Forex reserves fall $2.23 billion in a week, at 39-month low

The total forex reserves were at $275.49 bn on August 30

India's forex reserves have fallen to a 39-month low, according to the latest data released by the Reserve Bank of India (RBI).

The total forex reserves were at $275.49 billion on August 30. Reserves fell by $2.23 billion during the week. The last time the forex reserves were at $272.7 billion was on the week ended June 11, 2010.

Foreign currency assets, which form a substantial part of the reserves, fell by $3 billion. However, the fall got compensated a little as the value of gold held by the RBI increased by $977 million after the monthly revaluation.

The country's reserve position at the International Monetary Fund (IMF) decreased by $112.5 million to $1.9 billion, while special drawing rights from the IMF increased by $7.2 million to $4.3 billion.

According to a currency dealer, the fall in reserves was partly due to the RBI's intervention in the forex market and partly due the revaluation of currencies. The central bank, apart from dollars, also holds pounds, euros and Japanese Yen. However, their values are expressed in dollar terms. Capital flows are also less as foreign institutional investors are pulling out from Indian markets, said this dealer.

The RBI has been consistently intervening in the forex market to stop the rupee's slide. In the week ended August 30, the rupee had weakened 3.72 per cent to close at 65.71 against the dollar.

BSE revises circuit limits of over 460 scrips

Leading stock exchange BSE has revised circuit limits for shares of 463 companies, including United Breweries Holdings, Reliance MediaWorks, Kingfisher Airlines and D B Realty, as part of surveillance action.

The revised circuit limits, which ensures that the price of a scrip cannot move upward or downward beyond a limit set for the day, is effective from today.

The exchange has increased the circuit limit for some stocks, while it has been reduced for others.

BSE has raised the circuit limit for 409 scrips, including UBHL, Reliance MediaWorks, Kingfisher Airlines, Essar Oil, UB Engineering, MMTC, Venus Remedies to 10% from 5%.

Besides, BSE has also increased circuit filter level for companies such as Zuari Global, Kesoram Industries, Hindustan Copper, National Fertilizers to 20% from 10%.

For as many as 78 scrips the circuit limit has been upped from 2% to 5%, which includes Lifeline Drugs & Pharma, Mahindra Composites, Venus Power Ventures (India).

The exchange has, however, lowered the circuit filter for a total of 64 companies.

BSE has narrowed the limit for 28 companies to 5% from 20%, reduced the filter for 16 firms from 20% to 10%.

In a separate circular, NSE has set 5% circuit limit for 394 companies, 10% for 146 firms and 20% for a total of 895 companies.

However, there is no price band for 147 companies.

The companies that will have 5% price band include Emkay Global Financial Services, JVL Agro Industries, Lloyds Finance, Pipavav Defence, Piramal Life Sciences and Multi Commodity Exchange of India.

The list of firms that will have 10% circuit limit include A2Z Maintenance & Engineering, D B Realty, Kingfisher Airlines, McDowell Holdings, Muthoot Finance, UBHL, Venus Remedies.

Among the companies that would not not attract any circuit limit are Adani Ports and Special Economic Zone, Bajaj Auto, Bharti Airtel, Bharat Heavy Electricals Limited, Cipla, DLF, Hero MotoCorp, Hindalco Industries, ICICI Bank, Infosys, Maruti Suzuki India, United Spirits, NTPC.

The no price band list also include Tata group firms --Tata Chemicals, Tata Communications, Tata Global Beverages, Tata Motors, Tata Power Company, Tata Steel and Tata Consultancy Services.

Coal India inks fuel supply agreements with 140 power plants

Coal India has so far entered into fuel supply agreements (FSAs) with about 140 power plants, amid the deadline for signing FSAs expiring last month. Some agreements are yet to be signed because of certain issues concerning those power plants. The world’s largest coal miner has to sign 173 FSAs for a capacity of 78,000 MW.

Recently, the company had reported provisional production of 31.68 million tonnes in August 2013, as against target of 32.73 million tonnes. The company’s total off-take for the month of August stood at 35.10 million tonnes as against a target of 35.54 million tonnes.

Coal India is the world’s largest coal mining company. It also produces non-coking coal and coking coal of various grades for diverse applications.

MCX zooms 100% from August low

The stock trading at Rs 476 on BSE has been almost double from its low of Rs 238 touched on August 19.

Shares of the Multi Commodity Exchange (MCX) is locked in upper circuit for eleven straight trading sessions, up 5% at Rs 476 on BSE,  has been double in less than a month.

The stock hit all-time low of Rs 238 on August 19, after the National Spot Exchange (NSEL), a group company, suspended electronic trading.

However, MCX has clarified that the company has no exposure to crisis-hit NSEL, which had to settle dues worth Rs 5,600 crore to investors.

MCX and NSEL, both promoted by Jignesh Shah-headed Financial Technologies India, are totally different entities with no financial commitments or exposure to each other whatsoever.

The company said it is in full compliance with the directive of the Forward Markets Commission (FMC), the commodity markets regulator, on investments, loans and advances.

