Global financial crisis may be more severe, prolonged: PM

Prime Minister, Dr Manmohan Singh feels that the current financial crisis may be more severe and prolonged. The crisis is bound to hit the Indian economy, he said, adding that the government will take all the necessary fiscal and monetary steps to protect growth. He is confident that the Indian financial system will be stable and will function well.

Export growth slows to 10% in September

Global economic slowdown has had its impact on India's export growth, which slowed to 10.4 per cent in September to $13.74 billion. In August, the country's outward shipments had soured 26.9 per cent. Imports in September jumped 43.3 per cent to $24.38 billion mainly on account of oil imports costing more.

Unitech sells 60% in telecom for Rs 6,120 cr

The great rip-off story in the telecom sector continues. Unitech has divested 60% stake in its telecom arm to Norwegian company Telenor for Rs 6,120 crore. This is nearly four times the Rs 1,658 crore it paid for a 22-circle 2G licence earlier this year. Since the company has not even started to put in place infrastructure for providing telecom services, this consideration is clearly an arbitrage on the licence. Had the spectrum for 2G services been auctioned, this huge upside would have accrued to the government. Last month Swan Telecom had similarly divested stake at a large premium. The telecom minister’s defence of these windfall profits borders on the absurd. He says the government will earn more money from these operators in the form of revenue share. And that he would not have been able to impose a revenue share had spectrum been auctioned. The rush for the limited licences despite the revenue share terms had made it obvious that the 2G licence, with spectrum bundled along with it, was going dirt cheap. And that is precisely why everyone jumped onto the telecom bandwagon, a capital intensive and very competitive business. Even if we buy minister Raja’s argument, what was the harm in conducting the auction? People were queuing up for a pan-India licence at Rs 1,651 crore, the auction-discovered price for fourth telecom operator in 2001. The same could have become the base price in an auction. The government would not have lost a penny. Also, if the revenue share regime is incompatible with auction why does 3G policy demand a revenue-share even when spectrum is to be auctioned? Would Telenor, which now becomes a majority owner in the venture, not pay the revenue share? For Telenor, the acquisition is as good as winning the licence in an auction. What have Unitech and Swan Telecom done to earn crores by diluting their stake in their telecom ventures that don’t even have a tower yet? The finance minister is on record in Parliament that he expects the revenue from 3G auction to help lower the fiscal deficit. The public would like to know, in such times of extreme fiscal slippage, why the government is silent on this huge loss to the exchequer.

Top Gainers Vs Top Losers

BSE-30! 10,373 (+585) Top Gainers Nov 3, 2008 3:32:00 PM REL. INFRA 548.10 20.00% JAIPRAKASH ASSO. 84.50 17.61% DLF LIMITED 254.00 15.32% RANBAXY 193.75 14.34% SBI 1,265.00 14.02% NSE-50 3,057 (+172) Top Gainers Nov 3, 2008 3:34:56 PM REL. INFRA 550.00 20.22% DLF LIMITED 254.00 15.45% IDEA CELLULAR 49.00 15.16% RANBAXY 193.00 14.37% SBI 1,264.60 13.96% Top Losers SATYAM 300.05 -1.56% INFOSYS 1,367.00 -1.06% Top Losers NALCO 148.25 -6.94% HERO HONDA 729.25 -2.17% SUN PHARMA 1,100.00 -1.63% SATYAM 300.10 -1.49% INFOSYS 1,370.00 -1.36%

RBI cuts repo, CRR, SLR

The Reserve Bank of India, or RBI, has cut the repo rate by 50 basis points to 7.5% with effect November 3. It has also cut CRR, or cash reserve ratio, by 100 bps in two stages to 5.5%. The first stage of CRR cut would be with effect October 25 and the second stage would come into effect November 8. The 100-bps CRR cut will infuse Rs 40,000 crore into the system, the RBI said. The central bank will also cut SLR to 24% by 100 bps from November 8 onwards. It has allowed refinance to banks up to 1% of NDTL, or net demand and time liabilities, for 90 days. In a statement on its website, the RBI said, “The Reserve Bank has reviewed the current and evolving macroeconomic situation and liquidity conditions in the global and domestic financial markets.” The release stated, “On the growth front, it is important to ensure that credit requirements for productive purposes are adequately met so as to support the growth momentum of the economy. Domestic financial markets have been functioning normally. Prudent regulatory surveillance and effective supervision have ensured that our financial sector has been and continues to be robust. However, the global financial turmoil has had knock-on effects on our financial markets; this has reinforced the importance of focusing on preserving financial stability.” The Reserve Bank, the release said, will continue to closely monitor the developments in the global and domestic financial markets and will take swift and effective action as appropriate.The move comes close on the heels of the US Federal Reserve cutting its benchmark interest rates by 0.5% to 1% on October 30. Experts anticipated similar rate cuts across the globe. The next day, Bank of Japan cut interest rates from 0.5% to 0.3%.

FIIs pull out Rs 15347.30 crore in October 2008

Foreign institutional investors (FIIs) sold shares worth a net Rs 1074.90 crore on Wednesday, 29 October 2008, as against their outflow of Rs 1010.90 crore on Monday, 27 October 2008. FII outflow of Rs 1074.90 crore on 29 October 2008 was a result of gross purchases Rs 2685.90 crore and gross sales Rs 3760.80 crore. The BSE Sensex gained 36.43 points or 0.4% to 9.044.51 on that day. FII outflow in October 2008 totaled Rs 15,347.30 crore (till 29 October 2008). FII outflow reached Rs 52,139 crore in calendar 2008, so far, till 29 October 2008. There are a total of 1541 foreign funds registered with the Securities & Exchange Board of India (SEBI).

Reliance MF withdraws SIP facility in Gold ETF

Reliance Mutual Fund has decided to withdraw the additional facility of Systematic Investment Plan (SIP) in Reliance Gold Exchange Traded Fund with immediate effect i.e. from 31 October 2008. Earlier, Reliance Gold ETF had introduced SIP facility with effect from 24 October 2008. Reliance Gold Exchange Traded Fund is an open ended gold ETF with investment objective of providing returns that closely correspond to returns provided by price of gold through investment in physical gold (and gold related securities as permitted by SEBI from time to time.). However the performance of the scheme may differ from that of the domestic prices of gold due to expenses and or other related factors.