Sensex ends moderately higher in volatile trade

The BSE benchmark Sensex on Wednesday ended higher by 30 points after a volatile trade as investors indulged in adjusting their portfolios on easing political concerns and dropping crude oil prices.

The 30-share index of the Bombay Stock Exchange closed with a moderate gain of 30.30 points at 18,469.95. During the day, the barometer touched a high of 18,583.30 points and a low of 18,303.80 points.

In similar fashion, the broad-based National Stock Exchange index Nifty closed up by 10.20 points at 5,531 points.

A better trend in the Asian region as cheer from a drop in crude oil prices also supported the market to some extent.

Crude oil prices fell from 29—month high in global markets, eroding inflationary concerns and reducing fears of another interest rate hike.

The maximum support to the gauge came in from stocks in realty, consumer durables, auto and power sectors, while weak trend in healthcare and IT sectors on profit selling mainly capped the gains.

Market leader Reliance Industries gaining nearly 1 per cent also supported the market.

The realty sector index gained the most by rising 1.74 per cent to 2,106.44 followed by consumer durable index by 0.88 per cent to 5,791.41. The auto index rose by 0.72 per cent to 8,854.54 and power index by 0.48 per cent to 2,597.79.

As investors indulged in adjusting their portfolios with low value strong stocks, smallcap index rose by 0.82 per cent to 8,009.65 and midcap index by 0.65 per cent to 6,604.72.

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Rupee appreciates further by 13 paise against dollar

The rupee on Wednesday appreciated by 13 paise against the U.S. currency on sustained dollar selling by exporters.

At the Interbank Foreign Exchange (Forex) market, the local unit closed 13 paise lower at 45.09/10 a dollar. The rupee had gained 25 paise on Tuesday.

Dealers attributed further rise in the rupee to continued dollar selling by exporters and some banks.

Weakness in dollar in European market on Wednesday also helped the rupee rally. The dollar index, gauging of six major currencies, was down by 0.26 per cent.

The rupee opened nearly steady at 45.23/24 a dollar and it immediately touched a low of 45.26 a dollar. However, it recovered later to the day’s high of 45.07 before concluding at 45.09/10 a dollar.

The rupee premium for the forward dollar remained firm on sustained paying pressure from banks and corporates. The benchmark six-month forward dollar premium payable in May closed up at 128-1/2-130-1/2 paise from 127-129 paise on Tuesday.

Far-forward contracts maturing in November also finished higher at 236-1/2-238-1/2 paise from 230-232 paise previously.

The Reserve Bank of India fixed the reference rate for the dollar at Rs. 45.13 and the euro at Rs. 59.32.

The rupee shot up further to Rs. 69.66/68 against the pound sterling from Tuesday’s close of Rs. 70.06/08 and also hardened to Rs. 59.27/29 per euro from Rs. 59.49/51 previously.

It too improved further against the yen to Rs 54.03/05 per 100 yen from its last close of Rs 54.08/10.

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JSW launches open offer at Rs 20.54 a share for 20% in Ispat

MUMBAI: JSW Steel today launched an open offer to buy 20 per cent additional equity in Ispat Industries at Rs 20.54 a share, over three per cent lower than closing price on BSE yesterday.

After the public announcement of open offer, Ispat scrip today ended at Rs 23.60 a piece, 11.32 per cent higher than its previous closing of Rs 21.20m on the Bombay Stock Exchange (BSE).

JSW yesterday announced the Rs 2,157-crore deal to acquire 45 per cent stake in Mittal brothers promoted Ispat Industries.

According to Market regulator SEBI's guidelines, any company buying more than 15 per cent in another firm will have make an offer to buy 20 per cent additional stake.

"Today we have made public announcement to launch open offer at Rs 20.54 a share for Ispat shareholders," JSW Steel's Joint MD and CFO Seshagiri Rao M V S said.

The open offer would cost Rs 1,329.43 crore to the JSW, which post acquisition would be largest domestic steel producer.

