Bond Yiels Rise in India

Mayank Mehta, Chandrasekhar Atreya and Sanjay Barot
09 Jun, 2010
New York City

A private panel headed by HDFC chief Deepak Parekh has asked the government to change rules to allow the recommended debt fund of $10 billion for financing infrastructure projects in India to use untapped resources from pension and insurance funds.

[R]5:00 PM Mumbai, 8:30 AM New York – Stocks in Mumbai traded higher after fluctuating. Expert panel on infrastructure debt fund recommends use of untapped amounts of pension and insurance funds. Glenmark Pharma strengthens on favorable US court verdict on generic drug. Marico spurts on acquisition news.[/R]

Stocks in India rose for the first day this week after moving sideways several times during the day. The Sensex index finally closed 0.25% up or 40.79 to 16,657.89. The CNX Nifty index rose 12.30 or 0.25% to 4,999.45. Among the Sensex 30 stocks, 17 rose and 13 fell.

On BSE trading, 1,515 stocks advanced, 1,168 declined and 118 were unchanged. IT and capital goods stocks fell. Metal and banking stocks rose. Reliance Industries pared gains.

Rupee edged lower 2 paisa to Rs 46.95 against one dollar.

An expert panel headed by HDFC chief Deepak Parekh has asked the government to change rules to allow the recommended debt fund of Rs 50,000 crore for financing infrastructure projects in India to use untapped resources from pension and insurance funds.

The panel on the infrastructure debt fund has also urged regulators like the RBI, SEBI, Insurance Regulatory & Development Authority and the Pension Fund Regulatory & Development Authority to tweak their existing laws to enable the market to use the large amount of untapped insurance and pension funds.

Meanwhile the IMF has reported that risks to the global economic outlook have risen significantly.

“As the risks to the global economic outlook have increased significantly, policy makers have very little room to provide support for growth. The main concern is that the room for continued policy support has become much more limited and has, in some cases, been exhausted,” said IMF Deputy Managing Director Naoyuki Shinohara in a speech at Singapore today.

India’s 10-year bonds fell after the government announced a Rs 11,000 crore sale of notes on June 11. The announcement snapped a three day gain as bankers have less liquidity to invest in debt after mobile operators withdrew funds to pay license fees for 3G services.

Notes maturing in 2015, 2020, and 2032 will be on sale on June 11.

State Bank of India, the nation’s largest bank needs about Rs 36,000 crore in the next five years to maintain its capital adequacy ratio as well as expand its business. The bank is planning to raise as much as Rs 20,000 crore of that amount from a rights issue in the second half of the year ending March 31.

The government, the bank’s largest shareholder is likely to acquire 60% of the shares offered, Chairman Om Prakash Bhatt said in New Delhi today.

Insurance costs for oil companies are set for an exponential rise after the worst oil spill in the history of U.S., said Oil and Natural Gas Commission Chairman, R.S. Sharma while speaking to reporters in New Delhi today.

ONGC insures its operations on an annual basis and spent nearly Rs 15,000 crore to cover its assets around the world. This could have been three times higher had ONGC renewed the policy after the incident, he said.

Gainers & Losers

ARSS Infrastructure Projects Limited rose 6.9% to Rs 1,140.00 after the company announced that it has received a work order from RITES Limited, Nagpur on June 07 for Rs 114.49 crore.

Bajaj Finserv Limited rose 3.78% to Rs 465.55 on report that a unit of Berkshire Hathway may buy about 5% to 10% stake in the firm by open market purchase.

Bharti Airtel Limited rose 6.25% to Rs 273.90 after the company completed the acquisition of African assets of Kuwait''s Zain for $10.7 billion.

Dabur India Limited fell 2.12% to Rs 191.90 on profit booking after the stock rose 6.81% in the past five sessions.

Glenmark Pharmaceuticals Limited rose 0.33% to Rs 258.85 after the company reported that sanofi-aventis and Abbott Laboratories have failed in their court bid to stop India''s Glenmark Pharmaceuticals Limited from selling a generic version of hypertension drug Tarka in the U.S.

HDFC Bank Limited rose 1.32% to Rs 1,885.00 after the private sector bank''s ADR surged 3.65% to $139.42 on the New York Stock Exchange on June 8.

Hindalco Industries Limited rose 1.66% to Rs 134.40 after the company reported that it plans to borrow about Rs 14,000 crore in the next couple of years to build two new plants to treble its aluminum capacity.

ITC Limited fell 3.97% to Rs 278.20.

JSW Steel Limited rose 1.62% to Rs 1,028.50 after the company reported 23% increase in crude steel production to 5.65 lakh tons in May 2010 over May 2009.

Kwality Dairy (India) Limited rose 4.98% to Rs 149.60 extending gains for the second consecutive day, after the company fixed June 16 as the record date for a 5 to 7 bonus issue.

Marico Limited rose 6.25% to Rs 112.20 after the company reported that it is looking for acquisitions in Africa and Asia as it expects 45% of its skincare revenues to come from overseas.

Niraj Cement Structurals Ltd rose 3.48% to Rs 49.05 after a joint venture of the company secured an order worth Rs 80.32 crore.

NMDC Limited fell 0.64% to Rs 254.95.

Rural Electrification Corporation Limited rose 2.46% to Rs 290.00.

Strides Arcolab Limited rose 2.25% to Rs 368.20 after the company secured final approval from US Food & Drug Administration to market Fosphenytoin sodium injection in 50 milligram/milliliter strengths.

Three state-run oil marketing companies rose by 2.68% to 3.75% after finance minister Pranab Mukherjee said on June 8, a decision on fuel prices would be taken shortly.