India High Industry But Also Presents An Opportunity - Oct 31, 2008

The near recession in the U.S. and the global meltdown will, of course, have an impact on India''s high-tech industry. But it also presents an opportunity for Indian services vendors to improve their market share, while forcing them to diversify across sectors and geography. Lehman Brothers went bankrupt Sept. 15. A day earlier, Merrill Lynch announced it was being acquired by Bank of America. And U.S. mortgage giants Freddie Mac and Fannie Mae went into federal receivership. With each news flash, the Indian Sensex went downward, partly in sympathy, partly as foreign funds pulled out.

And the jitters echoed in the hallways of a host of tech services companies, who were servicing any of these firms or their U.S.-based suppliers. This was bad news. The Indian tech and business process outsourcing (BPO) services industry is strongly dependent on North America, and specifically on the sector that we call "BSFI" - banking, financial services, and insurance.

The U.S. financial services slump has come as a wake-up call for Indian exporters of technology and BPO services. But for them, this is no sudden crash. They have been through a longer crisis, though arguably, one that wasn''t as severe, as the result of the weakening dollar in 2007. So, they have had some time to prepare. In 2006-07, the currency averaged Rs.45.05 to a dollar.

In 2007-08, it averaged Rs.40.4, which meant a 10 per cent decline in rupee earnings for the same dollar billings. Accordingly, many of the Indian tech/BPO services exporters looked beyond North America, which used to account for most of our services exports three years ago. They went to Europe, and Asia, and an adventurous few Indian companies even "came" to the India market.

Reserve Bank Of India On External Commercial - Oct 31, 2008

A total of 50 companies mopped up $2.83 billion via overseas borrowings in September, according to the Reserve Bank of India''s data on external commercial borrowings (ECBs) and foreign currency convertible borrowings (FCCBs). According to the RBI data, 21 companies mopped up $370 million via the automatic route and $2.46 billion via the approval route. This is higher than in August, when corporates had mopped up $1.6 billion via ECBs and FCCBs. Some of the companies that raised money through ECB comprised Reliance Industries.

($1.65 billion for project), Gujarat State Petroleum Corporation ($325 million for import of capital goods), GTL Infrastructure ($175 million for rupee expenditure and import of capital goods) and Bhushan Power and Steel ($55 million for import of capital goods).

Country Will The Export Target Billion For The Current - Oct 31, 2008

The government on Oct 30 expressed confidence that the country will achieve the export target of $200 billion for the current fiscal, despite global economic crisis. "I am still confident we will able to meet the target," Commerce and Industry Minister Kamal Nath said, however adding that the global financial turmoil may impact exports. "Global economic gloom may have an impact (on export target) which we will see how it rolls out in the next two months," Nath said. The government has set an export target of 200 billion dollars for this fiscal, up from 160 billion dollars last year.

Concerned over a sharp decline in export growth to 10 per cent in September from about 27 per cent in August this year, the Ministry has already started working on a relief package for exporters. "We are in discussion with exporters to see how we can sustain our export growth," Nath said. Exports have taken a beating after the economic crisis emerged from the US that subsequently spread to other parts of the globe.

RBI Shifts Focus From Inflation To Growth - Oct 25, 2008

Inflation continued to show a welcome decline on Thursday with the wholesale price index rising to 11.07 per cent from 11.44 per cent last week. The numbers will come as a big relief to the RBI, which will announce its mid year credit policy review on Friday. Easing inflation and heightened concerns about a dip in growth is expected to ensure that the credit policy this time will prioritize growth over inflation.

Less than two months ago Dr D Subbarao had taken over as the RBI governor and outlined inflation as his primary concern.Now, as he prepares to present his first credit policy, the situation couldn''t be more different as inflation is passé and the primary concern for the RBI is supporting growth.

The inflation numbers released just a day ahead of the policy, showed a steady decline for the latest week down to 11.07 per cent with prices of primary articles and manufactured good seeing a decline.Economists opine that with prices easing this time''s credit policy will be pro-growth. Shubhada Rao, Chief Economist at Yes Bank, said,clearly growth and financial stability will notch up in RBI''s priority. Liquidity is still tight and we expect RBI to act on it. The RBI has already taken dramatic steps in the lead up to the policy, reducing the cash reserve ratio by 250bps to 6.5 per cent and the repo rate by 100 bps to 8 per cent.

But bankers are hopeful that more measures, especially to ease the liquidity situation, will be announced in the Friday policy. Some bankers expect another pre-emptive 50bps cut in the cash reserve ratio. Others hope that the earlier easing on SLR norms may be made permanent and some also expect adjustments in prudential norms.

Inflation Eased Further To Mainly Owing The Week - Oct 25, 2008

The rate of inflation eased further to 11.07 per cent for the week ended October 11 from 11.44 per cent in the previous week, mainly owing to lower prices of fruits and vegetables, pulses, certain spices and some manufactured and petroleum products.

Even as the government felt that the inflation was "still high," the fall in the Wholesale Price Index (WPI) based inflation for the fourth. consecutive week is expected to provide some cushion to the RBI to take measures to spur growth when it unveils its mid-term credit and monetary policy on Oct 24. Inflation is still high, but what is happening now, moderation in crude and commodity prices will have an impact on consumer prices as well, Finance Minister P. Chidambaram told journalists here.

Companies Bill Introduced In Parliament - Oct 24, 2008

The government on Oct 23 introduced the Companies Bill 2008 in Parliament that will replace a 52- year-old legislation, with new provisions that foster speedy mergers and acquisitions with lesser state control.The Bill seeks to sweep away over 600 provisions in the existing. law and bring in a smaller list of 426 (rpt) 426 that provides for greater shareholder democracy and fair valuations in companies.

The Companies Bill, 2008, introduced by Minister of Corporate Affairs Prem Chand Gupta in Lok Sabha, would replace the existing Companies Act, 1956, once it is passed by Parliament.The bill, according to the statement of objects and reasons, provides for formation of One-Person Company, while empowering government to provide a simpler compliance regime for small companies.

It said that companies would not be allowed to raise deposits from the public except on the basis of permission obtained by them through other legislations.The bill also prohibits insider trading by company directors or key managerial personnel and declares such activities as offence with criminal liability.

It retains the concept of producer companies, while providing a more stringent regime for companies with charitable object to check misuse.The proposed legislation also articulates shareholders democracy with protection of rights of minority shareholders, responsible self-regulation with adequate disclosure and accountability. Reduction of government control over internal corporate processes.

Continued Fall Which Ended Time Low Home Currency - Oct 24, 2008

The rupee continued to fall against the dollar on Oct 23 which ended at an all-time low of 49.81/82. The home currency fell by 50 paise against the greenback tracking the losses in the domestic equity indices, said forex dealers. Analysts expect it to breach 50 a dollar level any time now. The rupee opened at 49.65/67 and weakened further to touch an intra-day low of 49.86. It closed at 49.81/82, against the previous close of 49. 30/31.

