Major News Today

Domestic Funds net buyers Rs.659 crs (P)

Provisional figures for the day :

Gross buyers Rs.1318.90 crs

Gross sellers Rs.659.75 crs

Net buyers Rs.659.15 crs
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Domestic Funds net sellers Rs.199 crs

Gross buyers Rs.670.00 crs

Gross sellers Rs.869.00 crs

Net sellers Rs.199.00 crs

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European markets react...

Money market rates tumbled after the European Central Bank injected an unprecedented $500 billion into the banking system as part of a global effort to ease gridlock in the credit market.

The decline is the first sign attempts by policy makers to revive interbank lending are succeeding. Central banks, led by the Federal Reserve, are seeking to restore confidence to money markets after the collapse of the U.S. subprime-mortgage market. The ECB loaned a greater-than-anticipated 348.6 billion euros ($501.5 billion) for two weeks at 4.21 percent today.

This has kept the European markets higher........
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IFCI - Outcome of CoD Meeting

IFCI Ltd has informed that the Committee of Directors (CoD) [constituted for the purpose of conversion of Zero Coupons Optionally Convertible Debentures (ZCOCDs) held by Public Sector Banks and Financial Institutions into Equity shares] at its meeting held on December 17, 2007 has decided to issue 12,37,37,735 nos (Twelve crores, thirty seven lacs, thirty seven thousand, seven hundred and thirty five only) of Equity Shares to the Public Sector Banks and Financial Institutions @ of Rs 107/- per share (including premium of Rs 97/- per share) upon conversion of ZCOCDs of Rs 1323.99 crores.

Sterlite-MS not yet winner for IFCI stake sale: Srcs

Sterlite - Morgan Stanley is only the highest bidder.

Yesterday, late evening the board decided to invite the highest bidder, which is Sterlite and Morgan Stanley consortium for negotiations for the strategic stake of 26%. Sources say that the negotiations went on till early morning 5 o’clock and is expected to resume by 12 0’clock post noon.

The bone of contention is the price at which Morgan Stanley and Sterlite have expressed the intention to buy that stake. We understand that the other two bidders, which are Cargill Finance and Shinsei, had bids of less than Rs 85 per share. It was only Sterlite and Morgan Stanley, which have a bid in the range of Rs 90-100. If you put that into perspective, the average price for last two weeks comes to nearly Rs 107-108 per share.

Technically, the board cannot offer the stake to the consortium because the financial institutions who are converting the debt into equity will be paying that amount or the debt will be converted at the rate of Rs 107-108 per share.

So, it is important that the consortium raises its bid or is given an opportunity to raise the bid to the level of Rs 107-108, so that it matches the base price as per SEBI pricing formula.

According to Mangat, the negotiations are still on between Sterlite Morgan Stanley consortium and IFCI board. It is expected that by post 4 o’clock, some kind of a decision is expected and there might be some announcement. But the formal announcement is likely to come tomorrow when everything happens. It is going on as per scheduled.

There was no cut off date at all in the entire process and IFCI made it very clear that the pricing would be based on SEBI formula, which is six months average or two weeks average whichever is higher. Towards the end of November, when IFCI invited financial bids, the stock has started rallying from around Rs 90-113-114. So, it means that the average price for the last two weeks have gone up to Rs 107-108 per share. That is the reason why the bids are little lower than the floor price because the average for the two weeks is higher than the bid that Sterlite has put.

But the relevant date for this would be December 17th, the day they are using to convert the debt of nearly 1,300 crore, which they owed to the banks and financial institutions, to equity. So that date will remain as December 17th and you have to calculate the average price going backwards for last two weeks to get the base price.