Asked when the the open offer would hit the market, Rao said that "JSW has 14 days time to announce the dates of open offer, which is also subject to SEBI approval".

On the other hand, the JSW scrips closed at Rs 1202.90 per piece, down 0.75 per cent.

Enam Securities , who is managing the open offer on behalf of Sajjan Jindal-led company, said in a public announcement that JSW Steel proposes to acquire 64.72 crore shares of Ispat, representing 20 per cent (at a face value of Rs 10 each) of the total shares at a price of Rs 20.54 per share in cash.

The Sajjan Jindal-led company had said on Tuesday that it will buy a 41.29 per cent stake in Ispat through a preferential issue of fresh shares, which will reduce the Ispat promoters' stake to 26 per cent.

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BSE Sensex seen higher; metals watched

The BSE Sensex is expected to climb on Monday, supported by robust foreign fund demand and firmer Asian peers.
Foreign funds have pumped more than USD 21 billion into Indian equities so far in 2010, driving the main stock index nearly 16% higher.

Metals producers such as Sterlite Industries will be in focus after base metal futures rallied in Shanghai buoyed by expectations of more stimulus from the US Federal Reserve.
NMDC will be on the radar after the Economic Times reported China's Sinochem has approached the Indian state-run miner for a joint bid to buy Canada's Potash Corp.
The chairman of NMDC denied any such plan, the paper said.
The MSCI's measure of Asian markets other than Japan was up 0.8% by 0303 GMT, while the Japanese market was closed for a holiday.
The Nifty India stock futures in Singapore were up 0.6%.
Last week the 30-share BSE index logged its first weekly loss in six, but the benchmark that closed at 20,250.26 is only around 1,000 points from a record high.

Stocks to watch
Fortis Healthcare after the hospital chain's controlling owners said they have agreed to buy the healthcare assets of Hong Kong-based Quality HealthCare Asia Ltd for HK$1.52 billion (USD 195 million).
Bharat Forge after the Mint reported the firm's joint venture with Paris-based Alstom SA had emerged as the lowest bidder for the largest order for supply of power generation equipment in India.
Procter & Gamble Hygiene Health Care Ltd after the personal care products maker said it would consider a stock split in its upcoming board meet.
Hindustan Motors Ltd after the company's board proposed to write off the securities premium account which was worth Rs 3.17 crore as of March 31.
State Bank of Travancore after the company said it would raise its base rate to 8 percent from 7.75% effective October 11.

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SBI raises deposit rates by 75 bps; base rate unchanged

MUMBAI: State Bank of India (SBI) has said that it will raise deposit rates by 25-75 basis points with effect from October 1, but the bank has kept the minimum rate of interest on loans unchanged at 7.5 per cent.
“The bank revises upwards the deposit rates by 25-75 bps in various maturities, effective October 1, 2010,” SBI said in a filing to the Bombay Stock Exchange.
The deposit rates of SBI are in the range of 4 per cent to 7.75 per cent. The bank said that it reviewed the base rate — the minimum lending rate below which bank cannot offer loans — at the existing level of 7.5 per cent. Thus, the base rate will contin ue to remain at 7.5 per cent per annum for the present.

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Indian millionaires zoom by 42,800

India added more than 42,800 US dollar millionaires last year, taking the total number in the country to more than 127,000 — and the phenomenon is only going to grow further as high economic growth is sustained.

What’s more, India, China and other Asia-Pacific regional economies are collectively set to outpace developed countries in spawning high net-worth individuals (HNIs), wealth manager Merrill Lynch and consulting firm Capgemini said in a report released on Tuesday.
“Moving forward, China and India will lead the way in the region with economic expansion and HNI growth likely to keep outpacing more developed economies” it said.
The Asia-Pacific Wealth Report 2010 noted that the total amount held in assets by Indian millionaires accounted for more than $477 billion last year, up 53.6 per cent on the year. That is R21.5 lakh crore.
“The increasing confidence by Indian HNIs facilitated by the strength of the underlying economy which grew 6.8 per cent in 2009 has resulted in a surge in HNI wealth in the region,” said Pradeep Dokania, chairman, Merrill Lynch, Wealth Management, India.
Asia-Pacific as a whole outpaced Europe in the amount of wealth on play as the invested/investible corpus totalled $9.7 trillion, compared with Europe’s $9.3 trillion, it added.
“Asia-Pacific’s HNI population matching Europe’s for the first time highlights the region’s growth potential, with China and India at the forefront and Japan remaining an important market,” said Dokania.
The share of real estate dropped in 2009, while fixed-income investments went up. Equities and cash assets remained stable.

