Sensex up over 300 points in noon

The 30-share index that dipped 0.3% in opening moves, staged a smart recovery on the back of strong buying in bank scrips

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New Delhi: The markets extended gains in noon deals with the benchmark index moving up more than 2% or 334 points, led by a strong rally in banking counters supported by a drop in oil prices to sub $120 a barrel.

India’s inflation has more than doubled to nearly 12% since late February mainly on soaring oil prices, prompting the central bank to tighten the monetary policy aggressively.

The Sensex dipped around 0.3% in early deals. Twenty-five of its components were rising in noon trade. The broader-based NSE index or Nifty was up 2.09% at 4,487 levels.

“The market is likely to remain under pressure following a sharp drop in the US market in yesterday’s trades and weakness among major Asian indices. Persisting offloading of equities by FIIs in the domestic market may also add pressure,” said a technical analyst with Sharekhan.

“Nifty has a key support at 4,350 and a slip below this level could see it test lower levels around 4300, while on the upside the index could test 4,475,” he added.

The banking index moved up 6.4% or 433 points on broad-based buying. ICICI Bank, Syndicate Bank, HDFC Bank, Kotak Mahindra Bank, Karnataka Bank, State Bank of India and Axis Bank are some of the key gainers in this pack.

Oil slips below $120 a barrel

London’s Brent North Sea crude for September delivery dropped $1.13 to $119.55

AFP

Singapore: Oil prices fell in Asian trade Tuesday as fears about slowing US demand outweighed the increasing likelihood of heightened tensions over Iran’s controversial nuclear programme, dealers said.

In morning trade, New York’s main contract, light sweet crude for September delivery fell $1.14 to $120.27 a barrel from $121.41 at the close of floor trading in the United States Monday.

London’s Brent North Sea crude for September delivery dropped $1.13 to $119.55 .

Oil prices fell below $120 in New York and London Monday for the first time in three months after latest US economic indicators signalled weakness in the world’s biggest economy, dealers said.

The monthly US Commerce Department survey showed Monday consumer spending, which fuels two-thirds of output, had cooled in June while inflationary pressures accelerated.

The US is the world’s biggest energy user and any signs of slowing consumer spending usually weighs down global oil demand projections.

Tropical Storm Edouard, expected to make landfall Tuesday, will likely only provide limited boost to prices as investors are more concerned with American oil demand, analysts said.

“US demand won’t recover soon. Tropical Storm Edouard should bring a short term support but demand outlook weighs on prices,” commodity analysts from Societe Generale said in a report.

Phil Flynn, an analyst from Alaron Trading, agreed demand concerns were the biggest factor dragging down market sentiment.

“Slowing demand and the hope for more supply is weighing on the market even as the geopolitics and the weather is getting wild,” said Flynn.

Nuclear programme

Tensions over Iran’s nuclear programme surged after it missed a deadline over the weekend to respond to an international package of incentives aimed at persuading Tehran to freeze uranium enrichment.

The US State Department said Monday that it and the five other powers holding nuclear talks with Iran had threatened to pursue new punitive action against Tehran.

Iran has refused to suspend uranium enrichment it says is aimed solely at producing fuel for nuclear power production.

The United States and its allies fear the programme is a cover for developing nuclear weapons.

Iran is the world’s fourth-biggest crude oil producer and traders fear supply disruptions from the Islamic republic if tensions are further heightened.

Govt withdraws interest benefit on EEFC accounts

With effect from 1Nov, ‘08, all EEFC accounts shall only be permitted to be opened and maintained in the form of non-interest bearing current accounts, according to an RBI notification

By PTI

New Delhi: With the rupee depreciation resulting in gains for exporters, the government has decided to withdraw the benefit under which they earned interest on Exchange Earners’ Foreign Currency (EEFC) accounts from 1November.

An exporter was permitted to earn interest on EEFC accounts to the extent of outstanding balances of $1 million. The measure was valid up to October 31, 2008 subject to review.

“With effect from November 1 2008, all EEFC accounts shall only be permitted to be opened and maintained in the form of non-interest bearing current accounts,” the RBI notification said.