Global Loses Sparkle Falls Prices Below Selling - Oct 24, 2008

Tracking weak global cues gold prices today dipped below Rs 12,000-mark, on panic selling amid investors liquidating their holdings in commodities to meet the fresh losses in stock markets.Standard gold and ornaments dropped by Rs 500 each at Rs 11,950 and Rs 11,700 per ten gram respectively. Sovereign fell by Rs 50 at Rs 10,450 per piece of eight gram.

People are liquidating gold and other commodities as their losses in stock markets deepen, Delhi-based jeweller Gaurav Anand said.He said the credit crisis and rising concerns of global inflation keep mounting pressure on the stock markets everywhere.

In the global markets the precious metal plunged to 13-month lows as dollar gained against leading currencies. It traded at 719 dollar to 769 dollar an ounce in just two trading sessions.The euro fell to the lowest in almost two years against the dollar, while the pound traded near its lowest in more than five years.While silver, also plunged owing to selling pressure on weakening trend in London besides reduced offtake by industrial units.

Silver ready plunged by Rs 500 at Rs 17,230 per kg and weekly-based delivery by Rs 400 at Rs 17,130 per kg. Silver coins dropped by Rs 200 at Rs 28,100 for buying and Rs 28,200 for selling of 100 pieces.

Govt To Recapitalise 7 PSU Banks Fm - Oct 23, 2008

Finance Minister P Chidambaram today said government will inject fresh capital in seven public sector banks to improve their financial health and help them achieve a capital adequacy ratio of over 12 per cent."Today I announce with the Prime Minister''s permission that banks which have CRAR of below 12 per cent, well above 8 per cent Basel norm, well above 9 per cent RBI stipulated norm. We will help them recapitalise and bring them (CRAR) above 12 per cent. Chidambaram said while replying on a discussion on Supplementary Demands for Grants in Rajya Sabha.

However, Chidmabaram did not mention the names of the PSU banks which will benefit from the recapitalization programme of the government. Capital to risk (weighted) Asset Ratio (CRAR) is the capital and assets ratio which banks are required to maintain against risks. The ratio reflects the financial strength of a bank and its ability to take risk and remain solvent in times of credit crunch.

Last week, Finance Minister had said that nevertheless, the government has decided to provide the banks access to finance in order to raise CRAR that are now between 10-12 per cent to reach 12 per cent by a suitable date in future. According to RBI data banks, which have low CRAR at the end of March 2008, were UCO Bank (10.09), Andhra Bank (11.61), Central Bank of India (10.42), Bank of Maharashtra (10.26), Dena Bank (11.09), Vijya Bank (11.22) and Indian Overseas Bank (11.96).

Finance Minister Reviews Liquidity Situation - Oct 23, 2008

Finance Minister P Chidambaram held a meeting with senior bankers last evening in the backdrop of easing liquidity situation following a slew of measures taken by both RBI and the government.The meeting reviewed situation in the light of easing liquidity situation, Punjab National Bank Chairman and Managing Director K C Chakrabarty said.Credit delivery to productive sector was also discussed during the meeting, he said.

State Bank of India Chairman O P Bhatt and Indian Banks Association and Bank of India Chairman.T S Narayanaswami also attended the meeting.When asked whether any meeting with Prime Minister was also there on the day, Chakrabarty said, I am not aware of that.

Last month, owing to the tight liquidity situation, many banks had tightened their purse and went slow on credit disbursal.Cash in the market dipped to the extent that inter-bank call money rates went as high as 23 per cent.However, Finance Minister P Chidambaram came to the rescue of borrowers.Following this, RBI issued a notification saying, In view of the improved liquidity in the markets, the banks concerned are advised to review all such cases and permit drawal of sanctioned limits, guided by their usual commercial judgment. PRI COM ECO ESPL.

RBI had also said that it had noticed that in view of somewhat tight liquidity conditions in the markets in the recent past, some of the banks had been averse to disbursing working capital limits and term loans (including short-term loans) to clients against the sanctioned limits.

Thereafter, to ease the liquidity situation, RBI had taken a slew of measures, the latest being repo rate (short-term lending rate) cut by 100 basis points to eight per cent on Monday.Among other measure taken to infuse liquidity included slashing Cash Reserve Ratio - the slice of bank deposits to be kept with the central banks - by 250 basis points. The reduction led to release of whopping Rs 1,00,000 crore in the banking system.In addition to this, the RBI gave Rs 25,000 crore to banks, RRBs and cooperative credit institutions for their outgo on debt waiver scheme, among other measures.

PM Assures Of 7.5-8% GDP Growth - Oct 23, 2008

India will achieve a GDP growth rate of 7.5 per cent to 8 per cent this year despite the current global economic turmoil, which has only partially affected the country, Prime Minister Manmohan Singh has said."India is relatively less affected" by the global financial crisis as "our banks are well capitalised," Singh has told major Japanese newspapers in New Delhi ahead of his ongoing three-day official visit to Japan."The country will be able to grow by 7.5 per cent to 8 per cent," Singh was quoted as saying by Ashahi newspaper.

Backing Japan''s push for broadening the frame of financing the International Monetary.Fund to overcome the global economic turmoil, he said: if the reinforcement of IMF is necessary, India will willingly cooperate, the report said.Responding to Japanese media''s questions on the proposed Comprehensive Economic Partnership Agreement, Singh acknowledged that since differences existed between the two sides, it may not be possible for them to clinch a deal during his current visit.

However, the Prime Minister said he was hopeful that the ambitious CEPA could be finalised by the end of the year, another leading Japanese daily, Yomiuri Shimbon reported.India and Japan had started negotiations on the CEPA in January 2007 and have held several rounds, even on the eve of Singh''s visit here. The two sides, however, are yet to reach an agreement on issues like simplification of the approval procedure in Japan of generic drug which India exports and Japanese demand for concessions on its exports of automobile parts to India, the reports said.

Gold Falls By Rs 210 As Economy Recover - Oct 22, 2008

Gold prices tumbled by Rs 210 at Rs 12,750 per 10 gram in the national capital market on Tuesday following investors renewed interest in the surging equity markets, amid a weakening trend on the global front. Selling pressure picked up as investors preferred to park their funds in firming equity markets for quick gains.

A similar weakness was noticed in silver that lost Rs 100 at Rs 17,600 per kg.Sentiment also turned bearish as the precious metal in international markets, which normally set price trend in domestic markets here, fell as dollar firming against leading currencies eroded demand for the gold.

Marketmen said, the yellow metal declined in Asia below $800 an ounce as equities advanced reducing interest in gold as a safe haven asset.Gold fell one per cent to $781.20 an ounce in Asia while silver rose by 1.3 per cent at $9.91 an ounce.Silver followed the same trend on reduced offtake by stockists and industrial units.

