The rupee is at 63.02/63.04 versus its close of 62.93/94, after foreign institutional investors (FIIs) sold a net Rs 598 million in shares on 21 November to snap a 32-day buying streak that totalled Rs 238.84 billion as per exchange and regulatory data.Traders say continued weakness could spark intervention from the central bank.Rallies in US and Japan stock markets are also sparking talk of a shift by global investors to developed markets, with emerging countries with current account deficits such as India seen as vulnerable to future Fed tapering.USD/INR gains also reflecting demand from state-run oil companies, traders say.Still, the Nifty gains 0.5 per cent, recovering from its biggest single-day percentage fall in nearly two months on Thursday, putting a lid on USD/INR gains.The rupee is seen in a range of 62.70/63.30 for the session, traders said.(Reuters)
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India's narrowing current account deficit will not be enough to shield the country from pressures tied to Fed tapering, says Fitch Ratings. However, Fitch adds the spillover effects of the Indian rupee's weakness have not significantly hurt India's credit worthiness and will therefore not trigger any ratings action at this point. "(India's ratings) already incorporate both the sovereign's vulnerabilities and tolerance for volatility in global financial market conditions," Fitch said. Fitch adds India's economy has "not lost much momentum" on the back of "resilient" agriculture and exports, predicts economic growth of 4.8 per cent in 2013/14 and 5.8 per cent in 2014/15. Fitch also notes India's fiscal deficit remains under pressure, especially ahead of the general elections due next year, but says the government is likely to clam down heavily on spending. Fitch rates India at "BBB-minus", the lowest investment grade rating. It revised its outlook for the country to "stable" from "negative" in June. (Reuters)
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State oil group Petrovietnam and the overseas unit of state explorer Oil and Natural Gas Corp have signed a memorandum on joint exploration of crude oil, the Vietnam News Agency reported on Thursday.The exploration pact between Petrovietnam and ONGC Videsh Ltd would allow activities in Vietnam, India as well as in a third country.Vietnam's Industry and Trade Ministry also signed a memorandum with Tata Power Company Ltd on the construction of a $1.8 billion thermal power plant in Vietnam's southern province of Soc Trang, the agency said.The pacts were signed on 20 November during a visit to India by Vietnam's Communist Party General Secretary Nguyen Phu Trong, the report said.(Reuters)
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The sharp depreciation of the rupee in mid-2013 highlights India's difficult transition following an extended period of low growth, high inflation and a widening in the current account deficit.Fitch Ratings says in a report published today that the spillover effects of a weaker rupee have not significantly hurt India's creditworthiness, and hence would not trigger any rating action as this point.The economy has not lost much momentum, with both agriculture and exports remaining resilient and providing a cushion. Fitch therefore expects the economy to recover with real GDP forecast to rise 4.8 per cent and 5.8 per cent in FY14 (financial year ending March 2014) and FY15, respectively, compared with a 5.0 per cent rise in FY13.The modest economic recovery, however, will continue to undermine India's banking sector, which is facing a combination of weakening asset quality, eroding profit and declining capital. Nonetheless, these factors are likely to have only a moderate effect on the banking sector's ability to supply credit to the economy.Inflation has risen only moderately, despite higher import prices stemming from the weaker rupee. The Reserve Bank of India (RBI) has also signalled that it has started to place a greater focus on capping CPI.The current account deficit is narrowing, following measures to curb gold imports, a weaker exchange rate, and softer domestic demand. Fitch forecasts the current account deficit to decline to 3.1 per cent of GDP in FY14 (versus 4.8 per cent in FY13). This fall, however, will not be enough to shield India from further pressures related to the eventual start of Fed tapering.India's budget remains under pressure as the central government's (CG) fiscal deficit in the first six months of FY14 stood at 76 per cent of the full-year target. The authorities have indicated that they are still committed to lowering the fiscal deficit to 4.8 per cent of GDP (versus 4.9 per cent in FY13). To achieve this, the CG is likely to clamp down heavily on expenditures in 2H FY14.The ability to implement fiscal consolidation and continue with the overall economic adjustment process would support India's sovereign credit ratings. Fitch, however, acknowledges that the authorities' resolve to implement both tighter fiscal and monetary policies may be tested as the general election, which must be held by May 2014, approaches.(Reuters)
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The annual headline inflation is expected to moderate to near 5 per cent as there was reasonable price stability in some major commodities, the finance minister said on 19 November.P. Chidambaram made the comment in a lecture at the National University of Singapore.India's wholesale price index based headline inflation rose to an eight-month high in October at 7 percent, driven by costlier fuel and manufactured goods, raising the prospect of a fresh interest rate hike.Chidambaram also said the fiscal deficit target of 4.8 per cent of gross domestic product in 2012/13 would not be breached under any circumstances, even as many private economists say the deficit could cross the 5 per cent mark. (Reuters)
