Current news & Rumours in the mkt

[praveen taneja]

Economic and Political Headline
• Food inflation eased, but fuel inflation accelerated in late June and a recent hike in fuel prices kept the case for the central bank to top up its last Friday's rate hike when it reviews policy on July 27. Data released showed the food price index rose an annual 12.63% in the year to June 26, slower than the previous week's 12.92%, largely as prices in the year-ago period were high. The fuel price index went up by 18.02% during the period, compared with the previous week's 12.90%. The primary articles index rose by 16.08%, compared with 14.75% in the previous week. (BS)
• The number of Americans applying for jobless benefits last week fell to 454,000, a level that indicates improvement in the labor market is taking time to develop. Initial jobless claims decreased by 21,000 in the week ended July 3, Labor Department figures showed. (Bloomberg)
• Consumer borrowing in the US dropped in May more than forecast, a sign Americans are less willing to take on debt without an improvement in the labor market. The USD 9.1 bn decrease followed a revised USD 14.9 bn slump in April, the Federal Reserve reported. (Bloomberg)

 

[praveen taneja]

The International Monetary Fund (IMF) on Thursday raised its India growth forecast for 2010 to 9.4 per cent from 8.8 per cent estimated in April.

In its July update of the World Economic Outlook (WEO) projections, the Washington-based multilateral agency, however, kept unchanged its 2011 India growth forecast at 8.4 per cent.

In a report released today, the IMF said that India's GDP growth is expected to accelerate to 9.4 per cent in 2010 as robust corporate profits and favourable financing conditions fuel investments.

The Government expects the country's economic growth to be over 8.5 per cent in 2010-11 (April-March). The growth forecast made by IMF and the Indian government are strictly not comparable, as they count different months for arriving at an annual period.

While IMF forecast is for the calendar year 2010, the Government makes its growth projection for fiscal year (April-March).

Reacting to the IMF's India GDP growth forecast upgrade, Mr T.C.A. Anant, Chief Statistician of India, told Business Line that this was a positive signal and reflected their confidence in the economic growth outlook for India in the near term.

“IMF is an independent body monitoring India. It is a positive signal. If there are similar signals and confirmation from other agencies (monitoring the Indian economy), it will give greater confidence to us about the Government's own assessment of the growth prospects for the year,” Mr Anant said.

Meanwhile, in the July update, the IMF has raised its global growth forecast for 2010 to 4.5 per cent from its earlier estimate of 4 per cent in the April 2010 WEO, reflecting stronger activity in the first half of 2010 (January-June).

The IMF said that the higher growth was on expectations of a modest but steady recovery in most advanced economies and strong growth in many developing and emerging economies.

At the same time, IMF has noted that downside risks have risen sharply amid renewed financial turbulence.

IMF expects the Chinese economy to grow by 10.5 per cent in 2010. It also said that the first quarter GDP numbers in Asia were generally stronger than anticipated at the time of the April 2010 WEO and high frequency indicators suggest that economic activity remained brisk during the second quarter.

The GDP growth forecast for Asia has been revised upwards to about 7.5 per cent from about 7 per cent in the April WEO.

Dr Pronab Sen, Principal Advisor, Planning Commission said that he was not surprised by the IMF move to raise India GDP growth forecast to 9.4 per cent.

“It is not a surprise. It was on expected lines given that we had a strong GDP performance in January-March 2010 (Q1 for IMF's calculation) and will also have good one in April-June (Q2 for IMF's calculation) due to base effect,” Dr Sen told Business Line.

He highlighted that the January-March quarter had the highest weightage in GDP calculation. There was also stronger than expected growth performance in that quarter. “The fourth quarter (January-March) is usually the best quarter for us,” Dr Sen said.

When IMF came up with its initial forecast in April, it was unlikely that they would have factored the actual numbers for January-March 2010.

“Since now they are getting a better idea of the performance in the two quarters — January-March and April-June — which are high growth-cum-high weightage periods, they have pushed up the growth forecast,” Dr Sen said.

Dr Sen maintained that there was still a question mark over sustainability of investments even as many positive indications had emerged in the recent months.

 

[praveen taneja]

MFs mull exit load on liquid plus schemes


The industry move is likely to shrink the corpus of liquid plus plans, which currently make up close to one-third of the industry’s asset under management (AUM).


The Securities and Exchange Board of India (Sebi), in a circular, had said that to ensure that the value of the money market and debt securities in the portfolio of mutual fund schemes reflected the current market scenario, such instruments should be valued at the weighted average price at which they were traded on the particular valuation day.

