Pvt banks to reduce rates within fortnight

Following a meeting with finance secretary Arun Ramanathan, private banks today indicated that they will cut lending and deposit rates within next 15 days. Federal Bank's Managing Director M Venugopalan said his bank will consider lowering by 50 bps. ICICI Bank's Deputy Managing Director Chanda Kochhar said: "Both deposit and lending rates have to come down in the interest of the country."

India to raise annual spectrum fees for telcos

India will charge a fee of 1-2 per cent of mobile operators' revenue for using additional airwaves and will also levy a one-time charge fo r spectrum beyond 6.2 MHz, a telecoms ministry spokesman said on Wednesday. The decision will affect all leading telecoms operators, including No 1 player Bharti Airtel and rivals Reliance Communications and Idea Cellular. Akshay Rout, additional director general of media and communications, said firms would be charged 1 per cent of their revenue for spectrum between 4.4 and 8 MHz, and 2 per cent for up to 10 MHz spectrum. "The modalities, including the timeline, will be decided by the telecom commission through formal channel when they meet on Monday," Rout said. The decision was taken after the telecoms minister, Andimuthu Raja, met the prime minister and finance minister on Tuesday, he said. It is in line with a recommendation from the telecoms regulator made earlier this year. At 0725 GMT, shares in Bharti were down 3 per cent, Reliance Communications had fallen 6.6 per cent and Idea Cellular had lost 5.9 per cent in a weak Mumbai market

India to raise annual spectrum fees for telcos

India will charge a fee of 1-2 per cent of mobile operators' revenue for using additional airwaves and will also levy a one-time charge fo r spectrum beyond 6.2 MHz, a telecoms ministry spokesman said on Wednesday. The decision will affect all leading telecoms operators, including No 1 player Bharti Airtel and rivals Reliance Communications and Idea Cellular. Akshay Rout, additional director general of media and communications, said firms would be charged 1 per cent of their revenue for spectrum between 4.4 and 8 MHz, and 2 per cent for up to 10 MHz spectrum. "The modalities, including the timeline, will be decided by the telecom commission through formal channel when they meet on Monday," Rout said. The decision was taken after the telecoms minister, Andimuthu Raja, met the prime minister and finance minister on Tuesday, he said. It is in line with a recommendation from the telecoms regulator made earlier this year. At 0725 GMT, shares in Bharti were down 3 per cent, Reliance Communications had fallen 6.6 per cent and Idea Cellular had lost 5.9 per cent in a weak Mumbai market