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R-Power unveils investment plans of Rs 1.20 lakh crore

Bullish on India’s power sector, Anil Ambani Group company Reliance Power today unveiled its massive expansion plans entailing an investment of a whopping Rs 1,20,000 crore on thermal and hydro projects in the next seven years.

The company plans to pump about Rs 80,000 crore in coal—based power projects of 20,000 MW capacity in the next five years. Another Rs 30,000 crore would be invested to execute hydro power projects.

Reliance Power is also planning to set up gas—based projects in full steam and has plans to add 10,000 MW capacity in the future.

With this, the company’s total generation capacity from all sources of energy would touch 35,000 MW by 2017.

“Reliance Power will have operational capacity of 5,000 MW by 2012 and commission another 20,000 MW over the next three years (by 2015),” ADA Group Chairman Anil Ambani said, addressing the company’s Annual General Meeting here.

The cost of generating one megawatt of electricity from coal is about Rs 4 crore and for hydro is about Rs 6 crore, taking the total investment needed to Rs 1,20,000 crore.

The company has already raised funds to the tune of Rs 50,000 crore for financing its expansion plans.

The company operates two units (2x300 MW) of Rosa thermal power project (1,200 MW) at Shajanpur in Uttar Pradesh.

“Post Supreme Court judgement the development of 10,000 MW of gas—based generation has commenced,” Ambani said.

Construction of the 2,400 MW gas—based plant at Samalkot, Andhra Pradesh, has started and the project outlay is to the tune of Rs 10,000 crore.

Reliance Power has over 2 billion tonnes of domestic coal reserves that can support power generation to the tune of 20,000 MW capacity, Ambani said.

Three coal mines acquired by the company in Indonesia would support up to 10,000 MW electricity generation capacity.

In totality, the captive coal reserves in India and Indonesia are sufficient to support 30,000 MW of coal capacity for 25 years.

Reliance Power CEO J P Chalasani said that the company’s ultra mega power projects of 4,000 MW capacity each at Sasan (Madhya Pradesh) and Krishnapatnam (Andhra Pradesh) are on track.

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Assets under wealth management div to cross Rs 1,000 cr: SBI

State Bank of India (SBI), which forayed into wealth management services earlier this year, aims to bring assets over Rs 1,000 crore under management by March, 2011.

Financial Planning and Advisory Services, the wealth management division of the bank launched this year, is now available in 924 branches through Relationship Managers, a senior SBI official told PTI.

Asset Under Management (AUM) was at Rs 104 crore at the end of June 2010, and is expected to cross Rs 1,000 crore by the end of the current fiscal, the official said.
    
The wealth management division guides customers on meeting their financial goals through a suite of products, including mutual funds, fixed deposits and insurance, the official added.
    
Country's largest lender SBI is aiming at 20 per cent growth this fiscal in net profit, which was at Rs 9,166.05 crore last financial year.
    
"Quarter one was 25 per cent. We can do 20 per cent (this fiscal). That is what we would try to achieve...We will try to maintain this growth as far as possible," SBI Chairman O P Bhatt had said.
    
The bank had reported an over 25 per cent growth in net profit to Rs 2,914.20 crore for the first quarter ended June 2010, despite an increase in bad debts.
    
The rise in net profit was mainly due to a three-year high net interest income and a decline in the cost of deposits and savings.
    
Net interest income rose by 45.35 per cent during Q1, compared to the same quarter a year ago. Growth in net income was 4.30 per cent in June, 2009.
    
