The Tribune, Chandigarh, India

	Sensex, Nifty sink to 2-yr lows on weak rupee, global cues; banks lead losses FII pullout, Re slide responsible for market crash: FM Sanjeev Sharma/TNS New Delhi, November 23 The stock markets tanked on Wednesday with the benchmark indices — the Bombay Stock Exchange Sensex and the NSE Nifty — hitting two year lows on concerns over the depreciating rupee, economic problems in the United States and Europe and selling pressure by foreign institutional investors. The Sensex dropped to more than two-year low, down 365 points, as investors squared positions ahead of the monthly settlement in derivative contracts amid heavy fund outflows. The Sensex fell 365.45 points to 15,699.97 level seen on November 3, 2009. It had touched a low of 15,478.69 before the partial recovery. Before Tuesday's gain the market had lost nearly 10 per cent in eight straight sessions. IT, industrial and financial stocks led the slide on weak global trend as the US economy expanded at a rate below market expectations during the third quarter, they added. HDFC Bank was among the big losers. Reacting to the sharp market fall, Finance Minister Pranab Mukherjee said the Reserve Bank of India was closely monitoring the current rupee situation and would do “the needful, as required”. Mukherjee said despite the global uncertainty FII investments have been in the positive territory in October at $634 million and in November at $ 213 million). He added India’s growth and fundamentals were “strong” and looked “more attractive in a world confronting problems”. Referring to the fall in benchmark indices, he said this was on account of concerns over the United States’ third quarter growth and high yields on Spanish bonds. He said in India trading remained choppy a day ahead of the expiry of the November futures contract. Regarding the rupee, he said the rupee volatility was also keeping investors nervous, though on Thursday the rupee recovered from a low of 52.73 to trade at 52.12 per dollar. He said against an expectation of a more modest revision, the third quarter US GDP growth was revised downward to 2.0 per cent from the advance estimate of 2.5 per cent. As a result, the US markets closed lower by around 0.5 per cent yesterday. Asian stocks also fell in the range of 2-2.5 per cent, after a mining tax was approved in Australia’s lower house of Parliament, along with lingering concerns on Europe. Dipen Shah, head fundamental research, Kotak Securities, said the markets fell further today and breached the lows of the year. The continuing global uncertainty had an impact. Also, the winter session of the Parliament is in extreme focus and the second day of the session passed without any major decisions being taken. “Domestic reforms and spending are the pre-requisites for the markets to stabilize and start moving up”, he said.
	Cabinet likely to okay FDI in multibrand retail today Sanjeev Sharma/TNS New Delhi, November 23 The supermarkets of large global chains such as Walmart, Carrefour and Tesco will make their way into India with the government likely to approve 51 per cent foreign investment in multi-brand retail on Thursday. Increasing the foreign investment ceiling to 100% from the present 51% in single-brand retail for luxury brands like Gucci, Prada, Lladro is also listed on the agenda of the cabinet meeting on Thursday, according to government sources. Opening up of FDI in multibrand retail or allowing foreign chains to set up large scale retail stores which can sell all items including groceries has acquired urgency after the finance ministry cleared the proposal last week. A government source said there was a sense of urgency driving this move which has been held up for the last couple of years. There seem to be a couple of triggers driving this urgency. The government is keen to move ahead on some big ticket reforms as it has been heavily criticized for inaction. This would also attract foreign investments which have been dwindling and boost investor sentiment, something which has become very important with the sharp depreciation of the rupee which is also being blamed on weak foreign inflows. Also, opening up of retail is seen as a solution to tackle the stubborn food inflation problem which is confounding policy makers. Investments in cold storage chains and creation of infrastructure will reduce losses of agricultural produce and provide more options to farmers thereby increasing competition. However, the cabinet will have to take a final call on opening up of the US $500 billion retail segment, a move that is being opposed by the BJP and Left parties who are saying that it will hurt small retailers and grocery stores especially the kirana(mom & pop) stores. A committee of secretaries had in July recommended 51% FDI in multibrand retail with certain riders, like minimum investment of $100 million, 50% investment in back end infrastructure, 30 per cent sourcing from small scale enterprises, 30% turnover to be made to small retailers and the front end outlets will start only in towns with population of more than one million. State government permission will be needed in allowing these stores to open. The government is trying to allow foreign chains into the retail business in a calibrated way to balance the interests of the consumers and grocery store owners. It has been argued that FDI in retail would help in building much needed back end infrastructure, establishing supply chains by linking farmers directly to the retailers and offering quality products to consumers at reasonable prices. Organized retailers will pay higher prices to the farmers compared to the existing small traders and middlemen. FDI in retail will open up more and better paid job opportunities. The main arguments made against permitting FDI in MBRT has been a possible adverse impact on small retailers and kirana shops which may be affected by loss of business. Also, possible exposure of producers to predatory pricing which could expose them to financial risk. Another concern has been the possible loss of markets for small producers due to their inability to meet higher standards and to compete with large farmers due to lower volumes and lack of continuous supply.