Silver ready lost Rs 100 at Rs 17,600 per kg and weekly-based delivery by Rs 140 at Rs 17,480 per kg. Silver coins continued to be asked at previous level of Rs 28,400 for buying and Rs 28,500 for selling of 100 pieces.Standard gold and ornaments dropped by Rs 210 each at Rs 12,750 and Rs 12,600 per 10 gram respectively. Sovereign held unchanged at Rs 10,600 per piece of eight gram.

Export Growth Likely To Slowing Economy - Oct 22, 2008

First it was the turn of the banking and insurance sector then aviation and now it is the country''s trade targets which are in trouble. So, even while Commerce and Industry Minister Kamal Nath is confident of meeting targets, sources from within the ministry say that the export growth rate has already started to slide.

In fact, sources say unreleased figures of the export growth for September is showing a downfall to 10 per cent from a robust 35 per cent growth in October. All traditional export sectors are showing negative growth.Credit crunch has left people with less power to buy as a result of an inevitable slowdown in export growth, said commerce secretary GK Pillai.

Though the rupee has depreciated and crude prices have fallen too, the liquidity crunch is bound to see traders disgruntled with even the trade incentives having been withdrawn from them.The solution seems to lie in exploring other avenues. The drop in exports means job cuts but one has to try and look at newer markets as well as increase domestic demand, explained Pillai.

Rupee Closes A Tad Against Dollar - Oct 22, 2008

The rupee closed a tad against the dollar on October 21, as trading volumes remained thin due to the strike called by the employees of the Reserve Bank of India. The rupee opened at 48.99 and weakened to touch an intra-day low of 49.15. It closed at 49, against the previous close of 49.01. Due to the strike called by the RBI employees, there were no cash transactions.

Therefore, foreign banks were not active, as they did not buy dollars to make arbitrage profits in the non-deliverable forward market. In the forward market, the 6-month premium closed lower at 0.48 per cent (0.74) and the 12-month ended at 0.43 per cent (0. 61).

Gold Surges By Rs 150 On Diwali Demand - Oct 21, 2008

Gold prices bounced back by Rs 150 per ten grams on the bullion market in Mumbai on Monday on fresh local buying interest in view of fast approaching "Diwali" festival.Silver also strengthened in line with gold prices. Higher advices from global market also boosted the market sentiment. Gold prices rose in London as a weakening dollar and gains in crude oil increased the metal''s allure as a hedge against declines in the US currency and faster inflation.Gold for immediate delivery rose by $21.48 per ounce to $804.83 an ounce in London.

for December delivery gained by $18.70 an ounce to USE 806.40 in electronic trading on the Comex division of the New York Mercantile Exchange.In the local market, standard gold (99.5 purity) rose by Rs 150 per ten grams to Rs 12,735 from the last weekend''s level of Rs 12,585.Pure gold (99.9 purity) also rose to Rs 12,800 from Rs 12,640.Silver ready (.999 fineness) moved up by Rs 90 per kilo to Rs 18,065 from Rs 17,975.

India Central Bank Cuts Rates - Oct 21, 2008

India''s central bank unexpectedly cut short-term lending rates on Oct 20 in response to continued pressure from the global financial crisis. The Reserve Bank of India has cut the so-called repo rate by 100 basis points to 8% to stabilise India''s finances.This is the first cut in more than four years and comes ahead of a scheduled policy review on Friday.

The change will come into effect immediately. Banks worldwide have cut interest rates in a bid to boost their economies. The repo rate is the discount rate at which the central bank lends money to commercial banks to infuse liquidity into the market. The stock market jumped as much as 5.6% on the news but then fell back to close up 2.5%. On Friday it fell to its lowest close since June 2006.

Recession Could Run Deep Amartya Sen - Oct 21, 2008

The depth of the crisis in the US economy and whether it should be described as recession is a contentious and much debated question over the past few days.Well, with recent economic data confirming the painful downturn in the US economy, now the experts are confirming that the worst is in fact true. I believe we are in a recession already not that we are getting there. It could become deep if nothing is done about it. I am sure something will be done about it and we should be able to make it a fairly shallow recession and turn it around, said Nobel laureate and eminent economist Amartya Sen.

But with the big daddy going down, will the emerging countries be able to come out stronger from the deepening US recession and credit crunch?India, China are less affected at least initially because we are not as dependent but we are affected as many of the booming sectors have a clear trade connection, said Sen.In the long run we may be very well affected and I do not mean Sensex going down.

There are bigger problems like unemployment, and the possible slackening of the economy. These things are something that we need to be careful about, pointed out Sen.Even John Thornton, former president of the investment bank Goldman Sachs, believes that no country is the same and so India and China will have to depend on their own models for saving themselves from the crisis.

FDI Inflows To Feel Pinch Of Global Crisis - Oct 20, 2008

Foreign direct investment into the country India will feel the heat of the global financial turmoil, Commerce and Industry Minister Kamal Nath has said. Of course, we will see the impact (of global financial crunch) on our FDI inflows in the next six months, Nath said at a function of chartered accountants in New Delhi.It was only last week that the minister had expressed his optimism, and said India would exceed its target of $35 billion FDI this fiscal.

FDI inflows of $14.6 billion in first five months of 2008-09 showed an impressive growth of 124 per cent over the same period last year.Nath cited example of how the mood reversed in the stock market since January, 2008. We saw boom in our Sensex in January, when it was over 20,000 and today there is a gloom, he said, adding, there is not enough money to pour out.The BSE benchmark Sensex has dipped by over 50 per cent from a high of 21,000 in January to below 10,000 on October 17.With the foreign institutional investors (FIIs) pulling out over $11 billion from the beginning of this calendar year the rupee has come under intense pressure and lost over 20 per cent since April this fiscal.

Nath said FIIs have been pulling out of India in the last several weeks. While this did not reflects India''s fundamentals, it shows the inter-connection. Prime Minister Manmohan Singh, in Srinagar on October 10, had also expressed his concern over the Indian currency coming under pressure. Analysts say if the pace of FDI inflows get affected, the currency may further weaken. India''s foreign exchange reserves dropped by close to $10 billion for the week-ended October 10 from the preceding week. China, one of the largest exporting countries in the world, is also likely to see the impact of recession in the US and European economies.

No Indo-Tibet Barter Trade This Season - Oct 20, 2008

For the first time in two decades, the seasonal barter trade between India and Tibet will not take place this year as the Chinese government has not allowed Indian traders to enter Tibet through Lipulekh Pass in Uttarakhand. Though the annual barter trade, which was scheduled to begin from June, was earlier postponed due to Beijing Olympics. A group of businessmen and porters, who tried to cross the border in August, were turned back from Taklakot by the Chinese authorities citing internal security reasons.

Due to lack of transport and other infrastructure facilities, traders trek from hilly terrains of Pithoragarh to reach Taklakot where the barter trade has been taking place since 1992 after a hiatus of 30 years.This season, 60 trade passes were issued. But so far, no trader has been able to reach Taklakot.

However, a group of traders left for Taklakot early this month. But the officials said the traders, who are camping at Gunji, would not be able to cross Lipulekh Pass due to inclement weather and heavy snowfall.The volume of the Indo-Tibet trade has decreasing during the past three years. Last year, it registered the business to the tune of Rs 1.5 crore.

