Current news & Rumours in the mkt

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DOMESTIC NEWS
Economy
The government on Friday, raised petrol price by Rs 3.50 a litre, diesel
price by Rs 2 litre, kerosene by Rs 3 litre and LPG by Rs 35 per cylinder.
Food inflation rose to 16.90 per cent for the week ended June 12 from
16.12 per cent in the previous week.
India's Foreign exchange reserves stood at US$275.969 billion as on June
18, up from US$272.783 billion as on June 11. At the same time, foreign
currency assets reserves increased to US$250.370 billion from
US$247.241 billion last week, while gold reserves remained unchanged
at US$19.423 billion.

 

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Oil & Gas
Reliance Industries will invest $1.36 billion in shale assets of Pioneer
Natural Resources, as the energy major looks to build its presence in the
US shale gas sector. Under the agreement, Pioneer will sell 45 per cent
stake in its Eagle Ford shale acreage in south Texas to Reliance for $1.15
billion.
Mukesh Ambani-run Reliance Industries and his younger brother Anil-led
RNRL signed a revised gas supply agreement, a development that paves
the way for government to allocate gas to Anil Ambani group's power
plants.

 

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Capital Goods
McNally Bharat Engineering Company Ltd have received an order for
Supply of Ash Water Recirculation & Treatment System Package for
Singrauli Super Thermal Power Station, Stage - I & II, (5)1200 + 2X 500
MW) for a value of Rs. 41.4 Crores inclusive of all Taxes and duties. The
schedule time for completion is 27 Months.
Larsen & Toubro's (L&T) thermal power plant construction (TPCC)
business unit has received two orders worth Rs 827 crore from GVK
Power for the expansion of their Gautami Combined Cycle power plant in
Andhra Pradesh and SEPCO-I for the Talwandi Sabo power plant in
Punjab.

 

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Realty/ Construction
Hindustan Construction Company Ltd has received a Letter of Award
from Himchal Pradesh Power Corporation of India Ltd, for execution of
"EPC Contract Package for 100 MW (Civil and Hydro-Mechanical Works)
Sainj Hydroelectric Project in Kullu District of Himachal Pradesh. The
value of the contract is Rs. 431 Crore. The project is to be completed in
48 (Forty Eight) calendar months.

 

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INTERNATIONAL NEWS
US Existing home sales showed an unexpected decrease in the month of
May, according to a report released by the National Association of
Realtors on Tuesday, with higher sales in the West and the South more
than offset by a notable drop in sales in the Northeast. The report
showed that existing home sales fell 2.2 percent to an annual rate of
5.66 million units in May from an upwardly revised 5.79 million unit rate
in April.
US Consumer durable goods orders fell in the month of May due largely to
a drop in orders for transportation equipment. The Commerce
Department said that durable goods orders fell by 1.1 percent in May
following an upwardly revised 3.0 percent increase in April.
US Commerce Department said that GDP increased at an annual rate of
2.7 percent in the first quarter compared to the 3.0 percent growth that
was reported last month.
Germany's building industry orders increased in April from the previous
year. The total value of orders received by building construction and
civil and underground engineering enterprises increased 1.3% year-onyear
in April. Building construction demand increased 10.4% on an
annual basis, while civil and underground engineering demand
decreased 6.6%.

 

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Gold imports declined by over 50% to 17 tons in May as compared to 34.2 tons in April due to surge in gold prices, according to the BBA data.

 

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Insurance sector regulator IRDA on Monday came out with a set of guidelines directing life insurers to offer unit-linked insurance plans
(Ulips) at lower cost to buyers, while also providing higher life cover, though with a longer lock-in period.

While life insurance customers will benefit, the new rules could lead to a substantial cut in commission for insurance agents and force life insurance companies to drastically cut costs, leading to lower sales.

Interestingly, IRDAs decision to change rules governing Ulips came within three months of stock market regulator Sebi saying Ulips were investment products as well (on which Sebi is the sole authority) and banning 14 life insurers from selling Ulips without its permission.

IRDA on Monday said insurers would be allowed to charge up to 4% on annual premium paid on Ulips for the first five years, and thereafter charges will be reduced during the tenure of the policy. For plans of 15 years and above, the charges will be restricted at 2.25% of annual premium.