	World stocks hit 6-week low, euro dives against dollar London, November 23 World stocks hit their lowest in six weeks on Wednesday and oil prices fell after China's November factory activity shrank at its sharpest pace in 32 months, reviving fears of an abrupt slowdown for the world's second largest economy. Adding to global growth concerns, manufacturing in European heavyweight Germany contracted for a second straight month, and at a faster rate, as export demand slumped. However, the rush to safe-haven assets has pushed returns on them so low that they are less attractive to hold. Germany's debt auction on Wednesday was technically uncovered, sending the yields on 10-year German Bunds 5.5 basis points higher to 1.964% — still lower than inflation. Meanwhile the euro zone's sovereign debt crisis is eating into business and consumer confidence as well as leaving investors with ever decreasing options. "The souffle we hoped we were going to eat is collapsing in front of us. We had hoped for a soft landing in China, better figures out of the US and progress in Europe," Justin Urquhart Stewart, director at Seven Investment Management, said. The evidence of weakening in China, whose rapid growth has provided a major prop for the world economy, came a day after the United States cut its third quarter growth figure. The euro was down 0.9 percent at $1.3388 after a newspaper said France, Belgium and Luxembourg were in talks on how to provide temporary state debt guarantees for failed financial group Dexia, stirring worries France will face a further fiscal burden. — Reuters
	SKS Micro founder Vikram Akula quits Mumbai, November 23 Founder and chairman of the only listed microfinance institution SKS Microfinance Vikram Akula resigned on Wednesday from the board with immediate effect in the wake of huge losses suffered by the Hyderabad-based firm. The company has appointed PH Ravi Kumar, independent director, as the interim non-executive chairman. "Vikram Akula has tendered his resignation as the Executive Chairman and Director from the Board of Directors of the company with immediate effect. The Board has accepted the same with immediate effect," SKS Microfinance said in a filing to the Bombay Stock Exchange. The company did not give any reason for his resignation. For the quarter ended September 30, the SKS Microfinance reported a net loss of Rs 384 crore, against a Rs 80.54 crore profit in the corresponding period a year ago. Shares of SKS closed 4.98 per cent higher at Rs 116 on the Bombay Stock Exchange. SKS pushed the microfinance sector into public limelight after the company mopped up over Rs 1,650 crore (around US $350 million) through its initial share sale in July 2010. The public issue, which attracted huge participation from retail investors, also stoked expectations of more industry players tapping the capital market. The company, however, witnessed some low moments following the ouster of SKS Microfinance CEO Suresh Gurmani in October last year, who was at the helm of the micro finance lender at the time of its dazzling initial public offer. He was replaced by M R Rao as the managing director and CEO for the next three years. Gurmani's removal sparked off fresh concerns about corporate governance among MFIs. — PTI
	Debt crisis fails to roil Indian IT companies’ Europe plans Bangalore, November 23 Indian IT services exporters are on track to increase Europe's share in their revenue and see only a short-term impact of the paralysing debt crisis, top executives said at the Reuters India Investment Summit. The debt crisis is sweeping closer to the heart of euro zone, with fears that the contagion may now spread from Greece and Italy to Spain and France. India's showpiece IT sector feeds off increased outsourcing by companies trying to cut costs. As the crisis in Europe — the sector's second-largest market — deepens, clients will likely outsource more, executives said. "We’re seeing clients —who in the past have been hesitant to outsource ongoing application management work — and are now looking at outsourcing those type of services," Cognizant Technology Solutions CFO Gordon Coburn said Tuesday. A slowing US market, which accounts for more than two-thirds of the Indian IT industry's exports, has forced firms such as Infosys, TCS and Cognizant to expand their business in Europe and Asia. "The short-term