The company is a debt-free company and has a net worth of Rs 1,214 crore in the quarter ended June 30, it added.

Meanwhile, according to market buzz a leading investment bank is advising Financial Technologies, the promoter which held 26% stake in the company, on a possible stake sale in MCX.

A combined 7,521 shares have changed hands on the counter and there are pending buy orders for 319,488 shares on BSE and NSE at 0944 hours.

As bond yields rise in the US, RBI under pressure to raise rates in India

The central bank will have to raise rates to maintain the spread between the bond yield in India and US

The yield on 10-year US government bonds have risen to two-year highs and are just shy of the 3% mark as investors worry about a likely withdrawal of monetary stimulus by the Federal Reserve.

Including the 5 basis point rise on Friday, bond yields in US are now up 131 basis points from their lows in May this year. Yields refer to the interest income that a bond holder receives if they buy it at current price and hold it to maturity.

Experts say that this will put pressure on the Reserve Bank of India to raise interest rates so as to maintain the spread between the bond yield in India and US. The yield spread –the difference in the interest rate that a Indian bond pays over US government bond – has narrowed in recent weeks as yields in India have failed to keep pace with the rise in US.

Bond yield in India are up 68 points since May this year, less than half the rise in US. The spread declined to 546 points on Friday from a high of 636 points reached in middle of last month and over 600 basis points at the beginning of May this year. 100 basis points or bips makes a per cent.

There is scope for a further rise in bond yield in US as the date for stimulus withdrawal gets closer. In last ten years, the median yield on a 10 year bond in US is 3.78% while average yield has been 3.55% during the period.

“The rise in bond yield in US is an indication that interest rates are rising globally and it is here to stay. Ultimately it will get transmitted to India either through imported inflation from higher energy and commodity prices or through higher cost of foreign capital,” says Deep Narayan Mukherjee, director Ratings at India Ratings, the domestic credit rating arm of global rating agency Fitch.

It may some take time for the central bank to raise the benchmark interest rates in response but it will start showing up in the real economy much sooner, he says.

Analysts agree. “We can’t have a situation where bond yield or the interest rate in US keeps rising while that in India remains flat or falls. We expect interest rates to harden further in India in line with the global trend,” says Dhananjay Sinha, co-head institutional equity at Emkay Global Services. If the Reserve bank of India drags its feet on raising benchmark rates, the transmission will happen through currency depreciation, he says.

Experts say that the central bank also has to be mindful of elevated level of inflation in India while taking a stance on the interest rate.
“A persistently high level of consumer inflation meant that interest rates have been negative for most of the last five years. This is unsustainable and should correct soon,” says Mukherjee.

Some disagree and say that a lot depends on the upcoming meeting of Federal Reserve open market meeting slated for 18th of this month.

“There is lot of uncertainty in the global markets right now regarding Fed monetary stance. This is causing market volatility making it tough for policy makers in emerging markets,” says Arun Kumar R, vice-president, India Credit, Nomura.

Sensex surges over 200 pts, Europe opens positive

European stocks opened positive, with the Stoxx Europe 600 Index heading for a weekly gain.

Markets extended gains in the afternoon session this Friday on back of buying witnessed in financial shares after the central bank raised overseas borrowing limits for lenders in a bid to prop up grwoth and boost the rupee.

At 1PM, the 30-share Sensex rose 225 points at 19,203  and the 50-share Nifty gained 67 points at 5,660 levels.

Traders were, however, cautious ahead of the long weekend coupled with US Non-Farm Payrolls data tomorrow that may depict the health of world’s biggest economy.

Reserve Bank of India on late-Thursday allowed banks to issue, without its approval, guarantees on behalf of non-residents acquiring shares or convertible debentures of a company in India through open offers or delisting or exit offers.

The broader markets traded firm with mid-caps and small-caps gaining nearly 0.5 per cent on the BSE.

The market breadth was positive. Out of 2,101 stocks traded, 1,145 stocks advanced while 823 stocks declined on the BSE.


RUPEE

The rupee gained some ground today after the slew of reforms announced by the central bank late-Thursday.

At 12:50PM, the partially convertible rupee was trading at 65.67 per dollar against the yesterday’s close of 66.01 on the Interbank Foreign Exchange.


GLOBAL MARKETS

Asian stocks dropped, snapping a six-day advance and paring the regional benchmark index’s biggest weekly gain since July, as investors await the monthly American jobs report.

Japan’s Nikkei fell 1.5% at 13,860, Singapore’s Straits Times gained 0.2% at 3,046, China’s Shanghai Composite index rose 1% at 2,139 while Hong Kong’s Hang Seng rose 0.3% to 22,659 today.

European stocks opened positive, with the Stoxx Europe 600 Index heading for a weekly gain.

France’s CAC gained 0.3% to 4,019, Germany’s DAX added 0.12% to 8,253 while UK’s FTSE was up 0.1% to 6,537.


