Excess liquidity will ensure there will not be a big fall in market: Morgan Stanley

Chetan Ahya of Morgan Stanley said that he doesn't expect Fed to make any changes in the interest rates for the year. There are not enough signals to warrent a rate cut by Fed this year. He said that there is no need to cut rates at this point of time on account of sub prime mortgage fears.

About global markets, he said that global liquidity conditions will remain fairly comfortable. Risk premium were higher in last few months, but we have no concerns over it yet. He opined that excess liquidity will ensure that there will not be a big fall in the markets.

He further said that long bond yields across asia have gone up in the region and will continue to remain the same way. The investors' confidence will dictate asset prices and not the liquidity.

He said that they are concerned and will watch how sub prime market and Chinese market performs, since he believes that the US subprime and Chinese markets are key for all asset classes. He beleives that there are signs of slowing of growth despite strong IIP nos.

The GDP growth for FY08 seems at 7.7% and expect inflation to be at 5% level on the rise of rupee, he said. About Rupee appreciation, he opined that it will slow down and sees 3% to 4% annualised appreciation in the Rupee value. He said not to expect any policy rate hikes at this stage in India.

About sectoral markets, he said that there are downside surprises for interest rate sensitive sectors like Financial, Property and Auto sectors.




Sebi extends PAN deadline for mutual fund investors

The market regulator Securities and Exchange Board of India (Sebi) on Tuesday, 26 June 2007, extended the deadline for mandatory quoting of Permanent Account Number (PAN) by mutual fund investors till 31 December 2007 provided they give proof of application made for getting PAN.

The market watchdog relaxed the norms for mutual fund investors on request by Association of Mutual Funds in India (AMFI) which felt that it would be difficult for large number of small investors to obtain PAN in a short time.

Mutual fund investors investing more than Rs 50,000 anyway are required to quote PAN under regulatory norms.

Meanwhile, Sebi discontinued the practice of quoting Unique Identification Number and made PAN the sole identification number for all participants in the securities markets, effective from 2 July 2007.




World Bank approves $600 million loan to India

The World Bank has approved a $600 million loan to India to help revive thousands of loss-making rural cooperative banks and fight village poverty through cheap loans.

As yet, 12 of India's 29 states have sought financial help for their cooperative banks.

About 87% of marginal farmers and 70% of small farmers have no access to credit from a formal financial institution and have to depend on "extortionate" money lenders.




Government exempts some firms from preference share norms

The finance ministry said on Tuesday, 26 June 2007, firms that were on advanced stage of issuing preference shares before the government announced revised guidelines for the sector in April 2007 would be exempted from meeting the new norms.

Firms claiming benefit under the exemption must complete the process of issuing the shares and receive the money in return for such shares by 31 July 2007, government said.

On 30 April 2007, the government had issued revised guidelines for foreign investment in preference shares. It said foreign investment coming in as fully convertible preference shares, would be treated as part of the share capital. Other types of preference shares like non-convertible and optionally convertible, will be treated as debt and are required to conform to ECB guidelines and caps.




Maoists blew up a railway station and trucks transporting minerals

Maoist insurgents blew up a railway station and disrupted public transport across several Indian states on Wednesday.

Biramdih railway station in West Bengal was blown up, disrupting links with many parts of east and south India. A coffee extracting plant in Vishkhapatnam, a SEZ location, was also blown up.

On Tuesday, a goods train engine was blown up and another set ablaze in Jharkhand. Five trucks transporting minerals were set on fire in the state.

Maoists called the two-day strike in their strongholds of east and central India to protest against special economic zones (SEZs), low-tax enclaves which would enhance industrial growth but farmers in these areas will lose their land.




India-Thailand FTA to be in place by 2010

Prime Minister Manmohan Singh and Thai Prime Minister Surayud Chulanont met on Tuesday (26 June 2007) to speed up negotiations on a free trade agreement between the nations. India and Thailand have so far had a limited free trade pact agreed in 2003 and are negotiating a full treaty which is expected to be finalised by 2010. The bilateral trade volume has crossed US$ 3 billion and is expected to touch US$ 7 billion by 2010.