Market Tumbles

Bears tightened their grip in late trade pulling the market sharply lower. The BSE Sensex provisionally declined 571.15 points or 5.37%, with index heavyweight Reliance Industries (RIL) plunging more than 13% on brokerage downgrade. The S&P CNX Nifty fell below the psychological 3,000 mark. Realty, banking and metal stocks dropped on profit taking after recent strong gains.Fall in European stocks and lower US index futures weighed on the domestic bourses. Earlier, firm Asian markets had triggered an intra-day recovery on the domestic bourses in what was a volatile trading session.Trading in US futures suggested the Dow would fall 147 points at the opening bell, as the focus shifted to the weak economy after Barack Obama's decisive win in the US presidential election. European markets which opened after the Indian market, fell as the spotlight moved back to the troubled economy after the US presidential election. Key benchmark indices in France, Europe and UK were down by between 1.92% to 3.25%.But Asian markets, which opened before the Indian market, surged boosted end of the uncertainty about who will lead the US economy in the midst of great financial peril. Key benchmark indices in China, Japan, Singapore, Hong Kong, and South Korea were up by between 1.76% to 4.46%. But the Taiwan Weighted fell 0.29%. Democrat Barack Obama captured the White House today, defeating Republican John McCain to make history as the first black to be elected as the US president. As per the provisional closing, the BSE 30-share Sensex was down 571.15 points or 5.37% to 10,059.97. The market had surged earlier in the day boosted by rally in Asian stocks, Obama’s election as the next US president and expectations that a cut in interest rates by state-run banks would result in lower borrowing costs for the corporates. The early rally was also triggered by a sentiment by the Commerce and Industry Minister Kamal Nath after trading hours on Tuesday, 3 November 2008, that the government will further ease foreign investment rules, including those relating to defence production. The Sensex surged 314.29 points at day’s high of 10,945.41 in early trade. The index slumped 579.60 points at the day's low of 10,051.52 in late trade.The S&P CNX Nifty was down 165.35 points or 5.26% to 2,976.75 as per the provisional figures.BSE clocked a turnover of Rs 4,973 crore today as compared to a turnover of Rs 4,431.22 on 4 November 2008.The BSE Mid-Cap index was down 1.95% at 3,378.85 and the BSE Small-Cap index was down 1.98% at 3,955.20. Both the indices outperformed the Sensex. The market breadth turned weak in late trade in contrast to a strong breadth earlier in the day. On BSE, 993 shares advanced as compared to 1,571 that declined. 70 shares remained unchanged.India’s largest private sector company by market capitalization and oil refiner Reliance Industries (RIL) slumped 13.91% to Rs 1,252.80 after ABN Amro recommended a 'sell' on the stock and cut its target price by whopping 38% to Rs 1,150 from Rs 1,850 earlier. The scrip was the biggest loser from the Sensex pack. Jaiprakash Associates (down 10.03% to Rs 80.50), Grasim Industries (down 7.32% to Rs 1,049), Tata Motors (down 7.3% to Rs 179.70), and ACC (down 7.39% to Rs 469) were the major losers from Sensex pack.Telecom stocks fell on concerns that a government move to charge more for radio spectrum may impact their earnings. India’s largest telecom services provider by sales Bharti Airtel fell 4.64%.India's second largest telecom services provider by sales, Reliance Communication slipped 10.06% after Morgan Stanley cut price estimate on the stock by 45% to Rs 280.As per reports, the government plans to increase fees telecom firms pay for using additional spectrum by up to 2% of the firms' revenue, and would also levy a one-time charge for granting additional spectrum. As per reports public sector banks are likely to cut deposit and lending rates by 50 to 75 basis points within one week, after the Reserve Bank of India (RBI) on Saturday, 1 November 2008, unexpectedly cut its main short-term lending rate viz. the repo rate to ease a growing cash squeeze, spur faltering economic growth and fend off damage from the global financial crisis. Metal stocks declined after recent sharp fall in metal prices on global recession worries. Hindalco Industries, Hiindustan Zinc, Sterlite Industries, Steel Authority of India fell by between 3.66% to 12.76%. Tata Steel, the world's sixth largest steel maker, was down 10.05% after ArcelorMittal on reported quarterly operating profit and sales below expectations. IT stocks were mixed amid strong rupee and on worries the US outsourcing business will be curtailed after Obama won the US presidential election. India's third largest IT exporter by sales Satyam Computer Services rose 0.27% even as American depository receipt (ADR) fell 0.83% overnight.India's fourth largest IT exporter by sales Wipro rose 2.72% as ADR jumped 5.25%. India's second largest IT exporter by sales Infosys fell 0.91%, even as ADR rose 4.84%. India's largest IT exporter by sales Tata Consultancy Services slipped 0.5% off day’s high of Rs 548.90. Obama has strong reservations on outsourcing from the US. He had made many statements during his election speeches that he would discourage outsourcing from the US when he comes into power. The rupee strengthened 1.13% to 47.67. A strong rupee affects the IT companies as they earn most of their revenues in dollar terms. Bank stocks fell following reports private sector banks are expected to cut their lending and deposit rates in the next 15 days and will support credit lines to finance companies and mutual funds. India’s largest commercial bank State Bank of India was down 3.59% after its chairman O P Bhatt said on 4 November 2008 the bank was likely to cut interest rates by up to 50 basis points.Bank of India gained 0.04% on reports it has cut its prime lending rate by 75 basis points to 13.25% with effect from Thursday, 6 November 2008. But Indian Bank fell 3,12% after early gains after the bank said yesterday it will consider cutting its lending and deposit rates by 50-75 basis points this week.State Bank of Bikaner & Jaipur was flat at Rs 2651.70 after it cut its benchmark prime lending rate to 13.25% from 14%, effective 5 November 2008.State Bank of Travancore rose 5% after bank fixed 20 December 2008 as the record date for 10 for 1 stock split.India’s largest private sector bank by net profit ICICI Bank fell 1.62% even as the American depository receipt (ADR) spurted 7.28% overnight. ICICI Bank's chief executive K.V. Kamath said on 3 November 2008, the bank will review interest rates in the next few days.India’s second largest private sector bank by net profit HDFC Bank slipped 1.46%, even as ADR jumped 7.63% on Tuesday.India’s largest home loan lender by operating income HDFC fell 8.63%. As per reports, public sector banks are likely to cut deposit and lending rates by 50 to 75 basis points within one week. The Reserve Bank of India (RBI) on Saturday, 1 November 2008, unexpectedly cut its main short-term lending rate viz. the repo rate to ease a growing cash squeeze, spur faltering economic growth and fend off damage from the global financial crisis. Most realty stocks plunged in late trade from their gains earlier in the day despite hopes lower interest rates will spur demand for residential properties. Realty majors, Unitech, Anant Raj Industries, Parsvnath Developers, DLF slipped by between 2.6% to 11.59%. Indiabulls Real Estate rose 5.15%.