In addition, SBI's operating profit zoomed by 66.97 per cent in the first quarter. It had declined 7.28 per cent in the corresponding quarter of the previous year.

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Food inflation dips to 8-month low of 12.92%

New Delhi: Annual food inflation in India dropped sharply to 12.92%, an eight-month low, in the third week of June from 16.9% in the previous week on the back of a high base effect. But, with the week-on-week inflation figures showing marginal uptick of 0.3%, markets and economists expect the central bank to go for a sharp hike in the key policy rates on or before the quarterly monetary policy review that falls on July 28. The yield on government bonds across all maturities closed lower on expectation of hike in the key policy rates.

“The pace of rise in food prices is showing some signs of easing on the back of expectations of a good monsoon. However, if the prices do not drop from the current levels and core inflation eases, there is a possibility of classic wage price upward spiral scenario playing out,” country’s chief statistician Pronab Sen told FE.

On back of a high base effect, the annual inflation in potato prices showed a drop of 40% while price of onion fell by 7% in the week ended June 19. Cereals, vegetables and fruits showed single digit inflation while pulses showed a 31% annual increase in prices.

“Provided the monsoon is good, we are expecting the food price inflation to come down to 5%-6% by the December,” Plan panel member Abhijit sen had told FE in an earlier interview.” The prices of dairy products, which is showing no signs of easing so far, will also move down as a good monsoon brings down fodder costs,” Abhijit Sen had said. The price of milk showed an annual inflation of 15% in the week under consideration.

Although the Met department is projecting above-normal rains in the current year, according to the latest official data there was a 16% deficit in the monsoon rains in month of June. Last year, the worst monsoon rains in more than 30 years had pushed annual food price inflation to a high of 21%. Annual inflation for fuel items dropped to 12.9% from 13.18% in the previous week. But the annual inflation for fuel items will be showing a sharp spike in coming weeks as last week the government has hiked the prices of petrol, diesel, kerosene and cooking gas.

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BK Birla's daughter to be Kesoram vice-chairman

A change is in the wings, though perhaps not right now, for Basant Kumar Birla's Kesoram Industries . Birla, who is 90 and the chairman, says his daughter, Manjushree Khaitan, will manage Kesoram, but under his grandson, Kumar Mangalam Birla.

"Manjushree will look after the company and will be in constant touch with Kumar Mangalam Birla. I would want Kumar Mangalam to be the chairman of the company; Manjushree can be the vice-chairman," said Birla, on the sidelines of the Kesoram annual general meeting.

Last year, a shareholder suggested Khaitan be made vice-chairman. While Birla said he would consider, he was clear that Kumar Mangalam would inherit the company.

"All my companies will go to Kumar Mangalam, but my daughters will get a part of it," he said, when asked whether there was any change in the succession plan. Birla does not plan to retire at present. Though Birla did not make clear today if his statements meant another change in the inheritance of Kesoram, it was a departure from earlier indications. His statements today cleared the position regarding his views on Khaitan's role.

And, she addressed the shareholders for the first time and outlined a vision for the company, the most aggressive road map in recent times. "Kesoram would go beyond Rs 10,000 crore," she said while emphasising the need for a strategic long-term view.

Kesoram ended 2010 with a turnover in excess of Rs 5,000 crore. The board today approved an expansion plan entailing an investment of Rs 1,125 crore.

Birla's will, made in July 2004, said each company of his would be inherited by the person who was in charge of it and overseeing its day-to-day affairs. Under the formula, Manjushree Khaitan and the other daughter, Jayshree Mohta, were to get Kesoram Industries and Jay Shree Tea & Industries, respectively.

However, he later changed it, and said all the major companies Century Textiles, Century Enka and Kesoram Industries would go to Kumar Mangalam Birla.

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Split CFTC approves box-office futures

WASHINGTON — Federal regulators on Monday allowed a new online exchange to proceed to trade future box-office receipts for movies.

