying, "I understand that our great party needs a new start."

For some voters, the week of hardship - they could withdraw only 60 euros (about $67) a day from ATMs, and already some pharmacists were refusing to fill prescriptions - only strengthened their sense that Greece needed to stand up for itself.

After five years in which unemployment soared beyond 20 percent and the country's economy contracted by 25 percent, many said that a no vote was at least a vote for hope, the possibility of a new deal, rather than following the mandates of creditors who had failed to set Greece on a course to recovery.

For others, the hardship proved only that Greece, like it or not, was in the hands of its creditors and could do little but take whatever terms were being offered - the alternative of default, financial collapse and withdrawal from the euro being unthinkable. In many cases, they blamed Tsipras' young government for having returned the country to recession when it had shown small signs of recovery just before the January elections.

At a polling place near the archaeological museum in Athens turnout was low, poll workers said. And people coming out of the voting booths seemed split.

"I voted with my heart and also my mind," said Marie Triadafillou, who works in transportation logistics and voted yes. "I believe when you are in a union you cannot leave. We say in our country if the sheep leaves the flock it cannot live."

Yet others felt that the referendum was not about staying in the eurozone but simply part of the long negotiations between Greece and its creditors, which broke off more than a week ago when a frustrated Tsipras left Brussels and called for the referendum.

Since then, European officials have refused to negotiate further and to extend a deadline for the last bailout program, setting up a decision by the European Central Bank to cap its emergency support to Greek banks. This forced the government to close the banks for fear of extended bank runs.

At a polling station in a middle-class Athens neighborhood, Baizar Tazerian, 76, said that she was angered by what she believed had been European interference in the ballot and that she had just voted to reject the deal in the referendum.

"No means that we don't have to say yes to whatever they are saying," Tazerian said.

At a polling station in a southern neighborhood of Athens, Pantiotis Andrikopoulos, 33, a student, said he planned to vote no "because I don't like being blackmailed by the EU." He did not buy European arguments that a no vote meant Greeks wanted to leave the eurozone. "I'm for Europe but against the memorandum," he said, as he stood in a long line of people waiting to vote.

He also was not worried that Greek banks would remain closed if the no vote prevailed. "I don't believe that," he said. "They're trying to terrorize people with such talk."

In Ilisia, a middle-class neighborhood, poet Titos Patrikios, 87, voted at a school that was surrounded by pink and white oleander.

Patrikios seemed to embody much of his country's modern history. As a teenager during World War II, he took part in the resistance against the German occupation. After the civil war, he was imprisoned for his leftist sympathies. And after the military seized power in 1967, he was forced into exile.

Patrikios said he was voting yes, but urged others to vote their own consciences. "I vote yes because the real dilemma is inside or outside of Europe," Patrikios said. "In Europe, things are difficult sometimes, they are critical. But outside Europe is the catastrophe. So we have to choose between catastrophe and difficult."

He added that the most important thing was to avoid pitting Greeks against Greeks, but that he was not too worried: "I suffer from one illness and that is incurable optimism."

Athanasis Chryssochoidis, 76, a pensioner, said Greece was being made an example in case other Southern European nations tried to challenge the dictates of the eurozone.

"Tsipras and all of them want to negotiate," Chryssochoidis said. "But as soon as they said yes to something, the Europeans put up more demands. The issue is that Syriza is a left party and they don't want such mischief."

Sensex, Nifty to crash at open

US futures are lower and Asian markets are also weak for now. Shanghai remains up around 3% for the time being following unprecedented series of support measures undertaken over the weekend. The weather also is re-igniting worries with Sunday being the driest day in the past one month with rainfall 90-95 per cent below normal in most parts of the country other than eastern and northeastern India.

Greeks rejected a bailout plan as majority have voted  a ‘No’ in the referendum, rejecting the creditor’s demand of spending cuts in exchange of a bailout deal. Greek PM Tsipras expects that  a ‘No’ vote will compel the EU officials to concede to Athens demands, which includes haircut on country’s gigantic debt load without implementing severe spending cuts. On the creditor’s side, it seems that the Europeans will not be pleased with the outcome, as they wanted the incumbent Greek regime to conform to their demands. Euro has witnessed sharp decline in the Asian trading session today

The outlook is a crash at start even though the outcome of Greece is more or less on expected lines.  US futures are lower and Asian markets are also weak for now. Shanghai remains up around 3% for the time being following unprecedented series of support measures undertaken over the weekend. The weather also is re-igniting worries with Sunday being the driest day in the past one month with rainfall 90-95 per cent below normal in most parts of the country other than eastern and northeastern India.

As the result season unfolds, given that Q1 has been traditionally a strong quarter for India IT sector, we expect Tier-1 companies except for Tech Mahindra to deliver a healthy 2.5-4% qoq dollar revenue growth in constant currency. High visa costs and implementation of wage hikes would drive a decline in operating margin for most companies. In addition, May IIP data and June import & export data will be this week.

Back to Greece, there is also a possibility that the Greeks will be completely marooned and compelled to unfold its own currency. However, rebirth of Drachma can prove unpalatable not only for Athens but also for the entire European region as turmoil in Greece may lead to massive exodus and immigration into bordering European states. A failed state in the Euro regime also translates the failure of EU. On the repercussions perspective, the situation is still fluid and markets will await any official response from the EU officials.

Adani Group has reportedly hired "influential figures" from both sides of the political spectrum in Australia to convince the government of benefits its $7 billion Carmichael mine project and secure necessary approvals, according to media reports.

The Union cabinet is expected to give nod to the spectrum sharing and trading guidelines, by the end of this month, telecom secretary Rakesh Garg said.

Lanco Infratech is planning to sell part of its generation business to cut debt, says report.A report says that the company is expecting to raise Rs 4,000 crore ($630 million) in two to three years, T Adi Babu, chief operating officer, finance said.

NSE has told its shareholders that it is coming with an IPO as and when some clarifications on listing norms are provided, according to reports while, BSE has not received approval for IPO yet.

The Reserve Bank of India has  notified that the foreign shareholding through Foreign Institutional Investors (FIIs)/Registered Foreign Portfolios Investors (RFPIs) in M/s Petronet LNG Limited has reached the trigger limit. Therefore, further purchases of equity shares of this company would be allowed only after obtaining prior approval of the Reserve Bank of India.

Air India and GoAir come under Directorate General of Civil Aviation (DGCA) scanner, for allegedly violating safety norms while operating flights to Leh recently, says report.

Stalled projects which was a major concern on the economic front, are now back on track, with the value of such projects declining by more than half in the past year. According to data provided by the Centre for Monitoring Indian Economy (CMIE), the value of stalled projects dipped 60.35 per cent to Rs 79,300 crore in the quarter ended June this year from Rs 2,00,000 crore in the year-ago period, says report.

The Adani Group signed a MoU with the Tamil Nadu government to set up a Rs 4,536 crore solar park in the state, says report.