SBI to review interest rates this week

Country's largest lender State Bank of India today said it would review interest rates during the week. "It (interest rates cut) is on ou r agenda," SBI Chairman O P Bhatt told reporters here ahead of a meeting between the Finance Minister P Chidambaram and PSU bankers. A special committee of banks will meet to review the interest rates situation after today's meeting with the Finance Minister, he said. Besides, he pointed out that interest rates have peaked and are expected to moderate in coming days. Few banks, including leading PSU lender Punjab National Bank, have already lowered their benchmark prime lending rate (BPLR) following a series of monetary measures taken by Reserve Bank.

Promoters may rush to hike stake in holding cos

May be a bit early to conclude on the impact of the market regulator’s recent move of allowing promoters to hike their stake up to 75% thr ough the creeping acquisition route. But a section of market watchers are expecting an immediate fallout of the new rule. They feel holding companies of various corporate houses, available at a steep discount to their net asset value, are likely to see a flurry of activity in the coming days. With share prices of these holding firms having been beaten down quite a bit, cash-rich promoters would find it cheaper to increase stakes in their companies through the holding companies’ route. In an important amendment to the creeping acquisition rules last week, Sebi allowed promoters to increase their holdings in companies up to 75% through the creeping acquisition route provided that the acquisition is done through open market purchases and not through bulk/block deal or through preferential allotment. Earlier, this route was not available for promoters whose holding reached 55%. Creeping acquisition refers to the process wherein promoters can increase their stake each year by 5%. Large corporate houses, including the Tatas, Birlas and Godrejs have listed holding companies that in turn hold sizeable stake in the various group companies. Holding companies typically are formed only for the purpose of owning shares of other group companies. As such, these entities are not involved in the actual production of goods or services. “For cash-rich promoters, this is the ideal time to raise their stake in holding companies,” says Networth Stock Broking head of sales Deepak Mehta. “Firstly, prices are much below the fair value in lots of cases and secondly, the holding companies are quoting at a substantial discount. The only issue is how many promoters have that kind of cash,” he adds. For instance, Tata Investment Corporation holds sizeable stake in Tata entities like Tata Chemicals, Tata Motors, Tata Power and Tata Steel. As per Monday’s closing price, the market capitalisation of Tata Investment stood at Rs 967 crore. Meanwhile, the value of its total investments in Tata group companies is estimated to be around Rs 1,200 crore. According to KRIS director Arun Kejriwal, the regulator’s move has given promoters “an excellent opportunity” to up their stake in holding companies that “typically trade at a discount to their net asset values”. The value of these entities do not appreciate much and the management gains only by way of dividends, he adds. “There is a lot of logic in this approach,” feels Mr Kejriwal. Meanwhile, Mcdowell Holdings has a stake in companies like United Breweries and UB Engineering. While the M-cap of Mcdowell Holdings is less than Rs 66 crore, its investment in UB group companies is pegged around Rs 165 crore. Bajaj Holdings is the holding company of Bajaj group and has a market capitalisation of around Rs 3,445 crore. The value of its investment, however, in Bajaj entities is much higher than its own M-cap.

Socks in Europe, Asia Rise on Earnings; U.S. Futures Advance

Stocks advanced in Europe and Asia, sending the MSCI World Index to its sixth straight gain, after results from Clariant AG and Marks & Spencer Group Plc eased concern about profit growth, while money-market interest rates declined. U.S. index futures rose. Clariant and Marks & Spencer rallied more than 9 percent after the companies reported earnings that topped analysts' estimates. Societe Generale SA gained 8 percent. Mizuho Financial Group Inc. climbed 7.1 percent as lending costs tumbled the most in almost a decade in Japan. The MSCI World Index added 1.4 percent to 975.15 at 12:24 p.m. in London. The gauge for 23 developed countries rose six straight days for the first time since July, rallying 17 percent from a five-year low on Oct. 27. Europe's Dow Jones Stoxx 600 Index advanced for a sixth day, climbing 2.7 percent, the longest stretch of gains since August 2007, when the credit crisis got under way. ``We have had some earnings at the top end of expectations which has helped sentiment,'' said Richard Hunter, head of U.K. equities at Hargreaves Lansdown Stockbrokers, a unit of Hargreaves Lansdown Plc, which has $21.5 billion in assets under management. ``Government intervention across the world is now starting to help and money-market rates are going in the right direction.'' Shares in Asia rose, led by financial companies, as Australia's central bank cut interest rates more than economists expected. Japan's Nikkei 225 Stock Average gained 6.3 percent as trading resumed following yesterday's holiday. Mitsubishi UFJ Financial Group Inc. and Westpac Banking Corp. gained.