A divided Commodity Futures Trading Commission approved the proposed futures contracts for the new Trend Exchange. That means the movie futures trading can proceed; it is expected to begin sometime in the third quarter.

Major Hollywood studios strongly oppose the idea. They say rival studios could sabotage films by betting against them.

In giving its approval, the CFTC said it found that box-office receipts fit the law's definition of a commodity, that the Trend Exchange contracts aren't "readily susceptible" to manipulation, and they provide a way of managing risk.

The agency's vote was 3-2. Two CFTC commissioners, Democrat Bart Chilton and Republican Jill Sommers, voted against approving the contracts for the Trend Exchange.

"Popcorn prediction markets would serve no national public interest" and don't meet the law's requirements on how commodities are defined, Chilton said in a statement.

Chilton said he also was troubled by whether the new futures trading would provide a legitimate way for the movie industry to hedge against risk, since the agency's approval limits the use of the new contracts by movie studios.

Allowing future box-office receipts to be traded like crude oil or pork bellies would give people who finance movies a way to make money even when a film doesn't. It also could be used for speculation.

The first proposed contract for the Trend Exchange is for opening-weekend receipts for "Takers," being released Aug. 20, with Matt Dillon.

"We are pleased that the staff of the CFTC and a majority of the commissioners recognized the legitimate economic risk-management benefits that these products will provide to the entertainment industry," Robert Swagger, CEO of the Trend Exchange, said in a statement.

Trading would be based on the amount of money a movie takes in during its opening weekend. The exchange would set the initial odds for contracts, but those odds would change based on bidding of investors. An investor who buys a contract with longer odds takes on greater risk and the potential to earn more money.

For example, an investor thinks a movie will make at least $75 million in its first weekend. The exchange finds an investor who thinks the movie will fall short of that mark and the two investors enter the contract together. When the movie receipts come in, the one who is correct gets a percentage on top of his investment based on the odds received. The other loses his investment.

The CFTC previously approved the establishment of the Trend Exchange and the Cantor Futures Exchange. The proposed futures contracts, establishing rules for trading, have now gained the agency's approval for the Trend Exchange. For the Cantor exchange, the deadline for approving the contracts is June 28.

Supporters, led by investor groups that put up the money to make films, say the concept would help generate new capital for the movie industry. A tougher economy has made it harder to finance films and trading futures on box-office receipts would help offset risk.

Opponents, led by big Hollywood studios, warn that complex trading brought down the housing market and this idea could do the same to the movie industry.

In Congress, the Senate version of the financial regulatory overhaul would ban futures trading on movie revenues. It's unclear if that ban will survive House-Senate negotiations on the final legislation.

The studios' lobbying group, the Motion Picture Association of America, urged Congress Monday to put the ban in the final bill that will be signed by President Barack Obama.

"It is unfortunate that the CFTC has now given the go-ahead to a new gambling platform that could be plagued by financial irregularities and manipulation," MPAA President and interim CEO Robert Pisano said in a statement. The new box-office contracts "pose real possible economic damage to an industry that employs over 2.4 million men and women working in virtually every state in the country," he said.

Also opposed are the National Association of Theatre Owners, the Directors Guild of America, and the Independent Film and Television Alliance.

Swagger said his exchange "regrets that a special-interest group of Hollywood industry insiders chose to politicize the issue (and) we will fight attempts by this group to overturn the CFTC outcome in Congress."

from The Associated Press.

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Fed Weighs Growth Risks

Federal Reserve officials are beginning to debate quietly what steps they might take if the recovery surprisingly falters or if the inflation rate falls much more.

Fed officials, who meet next week to survey the state of the economy, believe a durable recovery is on track and their next move—though a ways off—will be to tighten credit, not ease it further. Fed Chairman Ben Bernanke has played down the risk of a double-dip recession and signaled guarded confidence in the recovery.

But fiscal woes in Europe, stock-market declines at home and stubbornly high U.S. unemployment have alerted some officials to ...

