Wednesday, June 23, 2010

Let's Hear Some Noise from the market

INDIAN ECONOMY
RIL, others pay rs 30,229 cr for BWA spectrum
The government on Tuesday received Rs 30,229.51 crore as fee towards broadband wireless spectrum from all successful bidders, with Mukesh Ambani-led RIL's internet arm Infotel alone coughing up Rs 12,847.77 crore. State- owned BSNL is yet to pay the dues of Rs 8,313.80 crore. No explanation, either from the corporation or from the government, was forthcoming. Department of Telecommunications officials said there was no information from the PSU.


World Economy
China loosens reins on yuan ahead of G-20
China's yuan jumped on Tuesday to its highest level since the currency was revalued in 2005 as the central bank signalled it would tolerate yet further gains to make good on its vow for more foreign exchange flexibility. China is relaxing its control on the yuan ahead of this weekend's G-20 summit of world leaders and breaking a two-year dollar peg that had been a lightning rod for critics who say the currency is under valued and gives Chinese exporters an unfair trade advantage. Markets surged on Monday after Beijing's weekend vow to allow flexibility for the yuan, on optimism a stronger currency would boost the fast-growing economy's purchasing power. Some doubts crept in to market sentiment at the end of the global day on just how far China would go. But on Tuesday,the People's Bank of China set the yuan's daily mid-point the reference rate for trading at 6.7980 per dollar,the highest level in five years. I am not surprised they did this, said Edward Meir, commodities and energy analyst at MF Global in New York.



Corporate
RIL plans to spend $3 b in fertiliser business
Reliance Industries plans to invest more than $3 billion over the next four to five years to build capacity for its entry into the fertiliser sector, a source with direct knowledge of the plan said. The move is related to chairman Mukesh Ambanis announcement on Friday to set up a giant coke gasification project at Jamnagar on Indias west coast, where Reliances two refineries are located. Reliances refining complex, the largest in the world, can process 1.24 million barrels of crude a day. The entire project right from coke gasification to urea production will need an investment of over $3 billion, the source, who declined to be named, said, adding: Reliance can also gasify coal in the same plant,in case there is a shortage of petcoke. 

Vivendi joins race for stake in RCOM
French media and telecom giant Vivendi SA is negotiating with Reliance Communications to buy a 26% stake in the firm as the Anil Ambaniled company seeks to pare down debt. The two companies have been talking for a month and discussions are now at an advanced stage, said a person with direct knowledge of the negotiations. A top Vivendi team was in Mumbai last week to freeze the contours of the deal. Another person close to the negotiations told ET that Vivendi is the front- runner in RCOMs quest for a strategic partner, in which other another contender is believed to be the UAE-based telecom service provider Etisalat. If Vivendi acquires a 26% stake,which will by way of a fresh issue of shares,it would have to make an open offer for another 20%,according to Sebi guidelines. 

Murli in talks with cement MNCs for unit sale
Murli Industries, a Nagpur based diversified company,is seeking a buyer for its 3- million tonne cement plant in Maharashtra,said a senior company executive. We are in preliminary talks with a handful companies,including some foreign giants, to sell the Chandrapur unit, Anand M Chandak, chief financial officer of the company, told ET. The company has appointed Motilal Oswal Investment Advisors to find a buyer, he said, without revealing the name of the interested parties. The company, which also produces cattle feed and paper, recently commissioned the cement unit in Chandrapur, near Nagpur. It is not clear what it intends to do with the funds from the sale.

Centum Learning raises Rs 40 crore
Centum Learning a Bharti associate company,engaged in higher education and skills training has raised Rs 40 crore from venture capital firm Mayfield India Fund by selling a minority stake. Centum Learning will invest the money over five years to expand skills building and higher education programmes. We plan to train nearly one crore people over the next 5-7 years, said Centum Learning Systems CEO Sanjeev Duggal.

RIL may close $1.35-billion US Gas deal
Reliance Industries Limited (RIL) is close to buying a 45 per cent stake in shale gas assets owned by the US-based Pioneer Natural Resources for $1.35 billion. An RIL spokesperson said the company couldn't make a comment at this point, but agencies quoted sources familiar with the development as saying the deal could be announced in a couple of days. Pioneer has about 310,000 acres of shale gas plays in the Eagle Ford region of Texas, US. The company had last month said it would be announcing a joint venture for the assets in the second quarter. This would be RIL's second acquisition of shale gas assets in the US. The company had in April bought 40 per cent interest in Atlas Energy's Marcellus Shale acreage. The Atlas deal size was $1.7 billion, with RIL committing to a capital expenditure of $3.5 billion over 10 years. 


