Top Gainers
- Hindalco
- ITC
- Infosys
- Jaiprakash Asso
Top Losers
- Reliance Infra
- ACC
- Ambuja Cements
- DLF
Chandramugi part 2
12 years ago
Top gainers & Top losers 30/06/08
Market at end Mon, Jun 30, 2008 - Sensex ends down 341pts, ACC drops 10%
The Sensex opened marginally (11 points) lower at 13,791, but moved up to a high of 13,872 in early deals.
Relentless selling in heavyweights like ICICI Bank and Reliance saw the index drop to a low of 13,405 - an intra-day decline of 467 points.
The Sensex finally closed with a huge loss of 341 points (2.47%) at 13,462.
The BSE Realty index plunged nearly 7% (332 points) to 4,543. The BSE Oil & Gas index declined over 4% (378 points) to 9,009. The BSE Consumer Durables, Power, Capital Goods and Bankex also dropped sharply today.
Market breadth was extremely bearish - out of nearly 2,700 scrips traded, over 2,100 declined today.
Reliance Infrastructure plunged over 11% (Rs 102) to Rs 751. ACC declined nearly 10% to Rs 512. Ambuja Cement was down 7% at Rs 73.
Reliance dropped over 4% to Rs 2,076. SBI slipped 4% to Rs 1,101, and L&T was down 3.7% at Rs 2,165.
ICICI Bank, Tata Motors, RCom, DLF and HDFC also declined today.
Infosys advanced 1.6% to Rs 1,735. Hindalco added 2% at Rs 142. ITC, Jaiprakash, NTPC and BHEL also closed with gains.
Reliance was the most active counter with a turnover of Rs 379 crore followed by Reliance Petroleum (Rs 262 crore), Reliance Capital (Rs 243 crore), MVL (Rs 210 crore) and Niraj Cement (Rs 148 crore).
Relentless selling in heavyweights like ICICI Bank and Reliance saw the index drop to a low of 13,405 - an intra-day decline of 467 points.
The Sensex finally closed with a huge loss of 341 points (2.47%) at 13,462.
The BSE Realty index plunged nearly 7% (332 points) to 4,543. The BSE Oil & Gas index declined over 4% (378 points) to 9,009. The BSE Consumer Durables, Power, Capital Goods and Bankex also dropped sharply today.
Market breadth was extremely bearish - out of nearly 2,700 scrips traded, over 2,100 declined today.
Reliance Infrastructure plunged over 11% (Rs 102) to Rs 751. ACC declined nearly 10% to Rs 512. Ambuja Cement was down 7% at Rs 73.
Reliance dropped over 4% to Rs 2,076. SBI slipped 4% to Rs 1,101, and L&T was down 3.7% at Rs 2,165.
ICICI Bank, Tata Motors, RCom, DLF and HDFC also declined today.
Infosys advanced 1.6% to Rs 1,735. Hindalco added 2% at Rs 142. ITC, Jaiprakash, NTPC and BHEL also closed with gains.
Reliance was the most active counter with a turnover of Rs 379 crore followed by Reliance Petroleum (Rs 262 crore), Reliance Capital (Rs 243 crore), MVL (Rs 210 crore) and Niraj Cement (Rs 148 crore).
Sensex could slide to 12,000 level
The fact that stock futures of many Nifty stocks were trading at a huge discount to their spot prices an unusual phenomenon lends some credence to this theory. A spiralling inflation and interest rate has already cast a shadow on several sectors such as banking, auto and real estate. On Friday, there was more bad news in the property space, with a downgrade of the debt papers issued by Sobha Developers. This is one of the first downgrades in the sector.
Bears tightened their grip as inflation climbed further to 11.42% and the political situation at the Centre remained fluid. “A further rise in the oil price will, unfortunately, continue to be particularly bad news for India,” broking house CLSA said in a note to clients.
“This is both despite and because of the Reserve Bank of India’s increasingly pre-emptive monetary tightening stance,” the note said, adding that “a re-test of the 12,000 level on the Sensex cannot be ruled out in these circumstances and that will be accompanied by a further weakening in the rupee.” The broking house, however, said a decline to 12,000 level would be a “massive long-term buying opportunity.”
For all the uncertainty over UPA government’s future, brokers feel that politics is not as big a cause for worry as inflation. “Market has discounted politics, because the government’s immediate priority is its own survival, and not any major policy measures,” said a veteran BSE trader, adding that it would not make much of a difference to sentiment if the government lasted for a month or three.
Elsewhere in Asia, Chinese markets declined by over 5%, while markets in Japan, Singapore, Hong Kong, South Korea and Taiwan were down between 1% and 3%.