The measure was among the several others extended last year to help exporters battle an over 12% rise in the value of Indian currency in 2007-08.

The government had on 1August announced withdrawal of an interest subvention scheme for exporters from September 30.

Under the interest subvention scheme, exporters were compensated for reduction in profits due to the rupee rise. Exporters got 2% relief in pre-shipment and post-shipment credit in various sectors, especially employment-intensive areas such as handicrafts, textiles, leather and leather products, carpets and marine products.

“Withdrawal of the two will affect exporters substantially, particularly when the benchmark lending rate of the banks have gone up by about 4%,” Federation of Indian Export Organizations (FIEO) president Ganesh Gupta told PTI.

Rupee boxed in narrow band ahead of review

Indian currency off opening highs on oil refiner dollar buying, takes bomb blasts in stridem eyeing Tuuesday rate decision

Reuters

Mumbai: The Indian rupee slipped from early highs on Monday on month-end dollar buying by oil refiners and as investors hung fire ahead of a policy review on Tuesday, uncertain if the central bank would raise rates or not.

At 10:40am, the partially convertible currency was at 42.2950/3050 per dollar, below Friday’s close at 42.26/27 and an early high of 42.1950. It rose to 41.82 per dollar last week, its highest since 12 May.

“Indicators are mixed with oil softer and the dollar slightly stronger but it seems like a quiet 42.20-42.30 day ahead of the review,” said a senior dealer at a state-run bank.

The dollar rose to a one-month high against the yen on Monday on easing fears about the world’s biggest economy, and Asian stocks were mixed as financial sector uncertainty lingered ahead of a slew of company earnings.

Two dealers said the rupee took news of bomb blasts in two cities in its stride as the explosions did not hit the country’s financial capital, but sentiment was slightly subdued.

Major cities went on high alert on Sunday, with fears of more attacks after at least 46 people were killed in two days of bombings that hit a communally-sensitive western city and the southern IT hub of Bangalore.

Stocks opened flat and then inched higher. Foreign investors have sold a net $6.5 billion worth of India stocks so far in 2008, after buying a record $17.4 billion last year. Capital inflows are a key support for the rupee.

The RBI is expected to raise its repo rate, the rate at which it lends cash to banks, by 25 or 50 basis from 8.5% at Tuesday’s review, and another increase is expected later in the fiscal year, a Reuters poll showed.

Traders said even though the underlying expectation is for a hike, softer oil prices and the inflation rate levelling out in the past two weeks’ data could make the central bank pause.

One-month offshore non-deliverable forward contracts were quoting at 42.29/42.39 per dollar.

Indian bond yields ease on oil, rate review awaited

The benchmark 10-year yield was at 9.09%, below Friday’s close of 9.15%. Earlier this month, it had hit a seven-year high of 9.55%

Reuters

Mumbai: Indian federal bond yields eased on Monday, 28 July, after global oil prices had fallen to a seven-week low, but investors may pare positions ahead of an expected interest rate rise at a monetary policy review on Tuesday.

At 10:10am, the benchmark 10-year bond yield was at 9.09%, below Friday’s close of 9.15%. Earlier this month, it had hit a seven-year high of 9.55%.

“It is unlikely to stay at current levels, as nobody would like to sit on heavy positions before the policy,” a dealer with a state-run bank said.

The dealer said the yields may spike to 9.25-9.30% if the RBI raised its key lending rate by 50 basis points.

A Reuters poll last week showed a majority of economists expected an increase in its repo rate, the rate at which it lends cash to banks, by 25 or 50 basis from 8.5%.

US crude was trading below $124 a barrel on Monday, having fallen as low as $122.50 on Friday, well below record peaks above $147 hit earlier this month.

A sustained easing of oil prices could reduce pressure on the government to raise state-set fuel prices once again. A sharp increase in prices of diesel, petrol and cooking gas last month pushed inflation into double digits.

Annual wholesale price inflation was 11.89% in mid-July, and dealers said further monetary tightening looked certain as the central banks tries to rein in price pressures.