Bankers See RBI Easing Liquidity Further - Oct 20, 2008

With stock markets tumbling and industrial production plummeting, RBI may inject another dose of liquidity booster by cutting benchmark short-term (resp) lending rate by 25-50 basis points at the mid-term review of credit policy this week, bankers and experts feel.After a series of cut in CRR the amount banks need to keep with the central bank RBI is scheduled to announce fresh measures in its review on October 24.

Although the government and the RBI, through a series of measures, have made provision for unlocking over Rs 2,00,000 crore of funds, the stock markets have continued the downward swing with BSE benchmark Sensex closing below the psychological 10,000 points on Oct 17. There is a possibility of repo rate cut to help economy tide over the crisis, a Finance Ministry official said, adding the suggestion was also discussed at the meeting of the high-powered liquidity panel.

According to the UCO Bank Chairman and Managing Director S K Goel, there may be 50 basis point cut in repo rate in the mid-term policy review.The repo rate was last raised by 50 basis points to nine per cent in the first quarterly review of the credit policy announced on July 29.Prime Minister''s Economic Advisory Council Chairman Suresh Tendulkar said, at this juncture I would not rule out a cut in repo rate.

He said since the inflation seems to easing, the RBI as well as the government should gradually, shift policy stance towards growth.Tendulkar''s remarks, as the head of the high-level think-tank, assumes significance in view of the sharp deceleration in industrial growth witnessed in August. The Index of Industrial Production (IIP) growth rate during the month nosedived to 1.3 per cent from 10.9 per cent in the same month a year ago.

Even Goldman Sachs in its report said, we expect that in the current extremely difficult global environment, with tight liquidity, weakening activity and falling commodity prices, the RBI should prioritise financial stability and growth concerns over inflation.

RBI is, therefore, expected to cut repo rate by 50 basis points on or before the policy meeting, it said. In last one month, RBI has announced to inject Rs 1,60,000 crore in the cash-starved banking system through mix of CRR and Statutory Liquidity Ratio.

Call Rates Unaltered - Oct 18, 2008

Call rates closed at 6.75-7.00 per cent, almost unaltered from Oct 16 close. In the three-day repo auction under the first liquidity adjustment facility (LAF), the RBI got and accepted one bid worth Rs 250 crore. There were no reverse repo bids. In the three-day repo auction under the second LAF, the RBI got and accepted 5 bids for Rs 7,100 crore. Under the 14-day special repo auction scheme for mutual funds, only four banks borrowed Rs 1,035 crore. In the CBLO market, there were 444 trades totaling to Rs 22,670.45 crore in the rate range of 5.10-6.80 per cent.

Sensex Ends Below 10K, Down 606 Pts - Oct 18, 2008

The benchmark lost 606 points, ending below the 10,000 mark at 9,975, as heavy selling surfaced in late trade. It is the lowest close for the Sensex since July 2006. The Nifty ended below the 3100 levels at 3074, down 194 points. This is also the lowest close of the broader index since July 2006. In sharp contrast to today''s close, the Sensex opened firm on positive cues from the Wall Street. The Sensex rose 205 points at day''s high of 10,786 in early trade. Then it slipped in and out of the red in many occasions as markets saw a very high volatility. But in the late trade it slipped to its day''s low. The Sensex is down 5.8 per cent for the week while the Nifty has shed 6 per cent.

The global cues were mixed Oct 17. Though the European markets were trading higher, futures pointed to a fall in the US markets on Oct 17. The Asian markets had ended mixed. Among the Sensex stocks on Oct 17, Reliance Infrastructure plunged 12 per cent to Rs 490. JP Associates, DLF and NTPC were the other major losers in the group.

India Inc Walks Away From M&As - Oct 18, 2008

India Inc saw quite a number of acquisitions in the last few years, but as the investor sentiment has turned negative in the world economy, the Indian companies can be seeing walking away from large global deals. The change in the trend is evident from the fact that Sterlite Industries is reviewing its planned $2.6 billion bid for Asarco. Infosys, too, walked away from its $800 million Axon deal recently. There could be many reasons for the change in the investor sentiment. There is a significant demand contraction in all sectors and also in output cutbacks, resulting in pricing power loss. With the financial crisis still raging, funding either via debt or equity has also become scarce.

Meanwhile, Tata Steel that bought Corus for a massive $12 billion also has to face the steel downturn with Corus cutting production. Hindalco is struggling to repay the $3.03 billion bridge loan the company had taken.
Moreover, JLR has also resorted to plant shutdowns following the demand slowdown. Mergers and Acquisitions (M&A) experts, however, have their doubts about India Inc being able to reap the expected returns on these mega acquisitions.

Call Rates Ease On Slew Of Measures - Oct 17, 2008

Call rates relieved as a slew of steps by the Reserve Bank of India, along with the release of the first instalment of farm loan waiver, injected close to Rs 1,45,000 crore into the system. The rates ended significantly lower at 6.75-7 per cent, against the previous close of 9.75-10 per cent. In the one-day repo auction under the first liquidity adjustment facility (LAF), the RBI received and accepted 1 bid worth Rs 2,500 crore.

In the one-day repo auction under the second LAF, the RBI got and accepted 6 bids for Rs 7,900 crore. In the one-day reverse repo auction under the second LAF, the RBI received and accepted 11 bids for Rs 6,270 crore. Only five banks borrowed Rs 2,270 crore under this scheme. In the CBLO market, there were 463 trades totaling to Rs 25,344.90 crore in the rate range of 1-9.51 per cent.

Indo-US Bilateral Trade Likely To Exceed - Oct 17, 2008

The United States Commercial Service on Oct 15 declared that the total bilateral trade between India and the US is likely to cross $50 billion by the end of 2008 against $41.6 billion last year. With the inking of the nuclear deal between the two countries recently, the trade volumes are likely to go up further not only with India but other countries too. Of the $17.6 billion US exports to India in 2007, aviation calculates to about $6 billion (34.4 per cent).

The growth has been quite speedy from $2 billion in 2006 to $6 billion in 2007, and there is huge potential for upside, according to Mr Steven White, Charge D'' Affairs, US Embassy. Mr White said that a large dependent of US companies is now in India exploring opportunities for co-operation with their Indian counterparts in the aviation sector.

Infrastructure Sector Faces Capital Crunch - Oct 17, 2008

The infrastructure sector in India has finally started to feel the heat of the slowdown. Although India''s top engineering firm L&T posted a 31 per cent rise in the quarterly net profit, a disappointed market pushed its stock down more than 11 per cent on Oct 15. The company, however, said that it will reach its annual targets. L&T is not the only company which is seeing lower margins. State-run BHEL is also facing raw material pressures and for it, too, margin growth would be a challenge.

