Current news & Rumours in the mkt

[praveen taneja]

MUMBAI: State Bank of India (SBI), the largest bank in India and one of the leading players in the housing finance market, has raised interest rates on home loans. Although the bank will continue with its 8% teaser rate — which the SBI had introduced more than a year ago — for the first year, it has increased rates for the subsequent years, effective April 1. The hike in home loan rates by SBI was triggered by the recent increase in its cost of funds.

Till March 31, SBI had two schemes — The Easy Home Loan (up to Rs 50 lakh) and Advantage Home Loan (above Rs 50 lakh). ‘‘ From April 1, both the schemes have been merged and extended for a month,'' an SBI spokesperson confirmed to TOI. ‘‘ The rates applicable for new loans sourced from April 1 till April 30 are 8% for the first year, 9% for the second and third years and floating rate at 1.75% below SBAR (SBI's equivalent of prime lending rate, or PLR) thereafter ,'' the spokesperson added.

So in effect, the home loan rates for the second and the third years have gone up by 50 basis points (100 basis points=1%), from 8.5% earlier to 9% now. While fourth year onwards, at the current structure , the interest rate will be at 10% per annum, since currently SBAR is at 11.75%. Earlier , from the fourth year onward , the floating rate was at 2.75% below the SBAR and the effective rate was 9%.

 

[praveen taneja]

Foreign funds have put in over Rs 20,600 crore (USD 4.54 billion) in the Indian stock market so far this year, with a majority of the chunk coming in the last month.

Analysts cautioned that markets may witness some selling pressure during the coming period and in absence of domestic trigger, Indian shares would follow global cues.

Over the week, Indian currency has further strengthened against the greenback and touched a near 19-month high of Rs 44.89/90 against a dollar.

Sectors such as banking and metals will be in demand, analysts said. Although IT stocks are expected to trade in range ahead of the bellwether Infosys' result due next week

 

[praveen taneja]

Can India emerge as a significant competitor to China in manufacturing? Poor infrastructure is often seen as a bottleneck.

The China price advantage is eroding. About 18 months ago, China was about 30% cheaper than India. Today, that has come down to 10% or lower. That’s not a huge difference when you consider the quality aspect and the difficulty in communication in China. Customers may not be willing to pay 30% higher, but they are willing to pay 10% more for better quality and communication. IP (intellectual property) protection is also a concern. Companies are worried that their design may be copied and someone may come out with a similar product. They are more comfortable sharing designs and drawings with suppliers in India. There are certain technologies, such as metal casting, metal forgings and plastic moulding, where India is very good. From an infrastructure standpoint, these industries are well-supported. It is also good for textiles. China is cheap, but when buyers think great quality, they think of India and Bangladesh. This is where India can compete, not necessarily on price but on quality.

 

[praveen taneja]

Corporate News Headline
Larsen & Toubro plans to set up a 1,600 Mw power plant in Karnataka, a top company official said today. (BS)
Maruti Suzuki on hiked prices of several models, saying it wanted to pass on to customer's part of a rise in input costs and expenses related to complying with new emission norms. (BS)
JSW Steel plans to expand the steel manufacturing capacity at its Bellary plant in Karnataka at an investment of USD 5-6 bn, a top company official said. (BS)

 

[praveen taneja]

Economic and Political Headline
• India's fuel inflation quickened in late-March and food prices climbed, making double-digit headline inflation a near certainty. The fuel price index rose 12.75% in the 12 months to March 20, higher than an annual rise of 12.68% in the previous week. Fuel costs have risen following a hike in domestic fuel prices and an upswing in world crude prices. The food price index rose an annual 16.35% in the same period, above the previous week's reading of 16.22%. (BS)
• Retail sales in Germany, Europe's largest economy, fell for a second month in February as bad weather and concern that unemployment may rise kept consumers at home. Sales, adjusted for inflation and seasonal swings, fell 0.4% from January when they declined 0.5%, the Federal Statistics Office in Wiesbaden said. (Bloomberg)
• An index of UK manufacturing rose to the highest level for 15 years in March as exports climbed. A gauge based on a survey of companies increased to 57.2 from 56.5 in February, Markit Economics and the Chartered Institute of Purchasing and Supply said in an e-mailed statement in London. (Bloomberg)

 

[praveen taneja]

Aban Offshore Deploys One More DeepWater Rig

Aban Offshore Ltd has informed BSE that a Letter of Award has been received from a leading exploration & production Company for the deployment of the jack-up rig Deep Driller 1 offshore India for a firm period of 1 year plus two optional periods of 6 months each. The estimated revenues from the firm period of the deployment is about USD 41 million (equivalent to Rs. 185 Crores). The deployment is likely to commence during the second quarter of calendar year 2010.

