Business Talk

Tata Tele puts stake sale in tower arm on hold

Posted by : MMB Messenger

Tata Teleservices has put on hold its stake sale in the tower arm, reports CNBC-TV18. "The move will not happen in the near-term. We expect higher valuations due to the advent of 3G. The company has exclusive rights over the Virgin brand. It is now up to Virgin to approach the company if they want to operate as MVNO."

credit policy-silient features

Posted by : KotakInvestment

Kotak Investments
29-July-2008
RBI surprises with 50bp repo and 25bp CRR hikes
• The RBI surprised with a 50bp hike in repo rates to 9.0%, 25bp hike in CRR to 9.0% and left reverse repo unchanged, against market expectations for a 25bp hike in repo rate and CRR.
• The RBI revised up its WPI inflation target to 7.0% by March 2009 as against 5.5% earlier, and revised down its GDP growth forecast marginally to 8.0% in FY09 from 8.0-8.5% earlier.
• The hawkish move delivered a clear message that inflation dominates growth and that a slowdown in demand would be required to curtail inflation, as aggregate demand pressures persist.
• We expect the RBI to maintain a tightening bias by hiking CRR by another 25bp in Q3 2008, but expect the repo rates to remain unchanged as the RBI has front-loaded its monetary policy tightening and due to rising growth concerns.
The Reserve Bank of India (RBI) surprised yet again with a 50bp hike in repo rates to 9.0%, a 25bp hike in the cash reserve ratio (CRR) to 9.0% effective from 30 August and no change in reverse repo rates, against market and our expectations of a 25bp hike in repo and CRR (Figure 1). The RBI revised up its wholesale price index (WPI) inflation target to 7.0% by March 2009 from its earlier forecast of 5.5%, which we think looks more realistic, and revised down its GDP growth forecast marginally to 8.0% in FY09 from 8.0-8.5% earlier. The policy statement is unambiguously hawkish and delivered a clear message that inflation concerns dominate growth and that a slowdown in demand is required to curtail inflation.
According to the RBI, while inflation is largely due to rising global commodity prices, continued domestic aggregate demand pressures and inelastic supply in the short run could exacerbate inflation. As we have argued, the RBI is also concerned about second-round effects on inflation as there are signs that "consumer price inflation is catching up with producer prices." Other factors that pose an upside risk to inflation include the incomplete oil price pass-through domestically, rising fiscal deficit and still-high global commodity prices. The only dovish part of the policy is the statement that industry and some service sector growth appears to be moderating. In providing the future outlook, the RBI has left the door open for further policy action saying that challenges to monetary management "warrant reinforced policy actions on several fronts". In this context, the RBI said that "a noticeable decline in inflation can be expected towards the last quarter of FY09 (Q1 2009)."
We agree with the RBI's inflation outlook as WPI inflation has not yet peaked and we expect double-digit inflation to persist until February 2009. However, we are much more bearish than the RBI on growth, expecting GDP growth to slow sharply to 7.3% in FY09 from 9.0% in FY08, because of rising headwinds from the sharp interest rate hikes, financial market turbulence, rising commodity prices and slackening foreign demand. Indeed, our composite leading index for India, declined further in Q2 2008, suggesting a continued growth slowdown (Figure 2).
In our view, the RBI has front-loaded a lot of its monetary policy tightening in anticipation of much weaker growth in the coming quarters, higher inflation in Q4 2008 due to an adverse base effect and most importantly, due to the lags involved in policy transmission. With a cumulative 275bp worth of repo and CRR hikes already in place in 2008, our bearish outlook on GDP growth, and our house view that that oil prices will drop further to US$90/bbl by Q1 2009, we judge that the urgency to hike the repo rate will be much less as the balance of risk shifts gradually from rising inflation towards slowing growth. Therefore, we expect no further repo rate hikes this year, but expect the RBI to maintain a tightening monetary policy bias by doing incremental CRR hikes to ensure that repo remains the binding rate corridor. We have pencilled in another 25bp hike in CRR in Q3 2008.

*CRR hike is effective from 30 August.
Source: CEIC and Lehman Brothers. Source: CEIC and Lehma Brothers’ report

Essar Steel not to up retail-consumer prices in Aug

Posted by : MMB Messenger

J Mehra, Director of Essar Group & CEO of Essar Steel Holdings said that his company trying to absorb the high cost push. The input prices have gone up Rs.3000-4000/tonne. The company is not increasing prices for retail consumer this month. There is no demand reduction, Mehra said.

Cabinet nod to restructure Punjab & Sind Bk equity

Posted by : MMB Messenger

The Cabinet has given its nod to restructure the equity capital of Punjab & Sind Bank, reports CNBC-TV18. The restructuring will allow the bank to raise equity via IPO. The government has also okayed the conversion of Rs 200 crore equity into preference capital, reports NewsWire18.

Cabinet nod to restructure Punjab & Sind Bk equity

Posted by : MMB Messenger

The Cabinet has given its nod to restructure the equity capital of Punjab & Sind Bank, reports CNBC-TV18. The restructuring will allow the bank to raise equity via IPO. The government has also okayed the conversion of Rs 200 crore equity into preference capital, reports NewsWire18.

Sebi to introduce KYC norms for FIIs, revisit PNs: Srcs

Posted by : MMB Messenger

In a move that can have major implications for foreign institutional investors, market regulator Sebi is thinking of introducing know-your-customer norms for FIIs. This is in the light of the RBI's concern on the origin of FII money in the domestic markets. The norms relating to Participatory Notes will also be up for review.