The Prime Ministers of Vietnam and Cambodia will visit the country early next month to strengthen economic and cultural ties with India. External Affairs Minister Pranab Mukherjee will tour Indonesia and Singapore. This is an indication that the goverment is pursuing closer trade as well as defence ties with Indonesia, Singapore, Thailand and Malaysia.




Rigid monetary policy and rising rupee moderate inflation:FinMin

Finance Minister Palaniappan Chidambaram said on Wednesday that RBI's policy tightening and the rupee currency's strength had helped to moderate inflation to an extent. The goverment intends to maintain inflation at 4-4.5% this year. The central bank has raised interest rates five times in the past year to 7.75% to combat inflation pressures. The rupee has strengthened about 9% so far this year against the dollar, hurting exporters but Chidambaram said the currency's strength was a reflection of huge capital inflows into the country.




Hefty Sell-off in progress, Gold and Silver crash further

Investors holding out before the fed decides the rates over the next two days

Precious Metals are still witnessing a hefty sell-off by the traders on MCX, thrashing by considerable margins. On COMEX precious metals are modestly lower suggesting that the investors were holding out before the fed meet, Federal Reserve will decide the rates over the next two days (27th June and 28th June).

MCX Gold which closed the preceding session at Rs 8637 per 10 grams, is now at Rs 8606 down Rs 31. Silver has been the major sufferer among precious metals with July benchmark contract squeezing by almost Rs 1000 in the last 3 days. Silver is now trading at Rs 16776 per 10 grams down Rs 112. Gold is likely to be on the weaker side in the next two days. Supports for the contract are at 8608 levels.

Two major reports were released last night in US, the Conference Board released its report on consumer confidence in the month of June, showing that its consumer confidence index fell to 103.9 in June from an upwardly revised 108.5 in the previous month. Economists had expected the index to edge down to 106.0 compared to the 108.0 originally reported for May.

The Commerce Department released its report on new home sales in the month of May on yesterday, showing that sales fell 1.6 percent to an annual rate of 915,000 units in May from a revised 930,000 unit rate in April. With the decrease, new home sales were down 15.8 percent compared to May of 2006.

The major currency pairs were little changed in early Wednesday trading, with the greenback holding steady versus the euro around 1.3445 and hovering around 122.49 against the yen, as Japan's finance minister said he's carefully monitoring the market.




Tulip IT $125mn FCCB conversion at 34% prem

Tulip IT Services today announced the conversion price of its zero coupon foreign currency convertible bonds (FCCBs) of $125 million.

According to a release issued to the BSE today, the FCCBs will be converted to shares at Rs 1,137.22 per share - a premium of 34% to Rs 848, the closing price of the company's scrip on the BSE on June 26, 2007.

The yield to maturity has been set at 7.38% and the bonds will be redeemed 144.51% of par on August 26, 2012 (if not previously converted, redeemed or purchased and cancelled), the release said.

The lead manager has an option to increase the issue size by an additional $25 million, the release added.




World Bank approves USD 600 mn loan for Indian farmers

The World Bank today approved one of its largest support packages to India with a USD 600 million loan and credit designed to transform access to financial services for Indian farmers.

The Strengthening Rural Credit Cooperatives Project supports the Government of India's programme to reform and revitalise the country's rural Credit Cooperative Banks (CCBs).

These include some 31 state cooperative banks, 367 district central cooperative banks and over 100,000 primary agricultural credit societies.

The goal is to transform them into efficient and commercially viable institutions responsive to the financial service needs of India's poorer farmers, including small and marginal farmers, the Bank said in a statement.

"Since the early 1990s, India has introduced impressive financial sector reforms that have resulted in increased competition, diversification, openness and depth.

"Yet, India's rural population still has limited access to finance from formal sources, relying instead on extortionate money lenders. The problem is particularly severe for small and marginal farmers, who are among the poorest of India's rural dwellers farming, respectively, less than one acre and between one and four acres of land." the Bank said.