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The government has slapped an additional penalty of $792 million on Reliance Industries for producing less than targeted natural gas from its eastern offshore KG-D6 block.A notice disallowing $792 million out of the cost already incurred on the Bay of Bengal fields was sent to RIL on November 14, an oil ministry official said here.With this, a total of $1.797 billion penalty in form of cost being disallowed, has been levied on RIL for producing less than targeted output during the past three years.The company has till date spent $10.76 billion on the block, which it can contractually recover from sale of oil and gas. It is obliged to share the profits with the government only after recouping those expenses.It may be remembered that on October 27, the Planning Commission had warned that imposing a second penalty on Reliance Industries for producing less-than-projected natural gas from its KG-D6 fields could impact investment climate in the same manner as retrospective tax amendments.Read Also: Reliance Refuses To Sign Oil Ministry ResolutionRead Also: Double Penalty On RIL To Hit Investment Climate: Plan PanelThe Planning Commission, in its comments on a draft Cabinet note floated by the Oil Ministry seeking to deny higher prices for the currently producing main fields in the KG-D6 block from April 2014, said the move "creates the possibility of potential arbitrariness.""It could impact adversely on the investment climate, in the same way as retrospective tax amendments did," it said.Meanwhile, on 20 November, the official said the cost has been disallowed as RIL and its partners BP plc of UK and Canada's Niko Resources did not drill the committed number of wells, which led to output dropping by over 80 per cent from the main Dhirubhai-1 and 3 (D1&D3) gas fields in the KG-D6 block.D1&D3 fields have in the first fours years of production (2009-10 to 2012-13) produced a total of 1.853 Trillion cubic feet of gas, 1.196 Tcf short of 3.049 Tcf that RIL had committed to produce in the 2006 development plan.But for the first year, the output has lagged the targets in all subsequent years, which has led to a huge chunk of facilities built lying unutilised, the official said.RIL had built facilities to handle 80 million standard cubic metres per day of gas from D1&D3 but the present output is just 8.78 mmscmd.As per the production sharing contract, RIL and its partners BP Plc and Niko Resources are allowed to deduct all of the capital and operating expenses from sale of gas before sharing profits with the government.Creation of excess or unutilised infrastructure impacts government's profit share and this is being sought to be corrected by disallowing part of the cost.According to the approved field development plan, the output should have reached 80 mmscmd last fiscal.The government had previously issued a notice to RIL disallowing$1.005 billion in cost for shortfall in production during 2010-11 and 2011-12. ($457 million for 2010-11 and the rest $548 million for 2011-12).The Mukesh Ambani-run company, which blamed unseen geological complexities for the fall in output, has initiated arbitration against the levy. The new levy would be opposed.The DGH blames RIL for not drilling its committed quota of wells for the fall in production that has resulted in a large chunk of production facilities lying unused or under-utilised.(Agencies)
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State-run Power Grid Corp of India's sale of shares, valued at about $1.2 billion, is likely to open on 3 December, three sources with direct knowledge of the matter said, as part of the government's drive to revive the divestment programme.The Power Grid offering, which was approved by the Indian cabinet earlier this month, includes fresh issue of company shares and the government's divestment of a 4 per cent stake.The government's planned sale of stakes in Power Grid and other state companies including miner Coal India is critical to relieving pressure on public finances that could put the country's investment-grade credit rating at risk.India has targeted raising $6.4 billion from selling stakes in state companies in the fiscal year ending March 2014, but has so far managed about $230 million, as ministries squabble over the timing of the issues and the rupee's fall against the dollar.The Power Grid issue is likely to remain open for investors to bid until 6 December, said the sources, who declined to be named as they were not authorised to speak to the media before a public announcement.A Power Grid official said the issue was likely to be launched in December but he was not aware of the launch date. Ravi Mathur, secretary at the Department of Disinvestment, was not immediately available to comment.Shares of Power Grid were trading down 1.3 per cent at Rs 95.10 on Tuesday (19 Nov) at 0924 GMT. At the current market price the sale of 787 million shares, of which 185 million will be sold by the government, will raise about $1.2 billion. Power Grid said on Monday (18 Nov) that it had filed for the follow-on offering with the market regulators.The divestment department, which oversees stake sale in state companies, is keen to push through the stake sales to take advantage of a share market rally that sent the Sensex to a record high this month.The government has also revived plans to sell stakes in two state companies, Indian Oil and Coal India, to raise about $2.3 billion by mid-December, sources with direct knowledge of the matter told Reuters last week.(Reuters)