India’s major cities were put on high alert on Sunday, with fears of more attacks after at least 46 people were killed in two days of bombings. Dealers said the security concerns had not unsettled debt markets on Monday.

Ansal API to develop 250 acres SEZ in Haryana

The SEZ, spread over 250 acres, will come up on the Amritsar-New Delhi Grand Trunk Road

livemint.com

New Delhi: Ansal Properties & Infrastructure Limited,has received a formal approval from the department of commerce (SEZs), Govt. of India to develop an Engineering-based Special Economic Zone (SEZ).

The SEZ, spread over 250 acres, is coming up on the Amritsar-New Delhi Grand Trunk Road. A separate subsidiary– Ansal Kamdhenu Engineering SEZ has been set up specially for the project.

Strategically located on the northwest periphery of Delhi, the SEZ is connected well with the National Highway-1 and the proposed Kundli-Manesar-Palwal Expressway. The Rajiv Gandhi Educational University at Sonepat, spread over an area of 2,000 acres, is located in the vicinity.

Sonepat being the gateway to the major business towns of Punjab, the SEZ will attract export oriented units from Punjab. Located in the hub of manufacturing sector in North India the SEZ will meet the pent up demand of the industrial sector for space in the area.

An important factor behind the development of the Engineering-based SEZ is that the engineering industry in Sonepat contributes substantially to the total exports in the country. Given the demand for Indian engineering products in the developed and developing economies, existing units are looking at options to expand and set up new units plan.

The SEZ will have prescribed processing and non-processing zones. The non-processing zone will include residential complexes and the processing zone will house manufacturing and engineering set ups across all industry domain.

Rupee seen up on Asian stocks, oil cues

The partially convertible rupee ended at 42.76/77 per dollar on Friday, a shade stronger than Thursday’s close of 42.81/82

Reuters

Mumbai:The rupee is set to gain on Monday, thanks to oil hovering around $130 a barrel and higher Asian stock markets, which could underpin local stocks and revive inflows.

The partially convertible rupee ended at 42.76/77 per dollar on Friday, a shade stronger than Thursday’s close of 42.81/82 and its best close since 26June. It had hit a 15-month low of 43.50 earlier this month.

Asian stocks rose sharply after a smaller-than-expected loss at Citigroup provided comfort about the financial sector’s stability of more results this week from banks and industrial firms.

Oil is India’s biggest import and slide from record highs above $147 should ease concerns about a ballooning trade deficit…

A ray of hope for Indian markets

India outshone all its regional peers and ended on a positive note despite political instability looming large

Ahead of the Ticker | Vipul Verma

Finally, after a long bearish spell, Indian markets saw a ray of hope as the benchmark Sensex index of the Bombay Stock Exchange ended Friday with gains of 165.56 points over the previous week’s closing. The recovery looks sharp when compared with the low of 12,514.02 points it plumbed two weeks ago.

Interestingly, the gains were in contrast to how the week played out on other key Asian markets such as Hong Kong where the Hang Seng index was down 320 points, Tokyo where the Nikkei was down 236 points, Taiwan where the index was down 429 points and Malaysia where the benchmark was down 45 points. Even the main index in China, which saw some smart gains during the week, ended 82 points lower.

India outshone all its regional peers and ended on a positive note despite political instability looming large and not much support coming from the funds. Domestic and overseas funds remained net sellers in aggregate till Thursday. (Friday’s figures will be released on Monday).

The reversal of the trend and a change in sentiments can be attributed to lower-than-expected inflation numbers and a sharp drop in global crude oil prices, which eased fears of runaway growth in inflation and, thus, calmed investors, who were fretting about a further monetary tightening that would lead to a sharp hike in interest rates.

Global crude oil prices fell more than $19 (Rs813) from last week’s high of over $147 a barrel. In percentage terms, the price of crude sank almost 13% from its record high on 11 July to Friday’s session-low. That was a huge comfort to sagging sentiments as investors were gearing up to see oil at even higher levels.

Sharp gains on the US bourses following better-than-expected results of major banks and a decision of the Securities and Exchange Commission to limit certain types of short selling from Monday in the stocks of 19 major financial companies, including all major investment banks and mortgage finance firms Fannie Mae and Freddie Mac, added to the positive sentiments on global markets.

