India Lifts Bonds Investment Limits

Chandrasekhar Atreya
24 Sep, 2010
New York City

India lifted foreign investor upper limit in government and corporate debt on the rising demand for investment in infrastructure. The revised limits also sustained the gains in stocks and the index surged to a nearly three-year high. India completes the transition to cleaner fuel standards.

[R]5:00 PM Mumbai – India lifted foreign investor upper limit to invest in government and corporate debt on the rising demand for investment in infrastructure. The revised limits also sustained the gains in stocks and the index surged to a nearly three-year high. India completes the transition to cleaner petrol and diesel that are compliant with European standards.[/R]

Indian stocks rallied after the government relaxed upper limit for foreign investors in bond market.

The BSE Sensex gained 0.93% or 184.17 to close at 20,045.18. The index gained 2.3% in the week and gained more than 2% for the fourth week in a row. The CNX Nifty Index on the National Stock Exchange also gained 0.9% to close at 6,010.70.

The government on Thursday raised the cap on investment by foreign institutional investors in the country’s debt and bond markets by $10 billion to $30 billion. According to an official statement foreign institutions will be allowed to invest up to additional $5 billion in government bonds and $15 billion in corporate debt.

In additions, institutions are permitted to invest $5 billion in bonds of infrastructure companies and government bonds with a residual maturity of over five years.

General Motors India will inaugurate its new engine manufacturing plant near Pune on November 12, a top executive of the auto major said. The state-of-the-art facility at Talegaon, on the outskirts of Pune, has been built at a cost of $230 million.

“This is GM’s first flexi-engine plant in the world that can make both petrol and diesel engines. The plant has capacity to manufacture 160,000 engines,” said Karl Slym, President and Managing Director of GMI.

Loans to businesses and individuals have picked up sharply in the fortnight to September 10, after witnessing sluggish growth for almost two months.

Loans to individuals and businesses surged by Rs 27,699 crore during the fortnight ended September 10 to Rs 3,331,809.78 crore, according to the latest data released by RBI.

This is the highest fortnightly growth since July 2, 2010, during which banks lent a record Rs 90,492 crore to fund telecom companies pay their 3G license fees.

Adani Wilmar is planning to invest Rs 1,000 crore for expansion over the next two years and expects to double its soya meal exports to 1 million tons this year.

“The company will be investing Rs 1,000 crore during the next two years. This capex plan comes on the heels of the company investing a similar amount to ramp up its refining capacity last year,” said Adani Wilmar Managing Director, Pranav Adani in Mumbai on Thursday.

Pepsico is looking to invest $500 million (about Rs 2,275 crore) in India in the next two years as it expands the capacity to meet rising demand. Recently, the arch rival Coca-Cola said it will also invest more than $210 million in India to expand its capacity.

According to industry sources, the company will be completing its $500 million investment announced in 2008 this year, a year ahead of its original schedule, and is looking at a similar fund infusion in the next two years.

India has fully switched over to cleaner Euro-III and Euro-IV petrol and diesel as of Wednesday and well ahead of the October 1 deadline, Minister of State for Petroleum Jitin Prasada said in New Delhi Thursday.

Shree Cement on Thursday said it will invest Rs 3,500 crore to expand its cement production capacity by seven million tons in the next five years.

“We have a production capacity of 13 million tons which will be expanded to 20 million tons by 2015,” Shree Cement Managing Director H.M. Bangur said on the sidelines of 49th annual meet of Cement Manufacturer’s Association on Thursday at New Delhi.

JSW Steel received Rs 4,800 crore from JFE Holdings of Japan following a deal in July this year when JSW sold a 14.99% stake to JFE. According to the deal announced July 27, JFE would directly buy the stake in JSW in exchange for cash and JSW will issue fully convertible debentures which can be converted at a later date.

“The amount will go towards reducing our debt and allow us to accelerate our growth plans forward,” said Seshagiri Rao Joint Managing Director of JSW Steel, while addressing the media in Mumbai Thursday.

German chemical major Lanxess is looking for acquisitions in the mid-cap category in Brazil, India and China as part of its expansion plans, company CEO Axel C. Heitmann said in Dusseldorf, while speaking at the company’s fourth media day recently.

Gainers & Losers

Aurobindo Pharma Limited rose 1.4% to Rs 1,062.95 after the generic pharmaceutical received US drug regulator''s approvals for ampicillin and sulbactam injections in bottle, single-use vial and bulk pack formats.

BASF India Limited surged 4.9% to Rs 658.05 after the agrochemical and plastic product maker launch seven products in the crop protection segment over the next three years.

EIH Limited rose 0.3% to Rs 140.40 after the hotel manager board approved a rights issue to rise as much as Rs 1,300 crore.

Everest Kanto Cylinder Limited surged 4.8% to Rs 125.55 after the industrial and compressed natural gas cylinders maker is in talks to sell its U.S. subsidiary CP Industries. The company had acquired CP Industries for $64.25 million in 2008.

Financial Technologies (India) Limited declined 11% to Rs 1,221.00 after the technology provider application to operate stock market was rejected by the Securities and Exchange Board of India.

JSW Steel Limited increased 1.7% to Rs 1,276.00 after the iron and steel product in consortium with Japan-based JFE Holdings Inc plans to set up a high-valve electric steel plant in India.

KPIT Cummins Infosystems Limited surged Rs 6.70 to Rs 173.20 after software development said board will meet on September 27 to consider acquisition of a company in the United States.

Lupin Limited rose 0.4% to Rs 400.75 after the pharmaceutical company''s finance chief Ramesh Swaminathan told the media that the firm expects sales to grow 22% in the year ending March 2011.

Navin Fluorine International Limited fell 0.8% to Rs 291.65 after the fluoro-chemical boards meet today to consider buyback of equity shares.

Omaxe Limited rose 0.9% to Rs 141.30 after the estate development company''s wholly-owned unit secured a road construction contract worth Rs 70.43 crore.

PBA Infrastructure Limited increased 2.2% to Rs 90.65 after the infrastructure developer received a road construction order worth Rs 252.50 crore in Rajasthan under the National Highways Development Project.

Roman Tarmat Limited gained 3.7% to Rs 53.00 after the construction company secured an order worth Rs 33.83 crore for construction of pavement and ring roads at Shirdi town in Maharashtra.

Satyam Computer Services Limited plunged 6% to Rs 100.10 after the information technology American depository receipt slipped 7.41% to $6.12 on the New York Stock Exchange on September 23.

Sun Pharmaceutical Industries Ltd. rose 1.7% to Rs 1,920.55 after the pharmaceuticals board approved a 5-for-1 stock split.

Tilaknagar Industries Ltd. increased 1.2% to Rs 265.75 after the alcoholic beverage company fixed September 30 as the record date for a 2:1 bonus issue.

Unichem Laboratories Limited gained 2.3% to Rs 494.00 after the pharmaceutical company got certificate of suitability from the European drug regulator for Alfuzosin Hydrochloride.