Wednesday, August 11, 2010

NEWS THAT YOU SHOULD KNOW

INDIAN ECONOMY
Lancet raises superbug spectre, Indian docs differ
Doctors and medical authorities in India played down the risk of an international public health scare after a report in an influential medical journal warned that people travelling to the country to get cheaper medical treatment risked picking up and spreading a new drug-resistant superbug. In a study published in The Lancet Infectious Diseases journal on Wednesday, scientists said they had found a new gene Delhi metallo-beta- lactamase (NDM-1 ) in patients in South Asia and Britain. The patients in Britain had undergone treatment in the sub-continent, mainly in India. The presence of NDM-1 in bacteria makes it highly resistant to almost all antibiotics, including the most powerful class called carbapenems, said the report, which was based on a study of bacteria samples collected from hospital patients in India and Britain. The potential of NDM-1 to be a worldwide public health problem is great, and co-ordinated international surveillance is needed, the Lancet report warned. But authorities in India said the concern was overdone. 

AAI to demand Rs 400 cr from DIAL, MIAL
The Airports Authority of India (AAI) has decided to demand Rs 400 crore as compensation from the operators of Delhi and Mumbai airports for not absorbing its staff working at both the airports before privatisation. "We will ask the airport operators in Delhi and Mumbai to compensate us by Rs 400 crore for not absorbing 60 per cent of our staff working at these airports," said a senior AAI official, who did not want to be identified. Senior officials explained both the airport operators were to absorb 60 per cent of the total 4,000 staff working at both the airports but the operators absorbed only six per cent of the total staff. "Out of 4,000, 600 opted for the voluntary retirement scheme and the rest have been deputed to various other airports," said another senior AAI official. 

World Economy
US trade gaps widen in JUNE
The US trade deficit widened a surprising 18.8 per cent inJune on a surge of consumer goods from China and other suppliers, suggesting US second-quarter economic growth was much weaker than previously thought. The monthly trade gap totalled $49.9 billion, the highest since October 2008, the Commerce Department reported onWednesday, as US exports stumbled a bit. The deficit was wider than any of the 67 Wall Street forecasts collected before the report, and is likely to prompt analysts to ratchet down estimates of second-quarter gross domestic product growth. "The strength in imports, though hinting at some pickup in consumer spending, continues to undermine GDP growth. Moreover, the slowing in exports will only fan fears of a faltering US recovery," said Sal Guatieri, senior economist at BMO Capital Markets. 

Corporate News
SBI-Macquarie buys 11% in Viom Network
Wireless TT Info Services, the telecom tower joint venture between Tata Teleservices and Quippo Telecom Infrastructure, has sold nearly 11% stake to Macquarie SBI Infrastructure Fund (MSIF) for 1,420 crore. The sale proceeds will be used to retire debt in the company which has been renamed Viom Networks, Sunil Kanoria, director, told a press conference on Wednesday. Mr Kanoria said additional stake was also exchanged in Viom, but that will not be disclosed. Viom has around 37,000 towers with 80,000 tenants. It was formed via a merger of the telecom tower operations of Tata Teleservices and Quippo in January 2009. At the time of the deal, the combined entity had about 18,000 towers, which gave it an enterprise value of 13,000 crore. The merger has just been completed. 

ANZ, BNP book 150,000 sq ft in Mumbai
Australian bank ANZ and French company BNP Paribas have together taken 150,000 sq ft of space on lease in Mumbai, according to a person privy to the developments. While BNP Paribas had booked 110,000 sq ft of office space in Maker Maxcity building in Bandra Kurla Complex at around Rs 300-Rs 325 per sq ft, ANZ had taken nearly 40,000 sq ft of space in Cnergy building in the Prabhadevi area for Rs 320 a sq ft, said the person. ANZ has a branch licence and is looking to launch its operations in the country. He said ANZ was most likely to make the Prabhadevi office its country head office, while Paribas had leased it for its various operations. 

IDFC completes capital-raising of 3,500 crore
Infrastructure Development Finance Company (IDFC) has completed capital-raising of around 3,500 crore as approved by the board of directors and shareholders. IDFC raised 2,654-crore through the qualified institutional placement (QIP) route by allotment of equity shares to qualified institutional buyers (QIBs), a company statement said. The QIP was done at a price of 168.25 per share. IDFC has also raised 840 crore of capital through a preferential issue of compulsorily convertible cumulative preference shares (CCCPS) to Actis and Khazanah to the extent of Rs 460-crore and Rs 380-crore, respectively, it said. 