These cuts in charges would make Ulips more attractive to buyers since they will have to pay lower charges for the same premium they paid earlier. In the long run, this will add to Ulip buyers funds. Lower charges will benefit customers, said GV Nageswara Rao, MD & CEO, IDBI Fortis Life Insurance. However, this could mean lower commission to agents which might affect Ulip sales, he added.

The life insurers will also have to cut their expenses and becuase of lower sales, it may affect their topline as well as bottomline.

The capping of expenses guidelines have been made very stringent, this will have quite farreaching consequences for the industry, said Kamesh Goyal, country manager & CEO, Bajaj Allianz Life Insurance. Small regular premium policies will become unviable, thus a large proportion of people who were paying premium of less than Rs 15,000 or so a year will suffer badly, Goyal added.

There is also fear in the insurance industry that the new commission structure might not be able to sustain an insurance agents income and this channel could suffer.

IRDA has also increased the lock-in period for all Ulips from three years to five years now, including the top-up premiums. The decision is expected to make these products more like long-term financial instruments that can provide risk protection. Longer lock-in would also discourage those insurance buyers who often entered Ulips, which are market-linked products, for short term gains.

 

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BP (British Petroleum), one of the world’s largest oil and gas companies, has undertaken a programme to consolidate its information technology (IT) vendors for application development and application maintenance (ADAM).

It has now selected Infosys, TCS, Wipro and IBM among its strategic ADAM vendors. -- this was on 27th aug 2009
BP cut it budget .. see dicout from it vendors 10% discoun it budge from 2bln to 300 mlns .. inidian it vendors account for 1bln

 

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Some banks may suffer after returning 442 billion euros in emergency loans to the European Central Bank this week but the ECB will ensure the payback goes smoothly, Governing Council member Christian Noyer says

 

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RIL UP on diversification plans

Reliance Industries rose on reports the Mukesh Ambani Group is close to signing an equal joint venture agreement with global private equity and hedge fund company, DE Shaw, to enter the financial services sector.



India's largest private sector company by market capitalisation has an equity capital of Rs 3270.71 crore. Face value per share is Rs 10.

The tie-up will enable the Mukesh Ambani group, whose flagship company is Reliance Industries (RIL), to offer services like energy and carbon trading and related derivatives, the media report suggested. It will also participate in sectors such as private equity and mutual funds, the report said, adding that the joint venture may eventually seek a banking licence in India.

It was, however, not clear whether the joint venture would be set up under RIL or held directly by Mukesh Ambani.

Mukesh Ambani was freed to enter the financial services sector last month when he ended a pact with his brother Anil Ambani that prevented them from competing on each other's business arenas. When the brothers split up the family empire in 2005, Anil Ambani got control of financial services firm, Reliance Capital.

Earlier this week, Reliance Industries announced seventh oil discovery in exploration block in Cambay basin, awarded under the NELP-V round of exploration bidding. Reliance Industries (RIL), as Operator, holds 100% Participating Interest (PI) in the block.

This discovery, named 'Dhirubhai-50', the seventh oil discovery in the block so far, has been notified to the Government of India and to the Director General, Directorate General of Hydrocarbons. The potential commercial interest of the discovery is being ascertained through more data gathering and analysis.

Last week, RIL said it will invest in shale assets of US-based Pioneer Natural Resources. Under the agreement, RIL will acquire 45% interest in Pioneer's core Eagle Ford shale acreage in south Texas. RIL will pay $1.31 billion for its implied share of 1,18,000 net acres. The transaction will include combined upfront cash payment of $263 million and deferred payments of $1.05 billion associated with a carry arrangement for 75% of Pioneer's and Newpek's capital costs over four years.

Media reports suggest that shale gas accounts for between 15% and 20% of US gas production but is expected to quadruple in coming years.

Recently, RIL signed a revised gas supply agreement with Anil Ambani-controlled Reliance Natural Resources (RNRL), as directed by the Supreme Court. The Supreme Court had ordered the two companies to renegotiate the Gas Supply Master Agreement, which was signed between the Ambani brothers as part of the business demerger in 2005.