Current a/c gap shoots up on oil imports

India's current account deficit widened to a new record in the second quarter of the current fiscal year, as a sharp jump in crude oil imports and a weak currency countered higher net invisible surplus. The shortfall in the current account, a broad measure of trade and investment flows, increased to US$12.54bn as against US$4.3bn in Q2 of 2007-08, and US$9.8bn in the previous quarter, the Reserve Bank of India (RBI) said. The Capital Account had a surplus of US$7.8bn in Q2 2008-09 as against US$33.53bn in the same period last year, resulting in a BoP deficit of US$4.7bn for the second quarter versus a surplus of US$29.2bn in the year-ago period.

Satyam promoter stake falls

The 8.27 percent equity stake of the promoters in IT bellwether Satyam Computer Services has slumped to 5.13 percent after their shares, pledged with financial institutions through a family-owned holding firm, were sold in the market, the firm disclosed to the Bombay Stock Exchange (BSE) late Friday.

In a letter to the BSE listing department, Satyam's company secretary G. Jayaraman intimated that 2,11,48,503 shares of the promoters pledged with the lenders were sold in the market 'for an undisclosed sum'.

'Of the 5,57,28,000 shares held by the promoters through SRSR Holdings Ltd, 2,11,48,503 shares were sold in the market by the lenders with which the shares were pledged,' Jayaraman said.

After the sale, the promoters hold 3,45,79,497 shares or 5.13 percent of the Hyderabad-based company's total equity.

'Out of the post-sale shares, 2,19,65,178 shares remain transferred to lenders' account under pledge invocation,' Jayaraman said in the letter, sent after the trading ended on the BSE.

The principal promoters include Satyam founder chairman B. Ramalinga Raju, executive director B. Rama Raju and his family members.

SRSR Holding is a family-owned investment firm floated by the Raju family to leverage shares it holds in Satyam and other firms. Other firms include the two realty firms - Maytas Properties and Maytas Infra, partly owned and run by Raju's two sons - Rama Raju and Teja Raju.

November exports down 10% yoy

India's merchandise exports fell for a second month in a row in November, as recession in the country's leading trading partners - the US and the UK and EU - led to lower demand for its products. Indian exports declined in October, marking the first monthly fall in five years. Exports during November 2008 were down 9.9% at US$11.5bn while imports too slowed sharply to US$21.57bn, up only 6.1% over the same month last year after crude oil prices collapsed from a record high. Imports had been growing at a brisk pace till October. As a result, the trade deficit for the month stood at US$10.07bn as against US$7.56bn in November 2007. The trade deficit had reached a high of US$13.94bn in August mainly on account of high crude oil prices. In rupee terms, exports were up 12% at Rs563.74bn, while imports increased by 31.8% to Rs1.05 trillion.

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Weekly Newsletter - Jan 3 2009

The much awaited stimulus package could provide more ammunition for the bulls to fire on all cylinders at least at start.

Thereafter the proceedings will hinge on the global cues. Stock specific events like a Satyam board meet and result expectations will keep bulls and bears active.

A run up in the last couple of days will also bring in some selling at higher levels. Use the upside to book some profits. Fresh money may be put in at lower levels.

The year 2008 has taught us many a lesson. Pays to remember some of them before taking a plunge.

Satyam saga continues

There is no end in sight to the misery of the beleaguered IT major Satyam Computer Services, as three more Independent Directors put in their papers even as the management tried hard to keep the employee morale up. One independent director, however came to the rescue of Satyam, saying that he won't quit the sinking ship. The stock shot up during the week on expectations of an imminent change in top management in the wake of a series of disastrous moves that have violated all norms of corporate governance. Media reports suggested that rival software firms (both global as well as local) along with private equity players were looking at acquiring the country's No.4 software exporter.