In the US, the Dow was trading marginally higher in early trade, though it was still close to its 21-month lows.
Even as stock prices are plunging rapidly, there is no talk of any brokering house or prominent market player facing a solvency crisis. This is because there are no major outstanding positions in derivatives as was there at the beginning of the year, just before the market went into a free-fall.
Bill Gates bids a teary farewell to Microsoft
Bill Gates said a teary goodbye on Friday to Microsoft Corp, the software maker he built into the world’s most valuable technology company based on the ambitious goal of placing a computer on every desk and in every home.
He leaves his full-time executive role at Microsoft, which he co-founded with childhood friend Paul Allen in 1975, to focus on his philanthropic organization, the Bill & Melinda Gates Foundation, the world’s largest charity, funded in part by his vast fortune.
At an event at Microsoft’s headquarters campus here, Gates, who will become a non-executive chairman and work part-time, joined Chief Executive Steve Ballmer on stage to deliver a short speech and field questions from employees.
"There won’t be a day in my life that I’m not thinking about Microsoft and the great things that it’s doing and wanting to help," said Gates, who wiped away tears as the group of employees rose to give him a standing ovation.
Ballmer, a Harvard University classmate who joined Microsoft at Gates’ behest, got choked up as he tried to describe Gates’ impact on the company and society at large.
"There’s no way to say thanks to Bill. Bill’s the founder. Bill’s the leader," said Ballmer. "We’ve been given an enormous, enormous opportunity and it was Bill that gave us this opportunity."
Gates will leave behind a life’s work developing software to devote energy to finding new vaccines or to microfinance projects in the developing world. He will still work on special technology projects at the company.
Once the world’s richest man, Gates’ personal fortune has been estimated at about $58 billion, according to Forbes Magazine. He has slipped to third place, behind investor and good friend Warren Buffett and Mexican telecoms tycoon Carlos Slim.
ONE BILLION AND COUNTING
Ballmer spoke about how he contemplated quitting Microsoft a month after joining the company and returning to Stanford University business school. Bill passionately implored him to stay and laid out the vision of the company.
"This is what Bill said to keep me. ’You don’t get it! You don’t get it! You don’t get it! We’re going to put a computer on every desk and in every home,’" said Ballmer.
There are currently more than one billion PCs worldwide, according to research firm IDC.
Gates and Ballmer recalled the many steps Microsoft took to evolve from a fledgling start-up to a company of more than 90,000 employees making everything from video game consoles to computer software.
The pair remembered the battles with computer industry titan International Business Machines Corp’s, an early partner turned rival when it rolled out a competing operating system to Microsoft’s flagship software, Windows.
"We went toe to toe with the biggest, most powerful computer company in the world and we beat them," said Ballmer.
The 52-year-old Gates said the company had made "a mistake" not recognizing earlier how Web search and online advertising -- businesses dominated by another start-up turned powerhouse, Google Inc -- could transform the software industry.
However, he cautioned skeptics not to count out Microsoft.
"I love that kind of thing where people are underestimating Microsoft," said Gates. "Yes, we make mistakes and we know it, but we come back and learn from those things. A lot of our best work is the result of that."
After 33 years, Gates said he sometimes finds himself lost in thought, driving to Microsoft without realizing it. He also said he will move out of his corner office -- making way for Ballmer -- into a smaller area one floor below.
"I am sure there will some day next month where I start thinking about software and I will start driving here to Microsoft, go up to the fifth floor and walk down to my office and they will be remodeling it," said Gates with a chuckle.
"In fact, they were wondering if I was leaving at four or five today, so they could get started on that."
Results June 30, 2008 / July 1, 2008
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Oil price 'may hit $200 a barrel'
 Global demand for oil has been fuelled by China and India |
The price of crude oil could soar to $200 a barrel in as little as six months, as supply continues to struggle to meet demand, a report has warned.
Goldman Sachs energy strategist Argun Murti made the warning as benchmark US light crude passed the $123 mark for the first time.
Surging demand was increasingly likely to create a "super-spike" past $200 in six months-to-two years' time, he said. Oil prices have now risen by 25% in the last four months and 400% since 2001.
US sweet, light crude hit an all-time peak of $123.53 (£63.25) on Wednesday, while London Brent crude jumped to $122.32.
Mr Murti correctly predicted three years ago - when oil was about $55 a barrel - that it would pass $100, which it reached for the first time in January of this year.
Chinese demand
Soaring global demand for oil is being led by China's continuing economic boom and, to a lesser extent, by India's rapid economic expansion.
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Both are now increasingly competing with the US, the European Union and Japan for the lion's share of global oil production.
