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Friday, September 06, 2013

Conviction slowly sets in!

One needs to be slow to form convictions, but once formed they must be defended against the heaviest odds. - Mahatma Gandhi

Healthy global cues and the great hope in the new RBI governor have slowly begun to bring some conviction to the investors. The Rupee gained 1.6% to close at 66.01 against the dollar. The main indices too staged a smart upmove. The rally underway could be short-lived and extreme caution should be exercised.

The outlook is a bright start. The developments in Parliament will be eyed too. Dovish comments have come in from the European Central Bank. The situation in Syria will also be on top of investors’ minds. Syria will remain in focus at the G-20 conference in Russia which begins today. A resolution authorising use of military force in Syria by a vote of 10-7 was passed, clearing way for vote in the full senate next week.

Moody's has cut 11 India banks subdebt ratings on increased bail-in risk.

US stocks moved up on strong US economic data. The jobs numbers released by payroll processing firm ADP showed hiring continuing at a modest pace. The August jobs report for US is due today. This report is anxiously awaited following which speculation will begin again on whether the Federal Reserve will start tapering its bond purchase program.

The Dow Jones industrial average rose 6.61 points or 0.04 percent, to 14,937.48, the S&P 500 gained 2 points or 0.12 percent, to 1,655.08 and the Nasdaq Composite added 9.743 points or 0.27 percent, to 3,658.785.

Asian stocks are mixed. Japan's Nikkei was 1% down while Hong Kong's Hang Seng index gained almost a percent. South Korea's Kospi index is marginally higher and so is China's Shanghai index.

Trends in FII flows: The FIIs were net buyers of Rs11.01bn in the cash segment on Thursday, while the domestic institutional investors (DIIs) were net sellers of Rs4.92bn, as per the provisional figures released by the NSE.

The foreign funds were net buyers of Rs6.85bn in the cash segment on Wednesday, according to the SEBI figures.

AGMs: Aditya Birla Nuvo, Alembic, Kothari Sugars and Chemicals, Pfizer, Shree Ganesh Jewellery House (I), Sunbright Stock Broking, Super Spinning Mills, Take Solutions, Uniply Industries, Unity Infraprojects, Wyeth.

In other news in the media:

The Steel Authority of India (SAIL) has requested the Government to set up a dedicated institution to finance capacity expansion in the sector. (BL)

The embattled Financial Technologies Ltd, has sought shareholder approval to raise Rs10bn to fund its future growth opportunities. (BL)

The Central Electricity Regulatory Commission (CERC) has returned the recommendations submitted by a high-level panel headed by Deepak Parekh that proposed increasing tariff for imported coal-based thermal stations of Tata Power and Adani Power. (BL)

Tata Consultancy Services has pipped Infosys and Wipro to bag a Rs1.93bn contract for setting up and managing a new software platform for the Income Tax Department, it is reliably learned. (BL)

The Cabinet Committee on Economic Affairs had decided earlier to raise the price of domestic gas but the row on the issue still looks far from settled. In what could prove a setback for Reliance Industries Ltd (RIL), there is a proposal to deny it a higher price for gas produced from its D1 and D3 discoveries, if it is established the company artificially suppressed output in these fields. (BS)

Central Bank of India (CBOI) said it has raised interest rates on high value deposits by 50 basis points to 9.50 %. (ET)

Power Finance Corp has kick started the process of bidding two ultra mega Power projects by signing an agreement with states authorizing company to issue bid documents as approved by the government last week. (ET)

The consortium of Rashtriya Chemicals Fertilisers (RCF), GAIL, CIL and FCIL will invest Rs80bn for the revival of urea plant at Talcher in Orissa with production capacity of 1.2 mn tonnes per annum. (ET)

Rashtriya Ispat Nigam Ltd (RINL) plans to increase its steel exports to around 25 % of overall sales in coming years and has already created a separate division to focus on the same. (ET)

Bharti group Chairman Sunil Mittal said he has no intention of buying back around 4 % stake that UK-based Vodafone, which also operates in India, holds in his Bharti Airtel. (ET)

Hatsun Agro Product Ltd, the Rs20bn private dairy company, will focus on Hatsun branded curd and Ibaco chain of exclusive ice-cream parlours during the current year. (BL)

The Government is considering measures to clamp down on imports of sub-standard automobile components, primarily from China. The move could bring some relief to the domestic industry, which is struggling to cope with competition from cheap imports. (BL)

In a bid to attract foreign investments, the banking regulator has allowed banks to stand guarantee on behalf of non-residents acquiring shares or convertible debentures of an Indian company through open offers/delisting/exit offers without its prior approval.(BL)

BRICS (Brazil, Russia, India, China and South Africa) nations on agreed to set up a US$100-bn foreign currency reserve pool to counter the impact of a pull-out by foreign investors when the US Federal Reserve started tapering its quantitative easing programme.(BS)

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