Moreover, most infrastructure firms operate at a debt of 60 per cent. Now, with the cost of debt rising nearly 2 per cent, earnings are evidently under pressure. The sentiment in the stock has slipped significantly, with shares of BHEL sliding 17 per cent in one month, L&T declining 30 per cent and Crompton dipping 12 per cent.

India Inc is now worried about new projects and new businesses. The investment cycle is threatened and fresh working capital has become expensive. This implies that from now on corporate India would have slower its pace when it cones to new businesses.

FM Announces More Liquidity Measures - Oct 16, 2008

Finance Minister P Chidambaram today announced more measures to enhance liquidity in the system by allowing corporate to bring more money from foreign investors, releasing more cash for banks and taking steps to further strengthen banking system. Chidambaram said RBI would immediately release Rs 25,000 crore to the commercial banks, cooperative banks and RRBs under the farm loan waiver scheme. He also announced doubling of the investment limit to six billion dollars for foreign institutional investors in corporate bonds.

The series of announcements came on a day when stock markets tanked, with the benchmark Sensex losing 674 points, reversing the two-day winning streak. Chidambaram, who along with RBI Governor had briefed the Prime Minister last night on the measures taken so far while exploring the other options, said the measures so far have helped improve liquidity and it has been felt that more steps are needed.

RBI Cuts CRR By 100 Bps To 6.5% - Oct 16, 2008

The Reserve Bank of India on Oct 15 cut the Cash Reserve Ratio (CRR) by 100 basis points. It said that the CRR cut would release Rs 40000 crore. RBI also raised ceilings on FCNR and NRE deposit rates by 50 bps each. This is the third CRR cut in the past nine days. The total cut is 250 bps. The Central bank also hiked the amounts that banks can raise from overseas unit. It said that RBI would provide more liquidity to meet the MF need. The banks can borrow 0.5 per cent of deposits for MF needs. The Reserve Bank stressed that the CRR cut was committed to maintain financial stability. It also assured that it would to review measures on a continuous basis.

India Exceeds Export Target For 2007-08 - Oct 15, 2008

India exceeded the export target for 2007-08 by 3 billion dollars achieving an overall growth rate of about 29 per cent, appreciation of rupee notwithstanding. Exports reached a level of 162.9 billion dollars during 2007-08, registering a growth of 29.02 per cent over the same period last year, according to the final figures released by the Directorate General of Commercial Intelligence and Statistics. The export target for the fiscal 2007-08 was 160 billion dollars.

In the same period, the domestic currency appreciated by about 8 per cent, eroding the profit margins of exporters.In rupee terms, the shipments for the period recorded a growth of 14.7 per cent to Rs 6,55,864 crore compared to Rs 5,71,779 crore last fiscal, it said.The major sectors which drove the exports during the period were engineering goods, petroleum products, gems and jewellery, agriculture and allied products and ores and minerals, it said.

Exports of textiles, handicrafts and sports goods, which were badly hit during 2006-07 due to appreciation of rupee vis-a-vis dollar since September 2006, showed improvement in their performance during the year, it added. The country''s export for the first five months of the current fiscal grew by 35.1 per cent to 81.2 billion dollars from that of 60 billion dollars corresponding period previous year.

Gold Plunges By Rs 210 On Global Cues - Oct 15, 2008

Losing nearly Rs 800 in three straight sessions gold prices on Oct 14 closed at Rs 13,200 per ten gram falling sharply by Rs 210 on the bullion market in New Delhi in line with weak global cues and shifting investor focus from funds to the surging bourses. The precious metal lost nearly Rs 800 in three straight sessions as some investor moved their funds away from the bullion market to the strengthening stock and bond markets. Standard gold and ornaments fell sharply by Rs 210 each at Rs 13,200 and Rs 13,050 per ten gram respectively. Sovereign continued to trade at previous level of Rs 10,600 per piece of eight gram. In the global markets, gold remained weak in last two sessions falling further on reports of the metal losing strength in the US dropping up to $832 an ounce on weakening dollar.

A weak dollar against leading currency make dollar-priced gold cheaper when bought in other currencies and erode demand for holding as investment. However, silver rebounded on emergence of buying by stockists at existing lower levels and recorded handsome gains. Silver in previous trading session lost by Rs 1600 per kg. Silver ready gained Rs 18,750 per kg and weekly-based delivery by Rs 350 at Rs 18,800 per kg. Silver coins also moved up by Rs 100 at Rs 28,300 for buying and Rs 28,400 for selling of 100 pieces.

Bond Prices Decline By Declare - Oct 15, 2008

Bond prices declined by Re 1 on fears that the RBI will declare an SLR cut, as this would decrease demand for the Government securities. Another factor was the view that with the stock markets staging a recovery, the RBI unlikely to cut rates aggressively. Total traded volumes on the order matching system were lower at Rs 3,405 crore.

The 8.24 per cent-10 year-2018 paper opened at Rs 102.7 and reached an intra-day low of Rs 101.76 . It closed at Rs 101.95, against the previous close of Rs 102.93. The second highly traded security, 7.94 per cent-13 year-2021 paper, opened at Rs 97.6 and closed at Rs 96.5.

Rupee Closes At 48.25 Against Dollar - Oct 14, 2008

After crossing the 49-mark last week, the rupee regained against the dollar on Oct 13, though the intra-day movement was range-bound. The rupee o pened at 48.35 and ended at 48.25, against Oct 10 close of 48.46. During the day, the rupee reached a high of 48. In the forward premia the six-month closed at 0.45 per cent, while the 12-month closed at 0.39 per cent.

Call Rate Closes At 9.75-10pc - Oct 14, 2008

The inter-bank call rate closed at 9.75-10 per cent, against the previous close of 9.50-10 per cent. With the 150 basis points CRR cut coming into effect from OCt 11, liquidity in the system has relaxed after the injection of Rs 60,000 crore. Call rates are looming around 10 per cent, compared to a high of 22 per cent last week.In the one-day repo auction under the first liquidity adjustment facility (LAF), the RBI got and accepted 33 bids worth Rs 35,600 crore. There were no reverse repo bids. In the one-day reverse repo auction under SLAF, the RBI got and accepted 3 bids for Rs 4,135 crore.

Gold Prices Fall On Reduce Offtake - Oct 14, 2008

Gold prices fell by Rs 50 to Rs 13,410 per 10 gram on the bullion market in New Delhi on Oct 13 on reduced offtake amid fresh selling by investors who rushed to the equity markets after stocks surged on Finance Minister P Chidambaram''s promising remarks. A steep rise in stocks after government announced more measures to check a free-fall in share prices, brought back confidence among investors who liquidated their other assets, such as bullion to invest in equities. Marketmen said the precious metals, which normally move in tandem with foreign markets, lost steam on rising demand for stocks.