This additional demand comes at a time of continuing production problems in a number of oil-producing nations.
Production is down in Nigeria after the latest attacks on pipelines this week by anti-government militants, while Iraqi exports through the north of the country have been hit by renewed cross-border raids by Turkish forces against Kurdish insurgents.
Oil prices are also rising as the key US summer driving season approaches.
Economists warn that continuing high oil prices will impact on the global economy, hitting growth and fuelling inflation.Oil price still near record $142
The price of crude oil has retreated slightly after hitting record highs above $142 a barrel, amid concerns that supply will not meet demand.
In London, Brent crude was trading at $140.16, having earlier hit $142.13.
New York light crude had climbed as high as $142.26 a barrel, but later fell back to $140.34.
Producers' group Opec has been under pressure to boost production, though recent reports have shown its members are split over whether to lift output.
Libya has threatened to cut production because the market is well supplied.
Libyan threats
Libya's most senior oil official, Shokri Ghanem, said on Thursday he was looking into the possibility of cutting production in response to US threats against oil producers.
Analysts blame the price of crude on a variety of factors from basic supply and demand to hedge funds.
Opec has said speculators have played a part in the oil spike this year, but others are not convinced.
"We believe the factors driving oil prices higher are fundamental and not speculative," Deutsche Bank said in a research note.
"Oil needs to rise to $150 a barrel for oil as a share of global Goss Domestic Produce to reach the levels that occurred in the early 1980s," according to the bank.
But tensions between oil consumers and producers are rising.
The US House of Representatives has passed a bill that would allow the Justice Department to sue Opec members for limiting supplies.
But the bill has yet to be backed by the Senate and the White House has already said it would veto the bill.
There was also scepticism about whether there will actually be a cut in Libya, because of soaring prices.
"I doubt that any real effort in cutting output would be forthcoming, considering that pricing continues to hit new records," said Victor Shum, an analyst at Purvin & Getz.
'Radically new level'
Meanwhile, the chief executive of Gazprom, Alexei Miller, has been talking down the influence of Opec.
Saying that Opec had no real impact on prices, he told the Financial Times: "Not a single decision has been passed of late that would really influence the global oil market."
He also said that the world was undergoing "a great surge in oil and gas prices, which will end with prices at a radically new level".
Mr Miller predicted that Gazprom would become the most influential company in the energy business.
On Friday, the firm approved the replacement of former chairman Dmitry Medvedev, who is now Russian president, with former prime minister Viktor Zubkov.
J K Paper Board recommends dividend
J K Paper Ltd has informed BSE that the Board of Directors of the Company at its meeting held on June 26, 2008, inter alia, has recommended dividend @ 15% for the nine months period ended March 31, 2008 (20% annualised) on 7,81,79,939 Equity Shares of Rs 10/- each of the Company.
Tata Consultancy - Press Release 26 June 2008
Tata Consultancy Services Ltd has informed BSE regarding a Press Release dated June 26, 2008 titled "Innovation from Tata Consultancy Services helps Ferrari retain pole position in Formula 1"
Realty: Tough to buy, tougher to rent
Realty prices might be showing signs of easing, yet its tough to buy a house. Prices are still high and loans are getting expensive. Renting a property is also getting dearer.
According to analysts and developers residential rentals are hardening, registering a 10% growth. The demand for rented residential space is high as India has very low residential rental yields hovering around 3-6% (that is, given the high prices, people prefer to live on rent rather than buy a property).
At the same time home loan interest rates are around 11% to 13%. While new property sales are slowing down, rentals are showing an upwards trend.
Many prospective home buyers are deferring purchase, expecting a dip in prices, and looking for renting accommodation in the short run.
“People are nervous about spending the capital they have in times of uncertainty. Therefore renting remains the only option. Though India is also unique as lot of people prefer to park money in residential projects and lock up apartments, which reduces the supply of apartments for rent, putting an upward pressure,” says global real estate advisory DTZ director Abhilash Lal.
Agreeing that lower residential yields have made renting a feasible option for many, Ansal Housing and Construction Director Kushagr Ansal points out, “Real estate yields in India are very low, pegged at 4-6%. This makes renting a lucrative option.”
Though new supply is being added to the pool of residential properties, it hasn’t really helped in stabilising rents. Says Parsvnath Developers COO Dr B P Dhaka, “New supply is not coming in the preferred centrally located residential areas. Also maintenance and construction costs have gone up in the last one year. All this has contributed to higher rentals.”
Developers also feel that residential rentals will not be hit in the short run. “Demand hasn’t really waned for quality houses and the market is still buoyant. Till the time the job market is healthy and disposable incomes don’t go down drastically, rentals will keep moving up. Though the rentals will plateau out in the long run,” says Ansal API vice-president (marketing) Kunal Banerji.