The estimates suggest that some 87 per cent of marginal farmers and 70 per cent of small farmers have no access to credit from a formal financial institution.

"Better access to finance for India's rural poor is absolutely critical for higher rural growth, for reducing inequality, and ultimately, alleviating poverty," said Isabel Guerrero, World Bank Country Director for India.

By providing small farmers with improved financial services, such as credit, savings, remittances and insurance, this project will play a significant role in helping India's rural poor benefit from growth opportunities, Guerrero said.

Twelve Indian states, Andhra Pradesh, Arunachal Pradesh, Bihar, Gujarat, Harayana, Madhya Pradesh, Maharashtra, Orissa, Rajasthan, Uttar Pradesh, Uttarakhand and West Bengal have signed the Memoranda of Understanding with the Government of India and the National Bank for Agriculture and Rural Development (NABARD) to the reform programme.

Potentially viable CCBs in those states will commit to a set of far-reaching legal, regulatory, governance and institutional reforms which will open the way to financial and operational restructuring.

In the process the CCBs will be recapitalised with grants to wipe out the accumulated losses, the value of members' capital will be restored, and a minimum capital to risk weighted assets ratio (CRAR) of 7 per cent will be achieved.

The project will also provide technical assistance throughout the process to strengthen CCB governance, managerial and operational performance, and support the computerisation for enhanced efficiency and transparency.

"The project will transform India's rural credit cooperative banks into efficient and commercially viable institutions that can provide financial services to the poorest farmers at affordable terms," said Priya Basu, World Bank Lead Economist and project team leader.

The loan from the International Bank for Reconstruction and Development (IBRD) has 20 years maturity, including a five year grace period. The credit is provided by the International Development Association (IDA), the World Bank's concessionary lending arm and has 35 years to maturity and a 10-year grace period.




United Phosphorus buys 2 products from DuPont

United Phosphorus Ltd. said on Wednesday that it has acquired the global triphenyltin hydroxide contact fungicide (TPTH) and fenbutatin-oxide miticide (TNTO) businesses from DuPont. The two products are marketed primarily as Super Tin and Vendex, respectively.

Triphenyltin hydroxide is a contact fungicide used mainly on potatoes, sugar beets and pecans. Fenbutatin-oxide is one of the largest tin acaricide used on various crops such as citrus and pome fruit.

Both the products will strengthen the company's position in the fruit, nut, vegetable and row crop markets, United Phosphorus said in a statement.

Cerexagri, which the company acquired last year, has had a long-standing marketing alliance with DuPont on TPTH.

Under this agreement, United Phosphorus and its subsidiaries throughout the world will be selling triphenyltin hydroxide and fenbutatin-oxide and its formulations from October 1. Until then, DuPont will be acting as agent for United Phosphorus and its subsidiaries.

The deal follows six acquisitions in 2006, which allowed United Phosphorus to become the third largest global generic agrochemical company.




Jain Irrigation gets Rs 84cr mango pulp order

Jain Irrigation Systems has bagged its largest order of Rs 84 crore from Hindustan Coca Cola Company for supply of mango pulp. Coke bottles a mango beverage under the brand name Maaza.

According to an official release issued by the Jain Irrigation to the BSE today, the mango pulp business is expected to exceed a turnover of Rs 160 crore this year based on additional export orders in hand. The entire order will be processed in the current mango season. It expects the Fruit & Vegetable Processing Division to register more than 50% growth in the current financial year.

The company has five plants for fruits & vegetables in the vegetable processing in India and one in the USA. It expects to process in excess of 75000 MTs of mangoes in the current season registering 60% growth in amount of quantity processed.

It is a major supplier to many MNCs and to global leading beverage & food brands and has emerged the largest processor of fruits & vegetables from India, the release said.

It will continue to invest to expand product range and to strengthen backward linkage with farmers so as to become major supplier of frozen, aseptic and dehydrated fruit & vegetable products, the release added.