They said the stocks, surging the most in the last four years boosted demand for equities, and investors preferred to syphon off funds from bullion towards stocks. However, silver remained steady in scattered small buying from coin manufacturers. Silver ready traded at last level of Rs 18,350 per kg while weekly-based delivery rose by Rs 20 at Rs 18,450 per kg. Silver coins were down by Rs 300 at Rs 28,200 for buying and Rs 28,300 for selling of 100 pieces. Standard gold and ornaments fell by Rs 50 each at Rs 13,410 and Rs 13,260 per 10 gram respectively. On the other hand, sovereign gained Rs 100 at Rs 10,600 per piece of eight gram on emeergence of buying retailers for Diwali festival.

Call Rates Surge As Banks Hold On To Funds - Oct 13, 2008

The inter bank call rates went up to an intra-day high of 22 per cent on October 10. The call rates ended considerably higher at 15.50-16.50 per cent, as against the previous close of 10-10.5 per cent. The CRR cut announced by the RBI would release Rs 60,000 crore into the system and ease the liquidity conditions. But since the CRR cut comes into effect only from Saturday, there was continuous pressure on the inter-bank call rates on Oct 10.

The Reserve Bank had earlier allowed banks to avail themselves of additional support under the liquidity adjustment facility (LAF) up to one per cent of their net demand and time liabilities and seek waiver of penal interest, introduce a second LAF daily, and increase FCNR and NRE deposit rates. With the global liquidity crunch spreading its tentacles, banks have been borrowing close to Rs 80,000 crore from the RBI on an average under the liquidity adjustment facility. On Oct 10, banks borrowed close to Rs 94,000 crore from the RBI. In the three-day repo auction under the first LAF, the RBI received and accepted 42 bids for Rs 50,270 crore. There were no reverse repo bids.

In the three-day repo auction under the second LAF, the RBI received and accepted 43 bids for Rs 41,730 crore. In the three-day reverse repo auction under second LAF, the RBI received and accepted 1 bid for Rs 500 crore. In the CBLO market, there were 358 trades amounting to Rs. 12,696.70 crore in the rate range of 8.90-17 per cent.

Bond Prices Go Up On CRR Cut - Oct 13, 2008

Bond prices went up by over Re 1 after the Reserve Bank of India cut the CRR by an further 100 basis points. Bond yields closed about 20 basis points lower, which means Rs 1.2 higher. The cancelling of the Rs 10,000-crore auction of Government securities also aided the market as it would ease the liquidity in the system. However, bond prices came off the day''s high due to profit taking, towards the end of trade, said a bond dealer with a private bank.

Total traded volumes on the order matching system were Rs 9,640 crore. The 8.24 per cent -10 year-2018 paper opened Rs 102.4 (7.88 per cent YTM) and closed at Rs 102.95 (7.79 per cent), against Wednesday''s close of Rs 101.7 (7.98 per cent YTM). During the day it touched a high of Rs 104 (7.64 per cent YTM). The 7.94 per cent -13-year -2021 paper opened at Rs 97.5 (8.26 per cent YTM) and closed at 98.25 (8.16 per cent YTM). During the day it touched a high of Rs 99.35 (8.02 per cent YTM).

Forex Reserves Decline - Oct 13, 2008

The reserves have been declining for the past few weeks following sustained FII outflows from the domestic equity market. This coupled with selling of dollars by the Reserve Bank of India, took the forex reserves down by more than $1 billion in the last one month. According to RBI figures, forex reserves dwindled by $7.87 billion to touch $283.941 billion for the week ended October 3.

The fall could be partly attributed to dollar selling by the RBI in the forex markets to stabilise the rupee, said Mr Ashish Parthasarathy, Deputy treasurer, HDFC. In the previous week, reserves had decreased by $153 million to touch $291.819 billion. According to the figures released by the Securities and Exchange Board of India, foreign institutional investors have been net sellers in the equity markets to the tune of Rs 416.80 crore for the week ended October 3, which also led to the decline in forex reserves. Foreign currency assets decreased by $7.741 billion to $274.911 billion. Gold reserves decreased by $127 million to $8.565 billion, while SDRs were unchanged at $4 million.

Rupee May Hit 50 Level In 2 Mths Experts - Oct 10, 2008

The Indian currency may lose further ground and dollar is likely to touch Rs 50 in the next two months in the wake of global financial crisis, say exporters and economists. With foreign institutional investors (FIIs) pulling out of the equity markets in the emerging economies, rupee touched a six-year low of 48.47 against dollar on Wednesday.

If the prevailing sentiment for withdrawal of portfolio funds continues and RBI does not intervene, the dollar can touch Rs 50 in the next 2-3 months, ICRIER Director Rajive Kumar said.The FIIs have net sold $ 120 million from India in the last three months with the global equity markets receiving a thrashing after collapse of several banks in the US and Europe.With erosion of over 20 per cent rupee value since April this year, exporters are laughing their way to bank on increased realisations, though some of them got trapped in the exotic derivative contracts of the previous year.

While they want stability in the foreign exchange market, exporters seem to nurse a desire of the rupee touching 50.On the back of windfall resulting from currency depreciation, India''s exports surged by 35.1 per cent between April and August this fiscal.However, import increase of 37.7 per cent has left a big trade gap of $ 49 billion in the five months of the current fiscal. The trade gap could exert further pressure on the overall current account situation of the country.

Finance Ministers To Hold Emergency - Oct 10, 2008

The top finance ministers of the world will hold an emergency meeting in about 48 hours time to plan out measures to stop the financial tsunami. The unprecedented coordinated global action has set the tone this meeting in Washington .. Twenty Finance Ministers including P Chidambaram will be meet the World Bank President. The big question is whether things will get as bad in India as they are in the West?

The President of the World Bank, Robert Zoellick, however, opines that there will be some slowdown in India but India will be in a position to weather the storm.The festival of Dushera gave the Indian markets and authorities a breather on Oct 9. But over the next day or two, if the markets resume their fall India may do what other top economies have done i.e. cut interest rates.

On Oct 9 three more top economies namely, Hong Kong, Japan and South Korea cut interest rates by up to half a percent. But the Asian markets still did not respond positively. Most of them closed about a per cent- a percent and a half down. The Federal Reserve, acting in coordination with other global central banks, cut a key US interest rate by half a percentage point on Wednesday to steady a teetering global economy. India has yet has not been a part of the unprecedented joint global action. Almost ten countries, the US and China included have slashed interest rates. It''s a move aimed to provide more money in the economies and to calm fears of the investors, depositors and businesses.

Strong Global Cues Gold Prices - Oct 8, 2008

Tracking strong global cues gold prices today rose by Rs 520 to close at Rs 13,400 per ten gram in the bullion market in New Delhi on festive buying and melting stock markets attracting investors looking for safe haven.Standard gold shot up by Rs 520 at Rs 13,400 and Rs 13,250 per ten gram respectively. Sovereign also rose by Rs 100 at Rs 10,600 on emergence of buying for festivals.There was negligble demand for gold, as it remained weak in last few session on reduced offtake, they said and added that today''s surge brought back the metal to a level seen on the first ''Navratras'', on October 30.In Hindu mythology, ten days of ''Navratras'' is considered to be an auspicious period to make purchases in precious metals such as silver and gold.The upsurge was partly supported by a firming trend in international bullion markets on similar ground as global stock markets led by the US, nearly crashed on panic selling.