However, Omaxe executive director Vipin Agarwal points out, “Since residential rentals and lease are long term arrangements, there has not been a significant increase in rentals in last 6-8 months (for people already living in rented properties).’’
According to analysts and developers residential rentals are hardening, registering a 10% growth. The demand for rented residential space is high as India has very low residential rental yields hovering around 3-6% (that is, given the high prices, people prefer to live on rent rather than buy a property).
At the same time home loan interest rates are around 11% to 13%. While new property sales are slowing down, rentals are showing an upwards trend.
Many prospective home buyers are deferring purchase, expecting a dip in prices, and looking for renting accommodation in the short run.
“People are nervous about spending the capital they have in times of uncertainty. Therefore renting remains the only option. Though India is also unique as lot of people prefer to park money in residential projects and lock up apartments, which reduces the supply of apartments for rent, putting an upward pressure,” says global real estate advisory DTZ director Abhilash Lal.
Agreeing that lower residential yields have made renting a feasible option for many, Ansal Housing and Construction Director Kushagr Ansal points out, “Real estate yields in India are very low, pegged at 4-6%. This makes renting a lucrative option.”
Though new supply is being added to the pool of residential properties, it hasn’t really helped in stabilising rents. Says Parsvnath Developers COO Dr B P Dhaka, “New supply is not coming in the preferred centrally located residential areas. Also maintenance and construction costs have gone up in the last one year. All this has contributed to higher rentals.”
Developers also feel that residential rentals will not be hit in the short run. “Demand hasn’t really waned for quality houses and the market is still buoyant. Till the time the job market is healthy and disposable incomes don’t go down drastically, rentals will keep moving up. Though the rentals will plateau out in the long run,” says Ansal API vice-president (marketing) Kunal Banerji.
However, Omaxe executive director Vipin Agarwal points out, “Since residential rentals and lease are long term arrangements, there has not been a significant increase in rentals in last 6-8 months (for people already living in rented properties).’’
Why Crude Oil market is exposed to speculation?
Speculation in association with an increasingly weakening dollar and supported by some fundamental risks such as fear of supply disruptions from unstable resource centers has fuelled the price spikes.
As long as the US interest rates will remain low, commodity markets in general, and crude oil in particular, will remain exposed to large speculative swings. Speculators purchase futures with borrowed money at low interest rates.
The speculative demand pushes the spot prices upwards, which, in turn, fosters even higher expectations of future price increases, which generates even more speculative demand and so on in a self-fuelling upwards spiral up to the trend reversal when speculation is no more profitable. And in case a trend reversal ensues, speculation could create an amplifying effect on the downside.
In the shorter term where demand is very insensitive to price, sharp price increases, whether caused by the OPEC’s decisions or by the trader’s expectations, are not dampened by parallel reductions in demand volumes.
Also the supply side of the market is very inelastic in the short-to-medium term, large speculative price increases cannot be cut short by flooding the market with additional supply. In a situation like this, a price speculation can continue to growing without resulting in surplus inventory, simply because traders can keep selling the same inventories to each other at ever high prices.
The likely trigger for crude oil price crash could be a slowdown in emerging markets (perhaps caused by the high oil price itself), which would obviously cut down demand for goods and services in general and crude oil in particular.
While the economic growth will accelerate for oil exporting countries, the high crude prices will impact the growth figures of fast moving economies. Inflation is rising in India and China due to increase in the costs of food imports, the current account deficits, though comfortable at current levels (China’s surplus of 11% and India’s deficit of 1%) will also be rising if the prices were sustaining at current levels.
On the other hand the ongoing slowdown in the US economy, the subprime impact and credit crunch, will negatively impact the US oil demand which accounts for nearly 21 percent of the global demand for crude oil. And even if China ’s GDP continues to grow around 10-11 per cent in the next two more years, the resultant increase in oil demand will not be sufficient to offset the decline in demand from the US economy.
It may be mentioned that the Organization for Economic Cooperation and Development has already cut its economic growth outlook through next year. It now forecasts several quarters of weak growth for most of its 30 members, which include the U.S., Japan, and several European countries.
Among the industrialized economies, the U.S. economy is projected to grow just 1.2 percent this year and 1.1 percent in 2009. The euro zone is likely to grow at 1.7 percent in 2008 and 1.4 percent in 2009. Japan is expected to expand at 1.7 percent this year and 1.5 percent in 2009. Also the IMF’s world economic outlook is not encouraging, they have already reduced the world GDP growth from 4.9% in 2007 to 3.7% in 2008.