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Asia’s Commodity Stocks, Copper Fall After Greece’s Downgrade

June 15 (Bloomberg) -- Asia’s commodity stocks and copper prices fell on concern Europe’s debt crisis may worsen as Greece’s credit rating was lowered by Moody’s Investors Service to junk. The euro weakened.

A measure tracking material stocks on the MSCI Asia Pacific Index lost 0.2 percent as of 12:55 p.m. in Tokyo, the first drop in four days, while copper declined for the first time in six. The euro weakened for the first time in four days against the yen. Standard & Poor’s 500 Index futures were little changed.

Greece’s credit rating was cut to non-investment grade as it struggles to rein in its budget deficit. Stocks fell after gains in the past week added $1.8 trillion in global market value on signs of faster economic growth and the decline in copper also snapped the longest rally in more than five months.

“Markets are losing some momentum because of the downgrade in Greece’s credit rating,” said Allan Yu, who helps manage abut $3.5 billion at Manila-based Metropolitan Bank & Trust Co. “The correction shouldn’t be significant because this downgrade is something investors have anticipated. Markets have also rallied recently that it’s attractive to take profit.”

The MSCI Asia Pacific Index was little changed at 114.25. A total of 461 stocks rose while 426 fell.

Japan, Australia

Japan’s Nikkei 225 Stock Average declined 0.1 percent and Australia’s S&P/ASX 200 Index gained 0.1 percent. China’s domestic markets are closed for a holiday.

Konica Minolta Holdings Inc., which counts Europe as its biggest market, lost 1.2 percent. Sumitomo Metal Industries Ltd. sank 1.4 percent and Nippon Steel Corp. dropped 0.6 percent after their share price estimates were cut by Mitsubishi UFJ Financial Group Inc.

Posco, South Korea’s largest steelmaker, retreated 1.1 percent after the Korea Economic Daily said it may this week tentatively agree to a 25 percent to 30 percent price increase for the iron ore it will buy in the third quarter. Posco spokesman Choi Doo Jin declined to comment on the report.

BHP Billiton Ltd., the world’s largest mining company, lost 0.5 percent in Sydney trading, and Rio Tinto Group, the third biggest, fell 0.2 percent.

Three-month copper on the London Metal Exchange fell as much as 1 percent to $6,594.75 a metric ton, before trading at $6,619.75. The metal yesterday capped its longest gain since the six-day climb ended Jan. 4, on optimism that China’s demand will rise. September-delivery copper in New York dropped as much as 1 percent to $2.9830 a pound.

Euro Weakens

The euro declined to as low as 111.62 yen in Tokyo from 111.92 yen in New York yesterday, when it reached 112.87 yen, the highest level since June 4. The euro dropped to as low as $1.2211 from $1.2221 yesterday, when it advanced to $1.2299, the strongest since June 3. Europe’s single currency also weakened against 10 of 16 major counterparts before a German report forecast to show investor confidence fell to the lowest level in almost a year.

Malaysia’s ringgit weakened 0.6 percent to 3.2665 per dollar.

“Uncertainty still exists,” said Moon Hee Lee, a Seoul- based currency trader at Royal Bank of Scotland Group Plc. “Clients are cutting their positions.”

In making the four-step downgrade to Ba1 from A3, Moody’s cited “substantial” risks to economic growth from the austerity measures tied to a 110 billion-euro ($134.5 billion) aid package from the European Union and the International Monetary Fund. The lower rating “incorporates a greater, albeit, low risk of default,” Moody’s said in a statement yesterday in London.

--With assistance from Ron Harui and Glenys Sim in Singapore, Saeromi Shin, Sungwoo Park and Frances Yoon in Seoul.

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Sensex slips over 332 points in opening trade

The Bombay Stock Exchange (BSE) benchmark Sensex today slumped over 332 points in opening trade on brisk selling by funds amid concerns over the eurozone debt crisis.

The 30-share index, which had gained 111.19 points in the previous sessions, plunged by 332.65 points to 16,187.03 in the first five minutes of trading.