The circular, released in February, was to be implemented on July 1, but was later postponed to August 1.

“The industry has started sending communications to clients, mainly corporate houses, regarding the exit load,” said the managing director of a foreign mid-sized mutual fund house.

Although there is no unanimity so far on the level of the load, fund houses say it will depend on individual players. The industry would charge between 0.25 per cent to 0.5 per cent, said chief executive officers (CEOs) of fund houses Business Standard spoke to.

“We have no other choice,” said a CEO. “This is nothing but a desperate measure the industry is taking to prevent outfows.

Implementing the load will help us in this unpredictable return scenario.” “Fund houses which have more than one liquid plus schemes are trying to re-position them,” said fund market insiders. However, fund houses fear that assets under liquid plus schemes will fall with this move. Corporate houses whose cash flow is predictable are likely to continue with these schemes while others are likely to shift to liquid or other short-term debt schemes, they say. Liquid plus schemes offer tax arbitrage. However, in liquid schemes, there were no tax incentives, said a chief investment officer of a mid-sized domestic fund house. Liquid plus schemes normally invest in securities of over 91 days whereas liquid funds invest in securities with tenures of less than 91 days.

 

[praveen taneja]

SBI Mutual Fund appoints Dharmendra Grover as Fund Manager

SBI Funds Management Pvt Ltd, the investment managers for SBI Mutual Fund, has appointed Dharmendra Grover as Fund Manager of SBI FMPL.


The funds that will be managed by him at SBI MF are Magnum MultiCap Fund, SBI Tax Advantage Fund-Series I, Magnum Investment NRI-FAP and Magnum Balanced Fund, a press release issued here said.

Grover brings with him a rich experience in the Indian equities market across equity research, fund management, corporate strategy and investor relations, the release said.


Source: http://economictimes.indiatimes.com...rover-as-Fund-Manager/articleshow/6148626.cms

 

[praveen taneja]

US district court rules in favour of Sun Pharma, dismisses all of Taros claims

 

[praveen taneja]

state bank of indore will be merged with sbii == minister

 

[alroyraj]

Piramal Healthcare sells diagnostics biz to SRL

Piramal Healthcare has formalised the sale of its Rs 200-crore diagnostics business to Super Religare Laboratories Ltd (SRL) for Rs 600 crore.

The transaction comes less than two months after the Mumbai-based drug-maker sold its domestic formulations business to Abbott for Rs 17,000 crore.

Though the deal puts the combined Rs 375-crore entity under SRL ahead of competitors in the diagnostic services industry, it has also raised concerns on whether these developments reflected Piramal Healthcare promoters' intent to exit healthcare.

If that were the case, the promoters would have sold equity in the company, making the transaction more tax efficient, the Chairman, Mr Ajay Piramal, told Business Line.

These funds come into Piramal Healthcare and would be invested in growing the existing businesses in healthcare projects and other emerging growth areas, he said. These could be outside the pharmaceutical segment, he said, without giving details.

Pre-empting questions on the group's real estate plans, he added that the funds from the sale of the two businesses would not go into real estate projects.

Piramal Healthcare is now left with the over-the-counter business, customs-manufacturing (where it makes products for overseas clients), anaesthetics and critical care products, and its demerged research business

Explaining the exit from diagnostics, Mr Piramal (at present in the US) said while diagnostics was a good business, they had been scouting for suitable acquisition targets for the last one year, without much luck.

The business showed sub-optimal growth and hence the decision to sell, so it could grow under another owner.

The diagnostics business in the country is fragmented with 50,000 players and the top four players have a 10 per cent market share, said Mr Murari Rajan, Piramal Healthcare's Executive Director (mergers and acquisitions), explaining the difficulty in finding acquisition opportunities.

Nevertheless, Piramal Healthcare will hold 10 per cent stake in the combined diagnostic entity, besides having two members on the board of directors, he said.

There is not much clarity on the final branding of the combined entity, a Piramal Healthcare representative added.

Of the funds received, Rs 230 crore would go towards clearing debt in Piramal diagnostics books, Mr Rajan said, while the rest would go towards taxes and cash into the Piramal Healthcare kitty.

The Piramal Diagnostics strategy was to enter into joint ventures with diagnostic partners. But these ventures subsequently became wholly-owned subsidiaries of Piramal Diagnostics, Mr Piramal clarified and added that all centres and doctors will move to the new venture.