According to the IMF estimates a permanent $ 5 a barrel increase in oil prices will decrease global GDP by up to 0.3 percentage points. This means that a $ 35 (approx.) increase in the oil prices since January 1, 2008, will cut the world GDP by 2.1% this year. The relationship between oil prices and output has also been studied by Bernanke, Jones, and Lee . These authors found significant recessionary and inflationary impact for oil prices on real GDP and consumer prices.
In a nutshell we can conclude that moderation in global economic growth could create a trend reversal in the crude oil prices, where there is possibility that speculation could create an amplifying effect on the down side. This is likely to pull crude prices back to US $ 85 – 90 range (per barrel) from where they had started recent up swing in January 2008.
As long as the US interest rates will remain low, commodity markets in general, and crude oil in particular, will remain exposed to large speculative swings. Speculators purchase futures with borrowed money at low interest rates.
The speculative demand pushes the spot prices upwards, which, in turn, fosters even higher expectations of future price increases, which generates even more speculative demand and so on in a self-fuelling upwards spiral up to the trend reversal when speculation is no more profitable. And in case a trend reversal ensues, speculation could create an amplifying effect on the downside.
In the shorter term where demand is very insensitive to price, sharp price increases, whether caused by the OPEC’s decisions or by the trader’s expectations, are not dampened by parallel reductions in demand volumes.
Also the supply side of the market is very inelastic in the short-to-medium term, large speculative price increases cannot be cut short by flooding the market with additional supply. In a situation like this, a price speculation can continue to growing without resulting in surplus inventory, simply because traders can keep selling the same inventories to each other at ever high prices.
The likely trigger for crude oil price crash could be a slowdown in emerging markets (perhaps caused by the high oil price itself), which would obviously cut down demand for goods and services in general and crude oil in particular.
While the economic growth will accelerate for oil exporting countries, the high crude prices will impact the growth figures of fast moving economies. Inflation is rising in India and China due to increase in the costs of food imports, the current account deficits, though comfortable at current levels (China’s surplus of 11% and India’s deficit of 1%) will also be rising if the prices were sustaining at current levels.
On the other hand the ongoing slowdown in the US economy, the subprime impact and credit crunch, will negatively impact the US oil demand which accounts for nearly 21 percent of the global demand for crude oil. And even if China ’s GDP continues to grow around 10-11 per cent in the next two more years, the resultant increase in oil demand will not be sufficient to offset the decline in demand from the US economy.
It may be mentioned that the Organization for Economic Cooperation and Development has already cut its economic growth outlook through next year. It now forecasts several quarters of weak growth for most of its 30 members, which include the U.S., Japan, and several European countries.
Among the industrialized economies, the U.S. economy is projected to grow just 1.2 percent this year and 1.1 percent in 2009. The euro zone is likely to grow at 1.7 percent in 2008 and 1.4 percent in 2009. Japan is expected to expand at 1.7 percent this year and 1.5 percent in 2009. Also the IMF’s world economic outlook is not encouraging, they have already reduced the world GDP growth from 4.9% in 2007 to 3.7% in 2008.
According to the IMF estimates a permanent $ 5 a barrel increase in oil prices will decrease global GDP by up to 0.3 percentage points. This means that a $ 35 (approx.) increase in the oil prices since January 1, 2008, will cut the world GDP by 2.1% this year. The relationship between oil prices and output has also been studied by Bernanke, Jones, and Lee . These authors found significant recessionary and inflationary impact for oil prices on real GDP and consumer prices.
In a nutshell we can conclude that moderation in global economic growth could create a trend reversal in the crude oil prices, where there is possibility that speculation could create an amplifying effect on the down side. This is likely to pull crude prices back to US $ 85 – 90 range (per barrel) from where they had started recent up swing in January 2008.
India ranked 74 on world corruption index
India has been ranked a lowly 74, two steps down since last year, among 180 countries of the world on the worldwide Corruption Perceptions Index (CPI), prepared by independent international agency Transparency International.
However, corruption is much higher in Pakistan which occupies 140th place, a little below Iran, Libya and Nepal which are ranked 133, 134 and 135 respectively.
Meanwhile, China which was ranked a joint 72 with India in 2007, slided a step down to occupy a place above its neighbour this year.
Among other Asian countries, Russia is placed still lower on 145, while Sri Lanka occupies the 96th position and Maldives is ranked 90.
The least corrupt country in the region is the nascent democracy Bhutan, which has been placed at the 41st spot by the non-government organisation tracking prevalence of corruption worldwide.
Denmark, Finland, New Zealand, Singapore and Sweden corner the top five spots retaining positions as the least corrupt nations of the world, while bottom of table is occupied by Myanmar and Somalia.