STOCK MOVERS

Domestically, the key sectoral indices gainers included banks, capital goods, IT, healthcare, pharmaceuticals while consumer durable sector lead the drop on the BSE.

The gainers included counters such as ICICI Bank rising 5%, Jindal Steel added 4%, Cipla gained 3.5% while ONGC was up 3% on the BSE.

The laggards were Tata Power declined 2%, Mahindra & Mahindra fell 2.9%, Coal India was down 2.5% while Reliance Industries declined 1.7% the BSE.

The key notable movers included counters such as Multi Commodity Exchange (MCX) that is locked in upper circuit for eleven straight trading sessions, up 5% at Rs 476 on BSE,  has been double in less than a month.

The stock hit all-time low of Rs 238 on August 19, after the National Spot Exchange (NSEL), a group company, suspended electronic trading.

Wockhardt has soared nearly 18% to Rs 546 in early morning deals after the promoters purchased equity shares worth Rs 10 crore from the open market.

Coal India to decide on shares buyback on Sept 18

Public sector miner Coal India Ltd will decide on the proposal for buyback of shares on September 18.

“We are not ruling out any possibility of buyback. The board will take a call on that. There is an annual general meeting on September 18 and the board will also meet on that day,’’ Coal India Chairman S. Narsing Rao said on Friday.

The company has a debt of $200 million and cash reserves of Rs 62,000 crore, Rao said at a CII conference on Mining Leaders’ Roundtable in the national capital.

The Government is considering if Coal India can buyback shares in case if it is not able to proceed through the 5 per cent disinvestment.

Government targets to mop up Rs 8,000 crore by selling shares in Coal India. This is a key share sale to meet the disinvestment target of Rs 40,000 crore.

The labour unions of Coal India have opposed any share sale. Coal India will hold a meeting on September 11 with its labour unions on this issue.

FSA signing

Rao said that there were just a few fuel supply agreements left to be signed out of the 173 mandated by the Government. The company is not likely to extend Friday's deadline of signing the fuel agreements.

Coal Secretary S.K. Srivastava said out of the 173 FSAs, 140 were signed so far.

RCom gets new CEO for enterprise business

Deepak Khanna appointed CEO, India Enterprise

As part of its strategy to increase focus on the enterprise business, Reliance Communications (RCom), on Friday, said that it has appointed Deepak Khanna as CEO, India Enterprise.

Khanna is an MBA from the Symbiosis Institute of Management Studies, Pune. He has worked in leadership roles with Bharti Airtel and Tulip Telecom, before moving to RCom.

"We see exciting growth potential in the enterprise business in the years ahead, and expect to register 30% per annum compounded growth in this space in both, revenues and profitability over the next five years," Khanna said, in a statement.

Tata Global Beverages trades with traction on the BSE

Tata Global Beverages is currently trading at Rs. 149.25, up by 2.10 points or 1.43% from its previous closing of Rs. 147.15 on the BSE.

The scrip opened at Rs. 148.55 and has touched a high and low of Rs. 149.85 and Rs. 145.15 respectively. So far 137616 shares were traded on the counter.

The BSE group 'A' stock of face value Rs. 1 has touched a 52 week high of Rs. 181.70 on 15-Nov-2012 and a 52 week low of Rs. 122.00 on 26-Mar-2013.

Last one week high and low of the scrip stood at Rs. 149.85 and Rs. 136.75 respectively. The current market cap of the company is Rs. 9198.68 crore.

The promoters holding in the company stood at 35.20% while Institutions and Non-Institutions held 36.36% and 27.48% respectively.

Tata Starbucks, the 50/50 joint venture between Tata Global Beverages and Starbucks Coffee is all set to inaugurate the first Starbucks store in Pune on September 8, 2013. Following the opening of new store, the total number of Starbucks outlet in India will increase to 21.

This flagship store will be located off North Main Road at Koregaon Park - a popular neighborhood in Pune - and promises to offer coffee lovers an enriching and elevated coffeehouse experience.

Tata Starbucks is reportedly planning to open around 100 Starbucks cafes in the country by next year.

ICICI Bank extends rally, surges 20% in three days

ICICI Bank is planning to launch 500 gramin branches during the current fiscal.

ICICI BANK has moved higher by nearly 6% at Rs 943, extending its previous two day’s rally, on Bombay Stock Exchange (BSE).

Shares of private sector lender have rallied 20% from Rs 784, in past three trading days as compared to 13% rise in the BSE banking share index Bankex.

ICICI Bank is planning to launch 500 gramin branches during the current financial year 2013-14.

The bank has already launched 308 gramin branches to provide basic banking services in unbanked villages and plan to scale it up to 500 this fiscal, the PTI report suggests quoting ICICI Bank Executive Director Rajiv Sabharwal.

The bank’s substantial branch expansion in the past three to four years and strong capital adequacy has position the bank to grow its loan book at faster rate than system average as and when business environment turns conducive, says analyst at Angel Broking in report dated August 1.

Analyst maintains Buy recommendation on the stock, from a medium term perspective, with a target price of Rs 1,068.