Super Religare

Super Religare Laboratories is promoted by the erstwhile Ranbaxy promoter family, Mr Malvinder Singh and Mr Shivinder Singh, and the recent acquisition makes it the largest network of pathology and radiology centres in the country.

After selling their stake in Ranbaxy to Daiichi Sankyo in 2008 for close to $5 billion, the Singhs have been hitting headlines recently over their battle for control in Singapore's Parkway hospitals group.

 

[alroyraj]

L&T set to bag Rs 12,132-cr Hyderabad metro rail project

Pips Transtroy, Reliance Infra by seeking lowest viability gap funding.
Construction major L&T is all set to bag the mandate to develop the Rs12,132-crore Hyderabad Metro Rail Project Ltd (HMRL), by virtue of seeking the lowest viability gap funding (VGF) support of Rs 1,458 crore.

L&T's bid emerged the lowest among the financial bids of six consortia, which were opened on Wednesday at the HMRL office here.

The Transtroy-OJSC-CR 18G-BEML and Reliance Infra (ADAG) Group were placed second and third, respectively.

Lanco Infratech, Essar and Soma-Strabag AG (Austria) were the others in the fray with their consortium partners.

While L&T sought Rs.1,458 crore as VGF, Transtroy sought Rs.2,200 crore and Reliance Infra Rs. 2,991 crore.

 

[alroyraj]

Licence fee: DoT rejects BSNL plea for level field

Private operators pay the revenue share only on income earned from telecom services based on a judgment given by the TDSAT. But since BSNL, being a state-owned company, did not want to be seen as challenging the Government in a court, the PSU did not get the benefit of the TDSAT judgment. Therefore, it has to pay licence fee on the total revenue, including income from non-telecom activities. Similarly, in the case of spectrum charges, BSNL has been asked to pay as per DoT's revised rates even as the private operators have got a stay order from TDSAT on the same.

So while private players are paying spectrum charges based on old rates ranging between 2 and 5 per cent depending on the quantum of spectrum, BSNL is paying the new higher rates, which is between 3 and 7 per cent of the annual revenue.

 

[alroyraj]

Costlier fuel nudges up June inflation to 10.55%

Even as the annual Wholesale Price Index-based inflation rose a lower-than-anticipated 10.55 per cent in June from 10.16 per cent in May, actual estimates could well be much higher.

The consistent upward revisions in the final monthly inflation numbers by the Government since January have been fuelling speculation that final inflation estimates, which come in with a lag, are certain to be way above what the provisional figures suggest.

The Commerce and Industry Ministry, which releases the consolidated Wholesale Price Index data on a monthly basis, has been effecting sharp upward revisions in the final figures since the beginning of this year, with the gap between the provisional and final figures widening to well over 150 basis points for April — the latest month where final data has been made available.

On Wednesday, the Government raised the April inflation reading to 11.23 per cent from a provisional 9.59 per cent. It has been making progressively steep upward revisions to the readings since January, suggesting it may be a step behind in anticipating inflationary pressures.
June data

The provisional data for June shows inflation in primary articles in June rose 16.28 per cent from a year earlier, mostly due to an increase in prices of food articles such as pulses, fruits and milk as well as non-food articles including fibres and minerals. The data showed annual food inflation eased to 14.60 per cent in June from 16.49 per cent in the prior month. The fuel index rose 14.32 per cent, while the June index of manufactured products was 6.6 per cent higher from the year-earlier level. On a sequential basis, the primary articles index rose 0.8 per cent due to higher prices of vegetables, fibres and minerals; the fuel index rose 1.7 per cent month-on-month due to recent price hikes; while the manufactured index rose 0.2 per cent.

Reacting to the latest inflation numbers for June, Finance Minister, Mr Pranab Mukherjee, said he sees inflation moderating after the kharif season. “We are already witnessing moderation in food prices,” he said adding that he expected the numbers to be high on the back of the fuel price hike.

‘To moderate'

The RBI is widely expected to tighten the screws more on a growth-supportive policy that increasingly is being seen as a hurdle to restoring price stability.
The central bank has raised its two main policy rates by 0.75 percentage point each in 2010, including an unscheduled, 0.25 percentage-point hike early this month. Reacting to the numbers, Secretary-General, FICCI, Dr Amit Mitra said, “…An anti-inflationary monetary package which does not take into consideration issues of commodity price rise, potential fuel price rise, and the signs of slowing down of consumer goods sector will impact the growth momentum. In this light, further interest rate hike at this juncture is prone with risks.”

http://www.thehindubusinessline.com/2010/07/15/stories/2010071551441600.htm