All the sectoral indices, led by realty and metal, were trading in the negative zone with losses up to 3.20%.

Likewise, the wide-based National Stock Exchange index Nifty fell by 105.30 points to 4842.30 points.

Marketmen said investors sold shares heavily after a steep fall in the US and Asian stocks markets on concerns that the European fiscal crisis might deepen further.

Meanwhile, the US Dow Jones Industrial Average fell by 3.60% lower in yesterday's trade, while Japan Nikkei was down by 2.51% in the morning trade today.

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Ashish Chugh's hidden gems for March

It is a company belonging to the Shaw Wallace Group. This company manufactures gelatine with its major customers being pharma and food industry. If you look at the financials of the company, for FY09, the company achieved sales of about Rs 69 crore with PAT of about Rs 5.9 crore.

For the first nine months of the current financial year, sales are at about Rs 62 crore which are up by about 23% over the same period last year. Profit after tax is about Rs 6.4 crore which is up by 44%. EPS on an annualized basis is about Rs 21. The stock at about current price of Rs 90-92 is available at a PE multiple of about 4-4.5.

This company is totally debt free. It has just about Rs 2 crore of working capital loans. The company has been consistently dividend payer and it paid dividend of 5% last year. The promoter holding is high at about 75%. Market capital of the stock at the current price is about Rs 37 crore as against the gross block of about Rs 47 crore, which the company has in its books. This is more than 50 year old company. So the value of gross block at the current price maybe substantially higher that what is getting reflected in the books of account.

The Shaw Wallace group has been selling various companies which were earlier a part of Shaw Wallace group. The company sold its flagship Shaw Wallace and Company to the UB Group couple of years back. They have sold of Dunlop India Limited and Falcon Tyres Limited to the Kolkata based Pawan Ruia Group. Company has also sold Hindustan Dorr Oliver to IVRCL Infrastructure and Mathar & Platt Pumps Limited to a German company called WILO. Narmada Gelatines is probably the only listed company left in the fold of Shaw Wallace which has not been sold by the company by the Group.

The possibility of Shaw Wallace Group making a complete exit out of Narmada Gelatines is something which may not be totally ruled out. At the current valuations, you have a company which is growing steadily at about 15-20% and is paying regular dividends. It’s a debt free company and buying the stock at Rs 92-93 paying a price earning multiple of about 4-4.5 you are not buying the stock really expensive. In case the sale does not go through, you may have a steady stock which may be market linked or linked to the performance of the company. The downside from these levels look restricted. In the event of the promoters deciding to sell the company, the valuations which the company can fetch maybe substantially higher than what is getting reflected in the current market price of the stock.

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Private sector banks raise rates by 25-50 bps.

Signalling a hardening of interest rates, private sector banks have started raising retail lending rates.

ICICI Bank, the country’s largest private sector lender, says it is going to charge 25 to 50 basis points more for auto loans and has discontinued its teaser offer on home loans.

Similarly, HDFC Bank has increased auto loan rates 25 to 50 basis points. Kotak Mahindra Bank has increased interest rates on auto and home loans by a similar amount.

The new home loan rates came into effect from Monday along with the end in the teaser rate, which offered 8.25 per cent on loans of all values for the the first year.

The new rates will be applicable to fresh loans.

In addition, HDFC, the country’s largest mortgage lender, also decided not to extend its special fixed-cum-floating rate offer. ICICI Bank and HDFC Bank’s new auto loan rates, linked to the tenure and the segment, are effective Friday. For ICICI Bank, auto loans up to 35 months will now cost 9 to 13 per cent; loans for 36 to 60 months will cost 8.75 to 12.5 per cent. For HDFC Bank, the rates will be 7.5 to 15.5 per cent, depending on the tenure and vehicle segment.

ICICI Bank has also reworked the slabs, charging 8.75 per cent a year for loans up to Rs 30 lakh, instead of the earlier Rs 20 lakh ceiling.