This week, the Indian market will look for further leads, but growing political uncertainties ahead of the government’s vote of confidence on 22 July will keep tabs on the momentum and may trigger some profit selling. However, on technical grounds, the market is poised to gain further after some brief profit taking.

According to a key technical study, the Sensex and the S&P CNX Nifty index of the National Stock Exchange may gain for two weeks before the rally that started last week fizzles out. However, it is worth noting that gains stretching two weeks does not mean the markets will gain on all the days of the week. It means that both indices are likely to close this week and next higher.

RCom up 4.5% on BSE

The surge comes on the back of its talks collapsing with South African teleco MTN for a possible amalgamation deal

PTI

Mumbai: Shares of Anil Ambani led-Reliance Communication gained over 4% on 21 July — the first trading session after its talks collapsed with South African telecom major MTN for a possible amalgamation deal.

The scrip surged to an intra-day high of Rs454.85, up 4.51% in the morning trade on the BSE. The scrip was trading at Rs452.25, up 3.92% in afternoon trade on the bourse.

About 13.32 lakh shares of RCom had changed hands on the bourses till afternoon trade.

Shares of Reliance Industries was trading at Rs2,112, down 0.03%, while as many as 4.36 lakh shares of the company had changed hands in the afternoon trade.

On the Johannesburg Stock Exchange, MTN shares had closed down 75 rand at 133.25 rand on Friday last week.

Last week, the RCom-MTN deal which could create a $70 billion entity fell apart as both sides confirmed they would not be able to conclude the transaction, a day after the Mukesh Ambani initiated the arbitration process against his younger brother.

On 19 July, in another significant move AAA Communications, a private company of Anil Ambani that holds 63.38% equity in RCom, wrote to RIL claiming it was “free to and shall deal with RCom shares as it deems fit.”

Asian markets fall sharply as worries mount over US financials

Every major index was in the red by midday, with Hong Kong’s Hang Seng Index dropping 3.2% and Taiwan’s benchmark losing nearly 4% at one point

Hong Kong: Asian stock markets fell sharply on Tuesday as investor confidence in the US financial system eroded even further, despite a government-backed plan to help beleaguered mortgage financiers Fannie May and Freddie Mac.

Every major index was in the red by midday, with Hong Kong’s Hang Seng Index dropping 3.2% and Taiwan’s benchmark losing nearly 4% at one point.

In Tokyo, the Nikkei 225 index shed 2% to 12,750.10.

While losses spread across most sectors, banks were hit particularly hard as investors worried that trouble in the US financial markets would spillover to Asia. Japanese traders, for instance, were rattled by a local business newspaper report that the country’s top three banks hold a combined 4.7 trillion yen (Rs1,91,905 crore) in Fannie May and Freddie Mac debt.

Those two government-chartered companies received a boost on Sunday when the US central bank and Treasury Department promised to step in with short-term funding and other aid should mortgage losses mount. Together, the companies hold or back about half the outstanding mortgages in the United States.

A sell-off of regional banks overnight on Wall Street, as well as fears that other American banks might face difficulties ahead, only added to the unease. On Monday, the Dow Jones industrial average fell 45.35, or 0.41%, to 11,055.19 after spiking nearly 140 points in early trading.

“Investors are quite concerned we could be heading toward a meltdown in the equities market if there’s no rebuilding in confidence, especially in the US,” said Alex Tang, head of research at Core Pacific-Yamaichi in Hong Kong.

In Japan, banking giant Mizuho Financial Group Inc.’s shares dipped 3.5% and Mitsubishi UFJ Financial Group Inc. was down nearly 4%.

Meanwhile, China’s biggest lender, ICBC, dropped almost 5.1% in Hong Kong trading. China Construction Bank was off 4.9%.

China’s most-watched index in Shanghai was off 2.5%. Elsewhere, South Korea’s benchmark slid 2.6%, India’s Sensex lost 2.3% and Australia’s main index slipped 2.3%.

In currency trading, the dollar declined against the yen to 105.83. The greenback was flat against the euro.