A Contract has been signed for the deployment of the jack-up rig Aban VII as an accommodation unit offshore Qatar for a 6 week period. The estimated revenues from the Contract is USD 2.5 million (equivalent to Rs. 11 Crores). The deployment is likely to commence during the second quarter of calendar year 2010.

 

[praveen taneja]

Indian Commodities Market
Crude oil prices surged in the week primarily on a weak dollar; and on intermittent positive
US economic indicators and worries about terrorist bombings in Moscow; prices ended at
$83.76 a barrel on March 31 as compared to $80.53 a barrel on March 25
US crude oil inventories rose 2.9mn barrels to 354.2mn barrels for week ended March 27
World Gold Council expects China's gold demand to double within 10 years, which would
indicate annual gold demand of around $29 bn at end-2009 average prices
The empowered Group of Ministers on food prices rejects the consumer affairs department's
proposal to lower subsidy on sale of imported pulses given to state-run trade agencies
Government notifies extending the export ban on pulses by one more year to Mar 31, 2011
Government makes available 18 lakh tonnes of non-levy sugar for the month of April
FMC asks exchanges to impose a penalty of Rs.1-5 lakh, with effect from April 1, on brokers
carrying unauthorised trading activities
Source: Crisil

 

[praveen taneja]

Indian Government
Commerce Secretary says that the appreciation of the rupee against the US dollar will hurt
India's export growth
Government to reaffirm its resolve to achieve fiscal health at the earliest by committing itself
to new goal posts through a change in the law
Government comes out with guidelines for wholesale trade to ensure that foreign retailers
cannot make a backdoor entry into out-of-bound multi brand retail
Government tells the RBI that the norms for approval of new banking licences could be
based mainly on the existing policy framework for ownership of private banks
Disinvestment department to consult SEBI for auction of public sector units’ IPOs
Divestment department says it will introduce quality parameters on the basis of which
bankers to the issues of public sector companies will be chosen
Government to classify all equity placements before a public offer to any investor, including
private equity firms, or employees as promoter equity
Corporate Affairs Ministry is studying ways to prevent over pricing of IPO and monitoring the
end use of funds raised through IPOs to prevent fund diversion
Government says launch of mobile number portability services has been further extended to
June 30
Civil Aviation Ministry plans to ask the cabinet to sell the state’s 49% stake in National
Aviation Company of India

 

[praveen taneja]

Regulatory Updates in India
IRDA says companies that did not lower management expenses below the prescribed
ceiling will have to set aside more capital to meet the proposed higher solvency requirement
IRDA Chairman says multiple regulators may not be healthy, and calls for clarity on aspects
that can result in regulatory overlap
DoT clears applications of all companies to participate in the auction of spectrum for
providing 3G and wireless broadband services
CBDT clarifies that a company that makes a notional loss on a forex derivative because of a
fall in its value cannot deduct the loss from its taxable income since it still owns that
derivative
The Enforcement Directorate registers a case under the Prevention of Money Laundering
Act against Etisalat DB; and is also investigating Loop Telecom for alleged violation of
telecom policy
Income Tax department seeks Supreme Court direction on RIL sales tax incentive issue
Confederation of Real Estate Developers’ Associations of India says it would consider taking
the government to court if its demand for excluding land cost from the proposed service tax
on housing complexes under construction was not met
Delhi High Court rules that an Indian company making a payment to an overseas entity is
obliged to deduct tax only if the income of the foreign firm is liable to be taxed in India
The Corporate Debt Restructuring cell approves the debt recast plan of Vishal Retail

 

[praveen taneja]

International Markets
IMF to dictate terms of assistance it provides to Greece
IMF head says that Greece has not asked the y IMF for help and there is no immediate sign of
its needing to do
Euro zone nations say bailout program for Greece and others will stabilize markets
S&P’s says Greece's sovereign credit ratings and outlook won't be affected by the bailout
plan from the Economic & Monetary Union and the IMF
Greece raises $6.7bn in bond sale to refinance its debt
Greece plans to issue a dollar denominated bond by the end of May to raise urgently
needed funds
German government agrees on a new tax on banks for a fund which could be used for
bailouts in the event of another banking crisis
Bank of Japan says that China is unlikely to experience the kind of asset price bubble crash
that Japan faced in the 1990s, but a rapid outflow of overseas funds could lead to a big
adjustment in its property prices
Bank of Japan’s Tankan headline diffusion index for large manufacturers improved to -14,
rising from -25 in the December survey
Japan’s industrial production fell a seasonally adjusted 0.9% in February from January
Japan’s jobless rate holds steady at a 10 month low of 4.9% in February