The United States also retains its position and is ranked 20th, just below Germany, Ireland, Japan and France. Besides, Britain occupies the 13th spot and is just ahead of Hong Kong.
However, corruption is much higher in Pakistan which occupies 140th place, a little below Iran, Libya and Nepal which are ranked 133, 134 and 135 respectively.
Meanwhile, China which was ranked a joint 72 with India in 2007, slided a step down to occupy a place above its neighbour this year.
Among other Asian countries, Russia is placed still lower on 145, while Sri Lanka occupies the 96th position and Maldives is ranked 90.
The least corrupt country in the region is the nascent democracy Bhutan, which has been placed at the 41st spot by the non-government organisation tracking prevalence of corruption worldwide.
Denmark, Finland, New Zealand, Singapore and Sweden corner the top five spots retaining positions as the least corrupt nations of the world, while bottom of table is occupied by Myanmar and Somalia.
The United States also retains its position and is ranked 20th, just below Germany, Ireland, Japan and France. Besides, Britain occupies the 13th spot and is just ahead of Hong Kong.
1% rate hike may up housing EMI by 7%
Interest rates are all set to go up by 50-100 basis points, following the RBI’s decision to increase the lending rate on funds to banks by half a percentage point. Punjab National Bank (PNB) CMD K C Chakrabarty said the step taken by RBI will lead to a minimum increase of 50 basis points in interest rate. Some banks might increase the rate even to 75 basis points, he added.
However, a senior official of a private sector bank said increase in the lending rate might go up to one percentage point (100 basis points). As the interest rates are going upward for last quite some time and not likely to come down in the near future due to inflationary pressure , many banks will increase the rates by one percentage point from July 1, 2008.
CMD of Union Bank MV Nair said the present round of increase in the policy rates will force them to raise their prime lending rates by 50 basis points to 13.25% from the present 12.75%.
He said the present tight money policy pursued by RBI to contain inflation will affect more those banks which normally borrow in the overnight money market to meet their lending requirements. Because of rise in the repo rate by 50 basis points to 8.50%, the interest rates on short term funds has gone up immediately.
In fact, many banks had not increased their lending rates, when RBI had increased its repo rate any cash reserve ratio in April.
However, a senior official of a private sector bank said increase in the lending rate might go up to one percentage point (100 basis points). As the interest rates are going upward for last quite some time and not likely to come down in the near future due to inflationary pressure , many banks will increase the rates by one percentage point from July 1, 2008.
CMD of Union Bank MV Nair said the present round of increase in the policy rates will force them to raise their prime lending rates by 50 basis points to 13.25% from the present 12.75%.
He said the present tight money policy pursued by RBI to contain inflation will affect more those banks which normally borrow in the overnight money market to meet their lending requirements. Because of rise in the repo rate by 50 basis points to 8.50%, the interest rates on short term funds has gone up immediately.
In fact, many banks had not increased their lending rates, when RBI had increased its repo rate any cash reserve ratio in April.
Oil price to hit $150-170 in coming months: OPEC
The president of OPEC, Algerian Energy Minister Chakib Khelil, predicted on Thursday that oil prices would rise to $150-170 a barrel during the northern hemisphere summer. helil insisted on Tuesday that oil producers saw no need to raise supply, blaming high prices on factors outside their control such as US pressure on Iran and the weak US dollar.
Speaking after talks with European Union nations, Khelil said the cartel of oil states believes it is pumping enough oil to supply current demand and has stocks and extra capacity to spare.
Khelil said prices in the next few weeks depend largely on how the US deals with Iran and the strength of the US dollar.
The US, supported by the European Union, wants Iran to permanently halt uranium enrichment, a technology that can give Iran the capacity to produce materials for a nuclear bomb if it wanted. Iran denies that, saying it only wants to produce energy.
"I think the market is probably waiting to see how the dollar is going to evolve in July, how the geopolitical situation is going to evolve with the threats made on Iran," Khelil said.
"I don’t think OPEC can do much about the geopolitics," he said. "I think some other people have to do something about that because if you have threats in areas that are producing areas or potentially producing areas, then of course the market will react to it."
The president of the Organisation of the Petroleum Exporting Countries, or OPEC, - based mostly in the Gulf region - could only handle one factor behind high prices: making more oil available.
"I think we are doing that and we think we are doing that very well," he said. "All you need to do is to look at the data to be convinced that the market is well supplied in oil and that we have enough surplus capacity and that we have enough stocks in the market."
The 13 OPEC members have for years gathered regularly to establish production quotas. They control some 40 per cent of world oil output. Despite the current surge in oil prices and growing global demand, they have refused as a group to boost production.