The US Dow Jones Average index dipped below 10,000 points, first time in four years and Japan''s Nikeei index to five year lows. Firming US currency was another boosting factor for the dollar-priced precious metals. In London, gold advanced for a second day, buoyed by demand for the metal as a haven as equities continued to slide.

Rupee Touches 48 Mark - Oct 8, 2008

The rupee touched the 48 mark to a dollar in highly volatile trade. The rupee opened at 47.96 and touched a low of 48.15. It closed at 47.93/94, against the previous close of 47.81/82. During the day, it moved in a range of 43 paise. Another reason for the drying up of dollar supply is the reduced inflows on account of buyers'' credit, pre-shipment or packing credit that exporters avail of. While it is difficult to predict what level the rupee may fall to, the next support could be at 48.75.

Call Rate Closed Lower As Against The Previous - Oct 8, 2008

The inter-bank call rate closed lower at 10.50-11 per cent, as against the previous close of 11-11.25 per cent. The RBI received and accepted 40 bids worth Rs 42,165 crore in the one-day repo auction under the first liquidity adjustment facility (LAF). There were no reverse repo bids. In the one-day repo auction under the second LAF, the RBI received and accepted 22 bids for Rs 21,120 crore. In the one-day reverse repo auction under SLAF, the RBI received and accepted 1 bi d for Rs 3,650 crore. In the CBLO market, there were 349 trades amounting to Rs 16,131.75 crore in the rate range of 8.71-10 per cent.

Direct Tax Mop-Up Jumps 32.54% - Oct 7, 2008

Deceleration in economic growth has not impacted revenue collections as the realisation from direct taxes have gone up by 32.54 per cent during the first half of the current fiscal. Within the direct taxes, collections from the corporate tax went up by 35.65 per cent taking the total direct tax realisation to Rs 1,47,197 crore, compared with Rs 1,11,055 crore in the year-ago period.

The corporate taxes collection rose to Rs 95,283 crore as against Rs 70,240 crore, while Personal Income Tax (including FBT, STT and BCTT) grew by 26.94 per cent to Rs 51,701 crore. With stock markets on southward direction, securities transaction tax registered a growth of just 2.72 per cent growth at Rs 3,182 crore during the period.

Among the direct tax the Fringe Benefit Tax (FBT) shot up by 62.23 per cent to Rs 3,580 crore.At the same time, growth in corporate tax deducted at source (TDS) remained above 52 per cent and personal income tax TDS grew at 28 per cent despite substantial tax relief allowed to individual taxpayers in the budget 2008.

Chandrayaan To Be Launched Mission - Oct 7, 2008

India''s first unmanned lunar mission, Chandrayaan-1, is scheduled to be launched from the spaceport of Sriharikota at 6.20 am on October 22, Indian Space Research Organisation sources said on Oct 6. The satellite was transported from here to Sriharikota in a special vehicle last week and has reached the Satish Dhawan Space Centre (SHAR). The spacecraft is expected to be mated with ISRO''s work-horse rocket, Polar Satellite Launch Vehicle (PSLV-C11) later this week, the sources said.

The spacecraft would carry 11 payloads -- five from India and six from the US, Europe and Bulgaria. It would be launched on board PSLV-C11. Chandrayaan-1 satellite would orbit the Moon at an altitude of 100 km mapping the topography and the mineralogical content of the lunar soil. Chandrayaan-1 would also carry a Moon Impact Probe payload for demonstrating the technology needed towards landing on the Moon''s surface. India believes the Rs 386-crore lunar mission is a step towards its quest for exploration of outer space and inter-planetary missions.

Rupee Ends At 5.5-Yr Low - Oct 7, 2008

A steep fall in share prices following the exodus of foreign funds pulled the Indian rupee down by a whopping 73 paise to its lowest level in 5.5 years of 47.82/83 against the US dollar. Heavy pullout by foreign funds from equity markets weighed on the rupee sentiment, while there was some dollar from oil refiners following a fall in global crude oil prices.

At the Interbank Foreign Exchange (Forex) bank, the domestic unit resumed weak at 47.40/41 per dollar from

Friday''s close of 47.09/10.After moving in a range of 47.28 and 47.85, the rupee on Monday ended at 47.82/83 a dollar, a fall of 1.55 per cent over previous close. Last time it had ended at 47.80 per dollar on March 7, 2003.Forex dealers said oil corporates were sustained buyers in dollar to grab the opportunity of fall in global crude oil prices near USD 90 a barrel in Asian trade on Oct 6.They said a slump in Asian stocks despite the USD 700 billion bailout package being passed by the US government last week to stem the financial crisis amid uncertainty in global markets affected the rupee sentiment.

Asian indices were down by 4.1 per cent to 5.6 per cent, while Indian benchmark Sensex tumbled by nearly 725 points or 5.78 per cent at close on Oct 6. Foreign Institutional Investors (FIIs) pulled out nearly USD 259 million on last Friday taking a total to USD 9.43 billion in the current calendar so far.

Forum In Bahrain To Highlight India As Investment - Oct 6, 2008

India''s pro-active policies and an ideal investment climate for foreign investments will continue to serve as a key attraction for global investors including Bahrainis.

This will be the message delivered during a presentation to be held in Manama on Monday at the Bahrain Chamber of Commerce and Industry (BCCI) on Indian Economy. The forum is taking place just over a week before Bahrain''s Crown Prince and Deputy Supreme Commander Shaikh Salman bin Hamad Al Khalifa embarks on a three-day visit to India. The event, being organised by the BCCI in cooperation with the Indian Embassy, will highlight the salient features of Indian Economy and the scope of further economic cooperations between the two countries.

Emphasis will be laid on potential business sectors such as IT, construction, building materials, banking, investment, healthcare and chemicals. It will also offer the participants an opportunity to exchange views and ideas to identify suitable business sectors for forging business alliances with interested counterparts. Balkrishna Shetty, Indian Ambassador to Bahrain, will address the forum.

Central Bank Needs To Act Ease Credit - Oct 6, 2008

The India Inc has said that the central bank should act to ease credit concerns. According to the executives at Alok Industries, Jaiprakash Associates and Balrampur Chini Mills, India''s central bank should make more cash available to lenders to ease a credit shortage and restore investor confidence. The Reserve Bank of India needs to cut the cash reserve ratio, the proportion of deposits banks must hold at the central bank, from an eight-year high of 9 percent before its next meeting Oct. 24, they said, predicting reductions of between 50 and 100 basis points.

Indian money market rates have risen to near an 18-month high as banks hoard cash and investors pull out from emerging markets to meet a deepening financial crisis. The central bank, seeking to allay concern in the market, said today the nation''s second-biggest bank has sufficient cash. Commercial banks worldwide are refusing to lend to each other after the U.S. housing slump caused the collapse of New York-based Lehman Brothers Holdings Inc. and forced governments to bail out financial institutions in the U.S. and Europe. Banks borrowed the most since 2002 at the European Central Bank''s emergency rate and deposited a record 44.4 billion euros ($64 billion) as money markets remained frozen.