US Visa move to hit Indian IT firms
The increase in H-1B and L-1 visa application fee would partially affect outsourcing to Indian information technology firms, said analysts. The US legislation is expected to impact operating margins of most Indian IT firms between 0.5 per cent and 0.75 per cent. According to a recent study by Religare, visa costs account for 0.3-0.5 per cent of revenues of Indian IT firms. This may force them to recruit more locals as part of their US workforce, taking a hit on their bottom line. Indian IT services companies use about 12 per cent of H-IB visas in a year, while the rest are used by Microsoft, IBM and Accenture, said industry body Nasscom. At the individual level, Indian IT giants like Infosys, Wipro and TCS are the biggest H-1B visa users. 

Market
Indian funds grab 7 spots in Asias small-cap Top 10
Indian funds have grabbed seven out of the top 10 spots in the league table of leading small-cap funds across Asia, thanks to some canny stock-picking amid growing investor appetite for cheap stocks with potential to deliver multi-bagger returns. An analysis of nearly 300 Asian small-cap schemes shows DSP BlackRock Micro Cap Fund leading the charge, delivering an 82% return over the past year. Managed by Vinit Sambre, who has been with DSP BlackRock for a little over three years, this fund has also soundly beaten the 58% rise of BSEs Small-Cap Index since August 2009. The 30-share benchmark Sensex has gained 20% during this period while the wider BSE 500 Index is up 27%. The other six schemes Sundaram BNP Paribas Select Small Cap, HSBC Small Cap,J PMorgan Smaller Companies, Franklin India Prima, Franklin India Smaller Companies and ING Vysya CUB have given investors returns between 44% and 57% on a trailing 12-month basis. These schemes manage anywhere between 46 crore and 954 crore. Four of these funds were launched during the peak of the previous bull run between January 2007 and March 2008,and investors in them have also had to endure a massive erosion in their initial investment in the downturn that followed. 

Banking
RBI pushes for stiff bank entry norms
The Reserve Bank of India favours stringent eligibility conditions for allowing new private banks, once again laying bare its deep unease at the prospect of allowing industrial houses into the banking business. The banking regulator, which plans to approve a limited number of banking licences in line with the announcement in this years Budget by finance minister Pranab Mukherjee, has outlined a few policy approaches, or options, which if translated into rules may make it difficult for many big business houses to promote banks. In a discussion paper on the entry of new private banks released on Wednesday, RBI has said that one option could be to allow only those industrial groups which have a diversified ownership base and without any direct or indirect exposure to real estate. If some of the other suggestions too such as the need for corporate houses to obtain a clean chit from agencies such as the Central Bureau of Investigation, the Enforcement Directorate, income tax and other regulators, denial of the business groups brand name and logo for the new banks brand and a board packed with independent directors are endorsed later, very few large business groups may make the cut. 

Mutual Fund
Mutual Fund Assets take a big hit
The equity segment of the domestic mutual fund market was hit hard in July, as the segment saw a record net outflow of funds even after a year of the entry load ban. Data from the Association of Mutual Funds in India (Amfi) show equity schemes had Rs 3,400 crore of redemptions. Including the equity-linked savings schemes (ELSS), the amount redeemed in the month was even higher, at Rs 3,539 crore. In June, too, the category saw a redemption of Rs 1,500 crore. Sector experts said, apart from distributors not selling equity products, the other factor playing an important role in such large redemptions was the stock markets regaining a 30-month high. "Several investors were stuck with their investments since 2007. These investors have been redeeming their money as the markets were going up and touching previous highs," said the chief executive officer of a top fund house. 

IPO 
IPO norms for insurers soon: IRDA
The Insurance Regulatory Development Authority (Irda) on Wednesday said the new guidelines for initial public offers by life and non-life insurance companies would be out "soon" and hinted that only insurers that had completed 10 years of operation would be allowed to come out with public issues. Several private sector insurers, including Reliance Life and HDFC Standard Life, have shown interest in tapping the capital market to augment their resource base, but these are yet to complete 10 years of operation.


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Thanks & Regards
Aditya Kachru

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