However, Saudi Arabia, the world’s largest oil producer, has said it would add 200,000 barrels per day in July to a 300,000 barrel per day production increase it first announced in May, raising total daily output to 9.7 million barrels.
OPEC members include: Algeria, Angola, Ecuador, Iran, Iraq, Libya, Nigeria, Saudi Arabia, Venezuela, Kuwait, Qatar and the United Arab Emirates.
Inflation India's biggest challenge, says FM
Finance Minister P Chidambaram considers inflation the country’s biggest challenge today and regards becoming an open market as the way forward. Expressing concern at "the relentless rise" of crude oil, commodity and food prices, he put partial blame for the rising food prices on the "foolish" diversion of food to fuel. But he did not name the US, where food crops like corn are used for making ethanol.
Speaking to a private news channel on Sunday night, the finance minister said, "Food prices have also been on the rise thanks to foolish diversion of food to fuel".
Chidambaram also did not think that recent acts of terrorist violence would affect the investment climate in India.
"Please remember, terrorist violence has affected bigger cities like London, Madrid, Tokyo, New York," he told the show host Erin Burnett discussing India’s economic challenges.
"If terrorist violence, terrorist action affects any city in India, it concerns all of us but that does not mean that investment has been jeopardised or is in peril," Chidambaram said. "India’s biggest challenge now is inflation."
India is building thousands of kilometres of roads, power plants, refineries and sea ports, he said referring to investment in infrastructure. "But surely the way forward is to become an open market."
Indian Commerce and Industry Minister Kamal Nath, too, viewed infrastructure as "also a big challenge for us to keep pace with our growth."
Infrastructure is just not roads, ports and airports, but also rural roads, which connect villages, drinking water, health and access to medical facilities.
Envisaging large investment in infrastructure over the next five years, he said: "It is happening. We have to have huge investments in energy sector, ports. So that’s all happening, that’s on the anvil."
Asked how long controls on foreign investment would stay, Kamal Nath noted that retail is one of the very few sectors which are not open. "Rest are all absolutely open and we are taking in investments."
Obviously because of liberalisation, foreign direct investment (FDI) had grown from $2.2 billion four years ago to 25 billion this year, he said.
Asked if India could remain self-sufficient in food in view of its growing population, Kamal Nath said: "We have been self-sufficient except in edible oil and lentils, which are imported. And unless we have a monsoon failure, we don’t see a problem even with these growing numbers."
Comparing India and China, the minister said: "We call ourselves the fastest growing free market economy. And there are differences in governance too." And while India’s growth story is domestic market-driven, China’s growth story is export market-driven.
"But China has its own genius, we have our own genius," Kamal Nath said noting the two countries have good relations even as they compete with each other
Anil Ambani eyes coal-to-fuel block -paper
India’s Anil Dhirubhai Ambani Group (ADAG) is looking to bid for mines that will be used to convert coal to liquid fuel, the Mint newspaper reported on Tuesday, citing an unnamed group official.The group has short listed an Australian firm and an American company as technology partners and could bid for three coal-to-liquid blocks in Orissa, the newspaper said.
Group spokesman Venkatesh Somayaji declined comment on the report.The newspaper said the move could open another front in an ongoing battle between Anil Ambani and his elder brother Mukesh, whose energy group Reliance Industries Ltd, was also in the fray for the blocks.
Reliance Industries had this month claimed it had a right of first refusal for Reliance Communications, controlled by Anil, after the mobile operator began exclusive talks with South Africa’s MTN Group to create an emerging market telco that would rank in the global top 10.
The estranged brothers have sparred since they reached a settlement in 2005 that divided the Reliance business empire between the two. ADAG has interests in telecoms, power, construction, financial services and entertainment.Record crude oil prices have kicked up interest in proven technologies such as coal-to-liquid.
India says Reliance to pump natural gas by September
India’s Reliance Industries Ltd will start pumping 25 million standard cubic metres a day (mmscmd) of natural gas from its D-6 field in the Krishna Godavari basin by September, the government said.This would help fertiliser plants switch to gas from naphtha and fuel oil, boost power generation, and increase supplies to households, the oil ministry said in a statement on Wednesday.
Output from the deep-sea field in the Bay of Bengal is expected to rise to 40 mmscmd by March 2009, it said.
The government said companies that discover gas in India under the New Exploration Licencing Policy must accord priority to urea plants, LPG plants, power plants and city gas distribution projects in that order.
"The sale would be on the basis of formula for determining the price as approved by the government," it said.
Twenty-two natural gas-based urea plants, which are using naphtha and fuel oil as natural gas was not available, would benefit from the decision, the statement said.