Rupee Decreased Against The Dollar - Oct 4, 2008

The rupee decreased by around 47 paise against the dollar. The day witnessed high volatility with the rupee moving intra-day in the range of 45 paise. The domestic currency opened lower at 47.16/18 and weakened to reach an intra-day low of 47.27/28. It then recovered to reach an intra-day high of 46.82/84 before weakening again to close at 47.08/10, as against the previous ended of 46.61/62. In the forward market, the 6-month premium closed lower at 0.44 per cent and the 12-month ended at 0.57 per cent.

Government Resumes Its Spending Rumours - Oct 4, 2008

Bond prices increased due to huge purchasing interest in Government securities, as liquidity is hoped to ease once the Government resumes its spending. Rumours of a rate cut also assisted bond yields ease a bit. Lower oil rates were also a trigger for bond prices opening higher. The total traded volumes on the order matching system were Rs 6,465 crore. The 8.24 per cent-10 year-2018 paper opened at Rs 99.5 and ended at Rs 99.63, against Oct 1 close of Rs 98.6. The 7.94 per cent-2021 paper opened at Rs 93 and ended at Rs 93.79, against the previous close of Rs 92.

Call Rates Continue To Be Steady - Oct 4, 2008

Call rates closed at 13.5-14 per cent, the same as the previous day''s end. The banks borrowed more than Rs 90,000 crore from the RBI via the repo auction under the liquidity adjustment facility. In the three-day repo auction under the first liquidity adjustment facility (LAF), the RBI got and accepted 49 bids worth Rs 65,095 crore. There were no reverse repo bids. In the three-day repo auction under the second LAF, the RBI got and accepted 33 bids for Rs 25,630 crore.

Rupee Reached Low Against Dollar Trade - Oct 3, 2008

The rupee reached a five-year low of 47.23 against the dollar during trade on Oct 1, due to the overall strengthening of the dollar in the overseas markets. However, interference by the central bank and dollar selling by corporates helped the rupee recover by 36 paise. The currency opened lower at 47.13/15 and weakened to reach an intra-day low of 47.23/25. It recovered to end at 46.61/62, against the previous close of 46.97/99. In the forward market, the 6-month premium closed marginally higher at 0.65 per cent and the 12-month ended at 0.66 per cent.

Long-Term Bonds Are Becoming An Attractive - Oct 3, 2008

Bond prices increased on value-buying as long-term bonds are becoming an attractive asset class, given the weakening of equities. Expectations that the Reserve Bank of India unlikely to increase interest rates given the tight liquidity in the market also helped bond prices up. More numbers of foreign institutional investors are registering for infusing in the debt market. Total traded volumes on the order matching system were Rs 4,620 crore. The 8.24 per cent -10 year-2018 paper opened at Rs 97.8 and closed at Rs 98.6, against the previous close of Rs 97.73. It reached a high of Rs 98.84 during day trade. The 7.94 per cent -2021 paper opened at Rs 91.25 and closed at Rs 92.

Liquidity Conditions Dominated In The Market - Oct 3, 2008

Tight liquidity conditions dominated in the market as call rates reached an intra-day high of 17.25 per cent. The rates subsided to end at 13.5-14 per cent, lower than the previous close of 15.75-16 per cent. The Reserve Bank of India put in around Rs 92,000 crore into the system via the repo auction. In the two-day repo auction under the first liquidity adjustment facility (LAF), the RBI got and accepted 51 bids worth Rs 70,295 crore. There were no reverse repo bids. In the two-day repo auction under the second LAF, the RBI got and accepted 27 bids for Rs 21,425 crore. In the CBLO market, there were 359 trades totaling to Rs 14,886.30 crore in the rate range of 9.00-15 per cent.

PM Says Growth Solid Despite Global - Oct 1, 2008

The Indian economy will grow at a rate of 7.5 to 8 percent this year despite being dented by the global slowdown, Prime Minister Manmohan Singh said on Sept 30. India is aiming to sustain high growth rates but also needs to cool double-digit inflation before the government heads into a general election in 2009. Singh acknowledged that slowing growth elsewhere, exacerbated by the financial markets crisis, had taken its toll on India''s economy but added that the outlook was still strong. Despite the uncertainties of the global economic and financial outlook, the prospects of Indian growth seem very good, Singh.

Our economy has grown at an average rate of 9 percent in the past four years. It is expected to slow down in the current financial year, reflecting the slowdown in the global economy. Even so, it will grow between 7.5 to 8 percent, Singh added. India''s gross domestic product grew by 7.9 percent during the April-June period from a year earlier, and the prime minister''s economic advisory council expects it to average 7.7 percent for the full fiscal year.

Gold Loses Shine As Markets Recover - Oct 1, 2008

Gold slipped after a positive start on Sept 30, falling back below the watershed $900 per ounce, seesawing between a broad range of $880 -900 as the global markets retreated from the initial havoc that was caused by the massive slide on the Wall street on Sept 29. The momentum in Gold, which has been tracking the global equity markets very closely off late as investors have shown a great appetite for the commodity in times when all the assets are plunging.

European shares moved off lows in a volatile session, as investors started to hope that a $700 billion US plan to shore up financial markets will eventually be approved. Meanwhile, US. President George W. Bush has called for urgent action, as US economy needs a Bailout Bill in order to avoid "painful and lasting" economic damage.

India Offers To Play A Role In Global Crisis - Oct 1, 2008

Seeking new rules for the world financial system, India on Sept 30 offered to participate in restructuring of troubled global markets. India cannot remain insulated in the long run. We need new rules for the global financial market, Commerce and Industry Minister Kamal Nath said at a meeting of top French industrialists organised jointly by apex Indian industry chambers FICCI and CII in Paris. Nath said the new financial architecture was not confined to one country. "We will of course participate with France and the US in restructuring the financial systems," he said.

Earlier on Sept 30, Prime Minister Manmohan Singh had also said India''s capacity to finance development would be affected and exports compromised if major economies went into recession. Singh, who was on a two-day visit to France, had said the crisis affecting the developed countries at the moment could spread to the rest of the world and wanted India and China to be part of the solution-finding exercise. India and several others Asian economies have so far not been directly affected by the collapse of major US and European banks. The US House of Representatives had on Sept 29 rejected a $700-billion bailout package. Further, Nath said the short and medium term fundamentals of the Indian economy were sound. Exports from India were growing at 30 per cent and the country was also receiving foreign direct investment at a faster pace. Referring to the India-EU Free Trade Agreement under negotiation, Nath said although New Delhi had to suffer "more pain" in terms of reducing the customs duty, the country was ready for it. But it was for the EU members to push for an early conclusion of FTA with Brussels (EU Headquarters).