MARKETS
Retail investors stay on sidelines despite rebound
Share prices have rallied smartly in the past few weeks, but retail investors are treading cautiously, as evident from the fall in trading volumes in second-rung stocks, this month. According to brokers,small investors are keeping away, as they expect the current phase of volatility to persist for some more time, because of uncertainty in world markets. Adverse news flow from European markets,and back home, fears of a rise in interest rates due to high inflation, have been keeping share prices volatile for the past couple of months. This has prompted small investors to adopt a selective approach with the focus mainly on sectors like metal and banking, according to ST Gerela, CEO, Satco Securities and Financial Services, a Mumbai-based retail broking firm. On the face of it,the situation in Europe appears to be improving steadily, but there are also fears that more skeletons could come out of the cupboard of the Eurozone crisis, he said. 

Govt share sales could do with some dragon fire
The government will have to hard-sell its upcoming divestment offerings to overseas investors, as it faces competition from larges ized public issues out of China,say bankers. Many Chinese firms are aiming to go public in the second half of this calendar. The size of one offering from China is almost thrice the size of Indian governments divestment target of Rs 40,000 crore for the current financial year. The first half (of 2010) was a lean period for share offerings globally. But with sentiment stabilising somewhat, there is a rush to raise money, said the head of equity capital markets at a foreign bank. Two mega-sized issues from Asia will be on offer sometime between July and September. Of these, the $23 billion initial public offering the worlds largest share issuance till date from Chinas Agbank is looking to hit the market by mid-July. The $3 billion-plus Coal India public issue Indias largest to date could be launched in late September. 
Banking
Rabobank sells 11% stake in YES Bank
The Netherlands-based Rabobank may take up the wholly-owned route to launch banking operations in India. As a prelude to setting up its banking operations, the Dutch lender on Monday sold 3.73 crore shares in YES Bank, which works out to an 11% stake, paring its total shareholding to 4.9%. The shares were sold in a series of bulk deals at an average price of Rs 263 per share,amounting to over Rs 1,000 crore. According to sources,the buyers included Life Insurance Corporation of India, SBI Life, Templeton and Carmignaca French fund. A Rabobank spokesperson did not respond to emailed queries. 

Govt capital in 5 PSU banks to boost their ratings
Public sector banks (PSBs) in the country can look forward to better credit ratings,following the governments decision to infuse Rs 620-crore capital in public sector banks. The government has announced that it will infuse Rs 620 crore in five PSBs UCO Bank, IDBI Bank, Central Bank, Bank of Maharashtra and Union Bank. This will be in addition to the Rs 150 crore of capital already pumped into four banks in May 2010. The announcement reinforces the strong expectation of government support, said rating firm Crisil. The proposed capital infusion, likely to be completed by end-September 2010, follows the sizeable capital already infused into PSBs over the past two years,and is consistent with the governments announcements in this regard. According to the ratings firm, the government will continue to extend such support to PSBs over the next two years, either directly through capital infusion, or indirectly, by facilitating capital mobilisation by these banks. 

Mutual Fund
Sebi breather for MFs on debt valuation rule
Capital market regulator the Securities and Exchange Board of India (Sebi) has given mutual funds (MFs) a breather to implement a norm for valuing money market and debt securities with maturity of over 91 days in their schemes. The market regulator has stretched the deadline for its implementation to August 1 from July 1 earlier, a Sebi circular Monday said. The move has come as a temporary relief to Mfs, as liquid plus schemes, which comprise nearly 40% of the industrys assets under management (AUM) of Rs 8 lakh crore,will be most impacted by the new rule. The new norm requires MFs to mark the value of money market and debt securities with maturity of over 91 days the securities that constitute liquid plus schemes to market prices. 

IPO
Barath Power to raise Rs 1.1 cr via IPO
Ind-Barath Power Infra plans to raise Rs 1,140 crore from an initial public offering (IPO) in India. The sale will be managed by JM Financial Consultants, Motilal Oswal Investment Advisors,Bank of America,IDFC Capital and Avendus Capital, according to a draft offer document on JM Financials website. Stakeholders including CVCIGP II Client Rosehill and Unit Trust of India will sell an additional 6.47 million shares, the document showed.

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