The government said 3 mmscmd of Reliance’s gas would be supplied to existing gas-based LPG plants, while 18 mmscmd would be supplied to power plants which were idle, underutilised or due to be commissioned this fiscal year.
Idea Cellular to Buy Spice Communications to Compete With Bharti Airtel
Idea Cellular Ltd. the fastest growing of India’s five biggest mobile-phone carriers, offered 32.4 billion rupees ($757 million) for control of Spice Communications Ltd. to increase subscribers by a sixth.
Idea, owned by billionaire Chairman Kumar Mangalam Birla, agreed to buy a 41 percent stake from Spice Group for 77.30 rupees a share and make an open offer for a further 20 percent at a price that’s 41 percent higher than Spice’s close yesterday. Idea, whose chairman also runs cement and aluminum operations, will sell a 15 percent stake to Malaysia’s TM International Bhd. after the takeover. TM owns 39 percent of Spice.
Idea will add about 4.5 million customers, closing in on Bharat Sanchar Nigam Ltd., India’s fourth-largest carrier. India is projected by the telecom ministry to double its mobile-phone subscribers to 500 million in two years, after having surpassed the U.S. as the second-biggest market this year.
``By taking over Spice they enhance their position and secondly, they become a dominant player’’ in India, said Choo Swee Kee, who counts TM International shares among the $202 million he manages at TA Asset Management Bhd. in Kuala Lumpur. ``For TM International, to hold a smaller stake in a bigger ocean is better than to hold a larger stake in a pond.’’
Idea this year has been adding customers faster than larger rivals Bharti Airtel Ltd. and Vodafone Group Plc’s Indian unit, according to data from the Telecom Regulatory Authority of India. The combined entity will have about 30 million subscribers in the market of 269 million users. Bharat Sanchar had 41 million users in April, while Bharti, the nation’s largest operator, had more than 64 million subscribers.
Shares Surge
Spice surged 32 percent in Mumbai to close at a record 72.35 rupees. Idea climbed 2.8 percent to 101.90 rupees, its biggest gain since June 12. India’s benchmark Sensitive Index rose 0.8 percent.
Idea shares have dropped 27 percent this year compared with a 22 percent decline in the Bharti stock and the benchmark index’s 30 percent fall.
After the takeover, Idea will sell 464.7 million shares of the combined company at 156.96 rupees apiece to TM, Malaysia’s second-largest wireless carrier, the New Delhi-based Idea said.
``India is all about scale. The merger will result in scale being achieved, so it’s very positive for us,’’ Yusof Annuar Yaacob, chief financial officer at TM, said in a phone interview. ``A merger where we’ll end up having a stake in Idea is better than having 39 percent’’ of a smaller company, he said.
TM, which offers wireless services to 40 million customers in 10 Asian markets including Indonesia and Bangladesh, will gain a stake in an operator with licenses to sell services nationwide.
Yusof said TM will spend about $2 billion to get as much as a 19 percent stake in the merged entity and added he would fund it through debt.
Expansion Plans
Idea expects to start wireless services in Tamil Nadu, Bihar, and Mumbai, the country’s financial hub, by August, Birla told reporters in Mumbai today. The carrier plans to spend as much as 100 billion rupees in two years to expand services and complete the takeover in six months, he said.
The Birla family, which is one of India’s oldest business families, runs companies including Hindalco Industries Ltd., India’s largest producer of aluminum and Grasim Industries Ltd., the South Asian nation’s third-largest cement producer.
``We have already moved from being the sixth biggest to the fifth-largest player in the telecom business. Our objective is to build on that position of strength and move aggressively with our growth plans,’’ Birla said.
Mittal buys third major property in London's priciest street
NRI steel tycoon Lakshmi Mittal has bought his third major property for 70 million pounds in Kensington Palace Gardens, London’s most expensive street. ( Watch )
Mittal, whose fortune is estimated at 27 billion pounds, already owns two large homes in Kensington Palace Gardens where Princess Diana spent her last years.
The latest purchase of the former embassy of the Philippines from Hedge fund tycoon Noam Gottesman came a month after Mittal bought Britain’s most expensive house for 117 million pounds on the street nicknamed "Billionaire’s Row", ostensibly for his son Aditya and his family. The 70 million pounds price tag for Mittal’s latest property is all the more remarkable as the former Philippine Embassy is in need of modernisation, the Evening Standard said. The 16,250 square feet home is also not the largest in the road but it looks on to Kensington Palace. 58-year-old Mittal, Britain’s richest man, himself lives in a home in Kensington Palace Gardens which he bought for 57 million pounds four years ago and is three times-bigger than his latest acquisition.
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