For home loans between Rs 30 lakh and Rs 50 lakh, their rate has been revised to 9 per cent (from 9.25 per cent for loans between Rs 20 lakh and Rs 50 lakh) and loans above Rs 50 lakh will cost 9.5 per cent a year (from 9.75 per cent).

The increase in auto loan rates by private banks will provide a twin blow to car buyers, who already have to contend with an increase in prices following the government’s decision to increase excise duty 2 percentage points.

“It is a message that interest rates will not go down further, they will only go up. But it (the increase) will only be to the extent to which we can protect our margins,” said Pralay Mondal, country head for retail assets and credit cards at HDFC Bank, the country’s second largest private sector bank.

Following the Reserve Bank of India’s decision to raise the cash reserve ratio 75 basis points in the quarterly review of the monetary policy, a move that sucked out Rs 36,000 crore from the system, banks have resorted to increasing deposit rates by up to 150 basis points for certain maturities.

“Deposit rates have gone up over the last few weeks. So, in reaction to the interest rate scenario, we have raised lending rates,” added a senior executive at a private sector player. Rising demand also made a rate rise possible he added.

Interest rates are increasing not just for the retail segment but in the last few weeks even companies have had to shell out more for short-term loans such as working capital finance due to slightly tighter liquidity conditions as well as higher demand for loans.

For the year-ended February 12, bank credit growth was estimated at 15.07 per cent, compared to 9.65 per cent for the 12 months-ended October 23. Similarly, banks, which were parking over Rs 1,00,000 crore on a daily basis with RBI through the reverse repo route till a few months ago, today parked Rs 83,745 crore with the central bank today.

“As it is, banks will move to the base rate regime from April that will mean higher rates for short-term loans. So, we are leveraging the situation now when companies need funds,” said a senior public sector bank executive.

Public sector banks, however, are expected to wait till the end of the month to review their retail lending rates.

“We have no immediate plans (to raise rates). We will see how deposit rates are moving. If there is a shift in the interest rate scenario, then we will take a call. At the moment, we are not looking at any interest rate revision,” Bank of Baroda Chairman and Managing Director MD Mallya said.

“We have said earlier that our bank has no intention to increase lending rates, such as auto, home and the benchmark prime lending rate, till March,” added Union Bank of India Chairman and Managing Director M V Nair.

A State Bank of India executive said that the country’s largest lender will review its home loan and auto loan rates at the end of the month. Its teaser rate offer is due to end on March 31. last week, SBI Chairman O P Bhatt had said interest rates were unlikely to go up till May-June.

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paypal

Mumbai: Breaking News! In a big relief to the millions of IT Firms, Freelancers, Writers, SEOs and IT Developers, world's largest online money transfer service provider, PayPal has announced the resumption of local bank withdrawals to India.

The paypal announcement says that the Reserve Bank of India (RBI) has allowed them to continue local bank withdrawals for settlements for exports of goods and services. All PayPal customers should be able to use the bank withdrawal service from March 3, 2010 onwards.

As part of the changes, the customers will be required to fill out a new field entitled 'Export Code' when they request a withdrawal. This information is required under the current laws of India in order to identify the nature of cross-border merchant transactions.

On Monday, March 1st, PayPal will be back in touch with its customers with specific instructions on how they can move their money into their bank accounts.

RBI has told PayPal that the online money transfer company needs specific approvals to allow personal remittances to India, which they currently do not have.

"Until PayPal gets these approvals, personal payments into India will remain suspended. However, if you are an exporter, you will continue to be able to use the PayPal service for payments of goods and services", said PayPal announcement.

All PayPal customers in India will now get purpose codes for export transactions and FIRCs (Foreign Inward Remittance Certificates). So, the payment and money transfers will become legit and there will be less scope for tax evasion and money laundering.

PayPal's India Head Farhad Irani has apologized for all inconvenience experienced by the customers in the past few weeks.

"We know the past few weeks have been difficult and I would like to assure you that we have been working tirelessly to resolve the situation and restore our service. PayPal’s highest priority is to always ensure we comply with all applicable regulations everywhere we do business around the world", he said.

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