Satyam announced that the board meeting that was slated on December 29 has been postponed until January 10, to consider the sale of a stake by the owners and a possible buy-back of shares. "In order to ensure that these questions are properly addresses, and that the interests of stakeholders are fully and carefully considered, Satyam has decided to broaden and scope of its deliberations beyond a possible buy-back of its stock," said B Ramalinga Raju, Chairman and Founder of Satyam. The company also confirmed that its promoters pledged all their shares, held by the family-run SRSR Holding Pvt. Ltd., with institutional lenders over a period of time since September 2006.

Interestingly, Satyam said two independent directors, Vinod Dham (the father of Pentium) and Krishna G. Palepu (professor in Harvard Business School), wanted to participate in the meeting sometime during the second of week of January. However, the two, along with one more independent director, Mendu Rammohan Rao (Dean of the Indian School of Business), stepped down from the company's board. The move brought down the number of directors on the Satyam board to just five. The longest-serving member Mangalam Srinivasan quit last week. But, former Union Cabinet Secretary, T. R. Prasad and another independent director V. S. Raju, former Dean of IIT-Delhi, made it clear that they were not resigning.

RBI unveils deep cuts in policy rates

On a review of current global and domestic macroeconomic situation, the Reserve Bank of India (RBI) decided to undertake further measures to enable banks to provide credit for productive purposes at appropriate interest rates. The central bank reduced the repo rate under the liquidity adjustment facility (LAF) by 100 basis points (bps) from 6.5% to 5.5% with immediate effect. The RBI also reduced the reverse repo rate by 100 bps from 5% to 4% with immediate effect. The cash reserve ratio (CRR) of scheduled banks will be cut by 50 bps from 5.5% to 5% from the fortnight beginning January 17.

The reduction in the CRR will inject additional liquidity of around Rs200bn to the financial system, the RBI said in a statement on its web site. The RBI said it would continue to maintain a comfortable liquidity position in the system. The central bank also said that the fundamentals of the Indian economy continue to be strong. "Once the crisis is behind us, and calm and confidence are restored in the global markets, economic activity in India would recover sharply," the RBI said. "But a period of painful adjustment is inevitable."

Stimulus package...the second coming

The Government announced the second round of its fiscal stimulus package to bolster India's economic growth amid a deepening gloom across the world in the wake of the worst financial crisis since the Great Depression. The Centre said that it was closely monitoring its spending to expedite the pace of expenditure for all schemes and programmes. The Government said it will set up a fast track monitoring committee to ensure expeditious approval and implementation of central projects. Chief Ministers are being advised to do the same.

The new measures outlined, taken together with steps taken earlier constitute a substantial counter-cyclical stimulus in the current year, the Government said, adding that it does not envisage any further measures in the current fiscal year. However, the Centre said that it is aware that the measures required to provide a stimulus to the economy have to extend beyond the current financial year. Towards this end, it is finalising Plan and Non-Plan expenditure that will be required in the next financial year to maintain the tempo.

The Plan for the next year will include proposals for recapitalization of the public sector banks. The recapitalization is expected to be of the order of Rs200bn over the next two years. This will help to ensure that the banking system will not suffer from capital adequacy constraints in order to provide credit growth needed to sustain the economic momentum in 2009-10, the Government said.

Got cheated ? Complain !

If you have been cheated by the petrol station who tries to distract you and fill up less fule or LPG distributor tries to promote 'SAFETY' by forcing you to buy products worth thousands - complain to the company (IOC, BPCL or HPCL) and you might get a surprise resolution in a couple of days with the Area Sales manager usually calling you or replying to your complaints!

Register a complaint through their websites or call them! -

IOCL - http://webapps.indianoil.co.in/paribhavam/

HP Gas - http://jihaan.hpcl.co.in/cms/register.aspx

HP Customer Service - http://www.hindustanpetroleum.com/En/UI/Locatorsearch.aspx

BPCL - http://www.bharatpetroleum.com/general/gen_customer_grievance.asp?from=corp

Please forward this to people who you think are affected!