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Federal Reserve Chairman Ben Bernanke, in his first public comments on personal plans after he steps down from the Fed in January, said on Tuesday (19 Nov) he will be "writing and speaking" on topics that have consumed his tenure at the US central bank."Before I became a policymaker I was an academic, and I worked on a lot of issues which are related to the things I have been doing for the last 11 or so years, such as the role of financial markets and financial stability in the economy," he told the National Economics Club after delivering a speech."I look forward to writing and speaking and having a little more time to contemplate some interesting issues," he said.President Barack Obama has nominated Fed Vice Chair Janet Yellen to replace Bernanke when his terms ends on 31 January. (Reuters)
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The Supreme Court on Tuesday (19 November) asked the unauthorised flats owners at the Campa Cola Society in Mumbai to vacate the premises by May 31, 2014 as no specific proposal could be worked out to provide them space in the compound for new construction.The apex court passed the order as Attorney General G E Vahanvati said, "after considering all aspects we are not in a position to work out any specific proposal".A Bench headed by justice G S Singhvi, which on November 13 had stayed the demolition of the unauthorised flats by taking cognizance of media reports, said it had taken the humanitarian ground into consideration to extend the date of demolition from November 11, 2013 to May 31, 2014 as the Attorney General had sought time to come out with a specific proposal for permanent solution.Read Also: Uncomfortable Questions"Having considered the matter in entirety, we deem it fit to extend the period till May 31 by which the occupants must vacate. This is subject to the undertaking to be given by occupants within six weeks," the bench said.It said "if no undertaking is given, the municipal corporation will be entitled to take action in accordance with the order of February 27".The court on February 27 had ordered the Brihanmumbai Municipal Corporation to demolish the illegally constructed flats and on October 1 refused to re-consider its earlier order and had set November 11 deadline to vacate 102 flats which were declared as illegal.However, on November 13, hours after over 100 agitated families clashed with the police while the civic squad was bulldozing its way into the premises, the apex court had stayed the demolition till further order,saying it was "badly disturbed by the development that is taking place at Campa Cola premises in Mumbai." In a ray of hope for the occupants of the unauthorised flats, the bench had taken note of the submission of the Attorney General that there was a need for permanent solution and he will come out with some specific proposal.Vahanvati had said unauthorised construction has to go but the flat owners should be given opportunity to build up building available in the campus without affecting the apex court order.He had said since there is space in the compound, the residents should be allowed to get approval of the building plan as originally it was planned to have nine towers and the builders came out with seven by accomodating all buyers in them.Seven high-rise buildings of Campa Cola Housing society were constructed between 1981 and 1989. The builders had permission for only six floors. One of the compound buildings, Midtown, has 20 floors and another building, Orchid, has got 17 floors.(PTI)
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India's state traders received bids above the floor price for wheat exports, trade sources said on 18 November, reflecting good response after a cut in the floor price intended to boost shipments from the world's second-biggest grower.Last month, India cut the floor by $40 a tonne to $260 for supplies from government stocks, to make exports more attractive to the Middle East and neighbours such as Bangladesh.The three state-run trading companies had all failed to sell in the last round of global tenders in October, when the $300 floor made Indian wheat expensive in comparison to rival supplies from the Black Sea.In Monday's tenders, PEC Ltd received the highest bid at $290 per tonne for its offerings on the west coast for shipment in December, while State Trading Corp. and MMTC recorded bids of $286 a tonne in their respective tenders."Indian supplies have become on par with Black Sea origin," said Tejinder Narang, adviser at New Delhi-based trading company Emmsons International.Traders said supplies from the Black Sea were available at $280-$290 a tonne FoB.They said Indian wheat was benefiting from expectations that global prices would rise next year as supplies from the Black Sea fell.The Indian government stuck to its floor price of $300 until last month after managing to export nearly 4.5 million tonnes between August 2012 to March 2013 as part of its strategy to cut huge stockpiles.On November 1, India's wheat stocks stood at 34 million tonnes, three times more than the target for the Oct-Dec quarter.The high level of stocks at government warehouses, boosted by a series of bumper harvests since 2007, has forced the state-run Food Corporation of India (FCI), the main grain procurement agency, to store wheat under tarpaulins. (Reuters)
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