Foreign Fund Flows to India

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

The benchmark index in Mumbai closed at a three week high on better than expected earnings and positive comments on telecom stocks. Reliance Power completed financing for its 4,000 MW project in Andhra Pradesh. HCL Infosystems buys 60% in NTS Group for about $6.5 million.

[R]5:00 PM Mumbai, 8:30 AM New York – The benchmark index in Mumbai closed at a three week high on better than expected earnings and positive comments on telecom stocks. Reliance Power completed financing for its 4,000 MW project in Andhra Pradesh. HCL Infosystems buys 60% in NTS Group for about $6.5 million. KPIT Cummins surges on overseas acquisition plan.[/R]

Stocks in India advanced, led by advances in telecom carriers Idea and Bharti Airtel. Leading benchmark indexes closed at their highest level in three weeks.

The Sensex Index gained 1.07% or 189.25 to close at 17,840.98 and CNX Nifty Index rose 0.89% or 47.18 to close at 5,343.95. Among the Sensex 30 stocks, 22 rose and 8 fell.

On BSE trading, 1,641 stocks advanced, 1,217 declined and 88 were unchanged. Metal, banking and realty stocks rose. Reliance Industries edged higher in volatile trade.

Six telecom stocks advanced between 4.0% and 13.05% after a foreign brokerage upgraded top services providers citing an improvement in the competitive environment.

Eight sugar stocks gained 4.2% to 11.75% after Farm Minister Sharad Pawar today said that the country must ease restrictions on the sugar sector.

India’s rupee rose for a second day running after benchmark interest rates were raised across four countries in Asia.

Rupee edged higher 12 paisa to Rs. 46.74 against one dollar.

Asian and global emerging market stock funds had net inflows as investors bought more shares in India and Taiwan in the week ended July 7 after pulling out $11.25 billion from equity funds worldwide, EPFR Global said.

Global emerging market stocks attracted $518 million and those investing in Asia excluding Japan drew $124 million as inflows into India rose to an 11-week high and Taiwan funds had their second-best week this year, EPFR said in a statement.

Reliance Power on Thursday announced financial closure of its 4,000 megawatt Krishnapatnam ultra mega power project developed by its wholly-owned subsidiary Coastal Andhra Power ltd.

The estimated cost of the project is Rs 17,500 crore and is financed by a 75:25 debt equity ratio. IDBI Bank is the lead manager for the debt facility with Power Finance Corporation acting as the joint lead manager.

India on Thursday announced a three year moratorium on deepwater drilling that would apply to 30 blocks issued since January 2008.

“The Cabinet Committee on Economic Affairs on Thursday approved the grant of a drilling moratorium of three years to all deepwater blocks where drilling commitments are pending, as on January 1, 2009,” Home Minister P Chidambaram said.

Drilling was affected in these blocks due to world-wide shortage of deepwater rigs since 2007, due to high crude oil prices, an official statement said. Of the 30 blocks ONGC has 16, Reliance Industries Ltd has 13 and Italy’s Eni is controlling one.

The National Institute of Securities Markets and Financial Planning Corporation (India) Pvt Ltd, on Thursday entered into an agreement to launch a joint certification examination for financial advisors.

“Financial planners should keep investor’s interest as their prime focus. This examination is the necessary first step to prepare them for rendering this service. This should be followed by continuous education and training,” said the Securities and Exchange Board of India Chairman C.B. Bhave in Mumbai yesterday.

Gainers & Losers

Alstom Projects India declined 2.0% to Rs 644 after the stock turned ex-dividend today, July 9, for a dividend of Rs 10 per share for the year ended March 2010.

HCL Infosystems Limited added 3.3% to Rs 116.70 after the company agreed to acquire a 60% stake in Dubai-based technology services firm NTS Group for about $6.5 million.

Hindustan Zinc Limited rose 0.9% to Rs 959.90 after the company increased zinc prices.

Hindustan Dorr-Oliver Limited rose 3.2% to Rs 126.40 after the company''s overseas unit secured an order worth about 8.30 million pounds.

ICICI Bank rose 1.2% to Rs 873.50 after the private sector bank today priced $500 million of international bonds at 5%.

Jamna Auto Industries Limited rose 3.7% to Rs 106.60 after the company''s board approved preferential issue of 26.31 lakh shares of Rs 10 each at a premium of Rs 85 per share to MAP Auto and Clearwater Capital Partners Singapore Fund III.

KPIT Cummins Infosystems Limited rose 2.0% to Rs 156.60 after the IT consulting firm said its board will meet on July 13 to consider strategic acquisition of Germany based niche automotive product company.

Phillips Carbon Black declined 1.5% to Rs 203 after the stock turned ex-dividend today, July 9, for a dividend of Rs 5 per share for the year ended March 2010.

PTC India Limited rose 3.9% to Rs 104.55 after the company said it is in talks with private equity fund SAIF Partners, Hong Kong to sell up to 11% in unlisted unit PTC India Financial Services.

Pratibha Industries Limited rose 0.1% to Rs 410.85 after the company with Abhyudaya Housing Construction (P) secured a project from National Highways Authority of India.

Shiv-Vani Oil & Gas Exploration Services Ltd rose 1.6% to Rs 463.50 after the company decided to launch an issue of foreign currency convertible bonds to raise $75 million.

Steel Strips Wheels Limited surged 9.3% to Rs 195.20 after the company said it has been nominated as the supplier by German car maker Audi for supplying steel wheels rims worth about Rs 178.60 crore over five years.

Steelcast rose 3.9% to Rs 111.20 after the company said its board will meet on July 14 to consider forming joint venture with Michigan Steel of USA, a leading steel foundry, for marketing of steel castings in United States.

South Indian Bank Limited rose 3.8% to Rs 188.50 after the bank''s equity changed hands in a bulk deal today, July 9.

Tata Steel rose 2.4% to Rs 495.75 after the company said it is planning to hike steel prices following increase in prices of raw materials globally.