challenges will impact business, but in the long term, we see opportunities even in Europe," SD Shibulal, CEO of Infosys, said Wednesday. Infosys plans to double its revenue share from Europe to 40% by the end of its 2014 financial year, while Cognizant expects "significant revenue" coming from the region in the next 4-5 years. Infosys and Cognizant are also looking to scale up in continental Europe through acquisitions. — Reuters IT majors play down gains from Re fall A sharp decline in the rupee means Indian IT services exporters are getting more bang for their buck, but most top executives are wary of the sudden dip as it adds to the current uncertainty. "If the change is gradual we can manage, but if the change happens at the end of the quarter, either way, we’ll have a big shift. We will not have the time to adjust," Infosys CEO SD Shibulal said at the Reuters India Investment Summit in Bangalore on Wednesday. IT firms may also not reap the full benefits of a strong dollar.
	Skoda to roll out new Fabia, Superb variants Ruchika M Khanna/TNS Chandigarh, November 23 Having gone against the tide by posting a 50 per cent growth in sales, Skoda Auto India is now working at consolidating its position in all segments of cars. For this the company will launch new variants of its existing best selling models — Fabia and Superb — in the coming year. The new Fabia will be launched in a new avatar, with looks of an SUV. Its top selling model in the D segment, the Superb, too will be re-launched with a new design, and is likely to hit the market here early next year. Talking to The Tribune on Wednesday, Thomas Kuehl, member of the board and director, sales & marketing, Skoda Auto India, said even as the car industry in India had hit a flat growth this year, Skoda had posted a 50% jump in its sales between January and October this year. With the launch of Rapid, a new car in the C Segment, the company is looking at finishing this year with a 47% spurt in sales. “India has become one of the top most markets for Skoda in the world. As against 20,400 units sold by us in the Indian market last year, we’ll be closing this year in December by selling 30,000 units”, he added. Kuehl said as the firm brings in more cars in the Indian market, it is also aiming at increased localization of manufacturing. “For Skoda Auto India localization of car manufacturing at our plants in Aurangabad and Poona is 60%. For the Rapid the localization is almost 70%. As the economies of scale grow we’re looking at more and more parts being sourced from the Indian automakers,” he added.
	RBI deregulates interest on savings accounts in rural banks Mumbai, November 23 The Reserve Bank on Wednesday deregulated interest rate on savings accounts in regional rural banks subject to two conditions, a move that will fetch better returns for its depositors. RBI had freed savings bank deposit rates for the scheduled commercial banks last month. Under the first condition, the notification said, “each bank will have to offer a uniform interest rate on savings bank deposits up to Rs 1 lakh, irrespective of the amount in the account within this limit”. The other condition states that for savings bank deposits over Rs 1 lakh, a bank may provide differential rates of interest, if it so chooses. This would, however, be subject to the condition that banks will not discriminate in the matter of interest paid on such deposits, between one deposit and another of similar amount, accepted on the same date, at any of its offices, it said. — PTI
	RBI eases overseas borrowing norms for corporates Mumbai, November 23 The Reserve Bank of India has eased overseas borrowing rules for local corporates by raising the ceiling for the interest that firms can pay for borrowing abroad. The move is on "a review of the developments in the global financial markets and current macroeconomic conditions," the RBI said. The all-in-cost ceiling over 6 month LIBOR for average maturity of three and up to five year has been raised to 350 basis points from 300 bps, it said. It kept unchanged the ceiling in case of maturity over five years at 500 bps. The RBI also directed that funds raised abroad meant for rupee expenditure in India would have to be brought in immediately to local rupee accounts. The new rules would be effective immediately while the all-in-cost ceiling will hold until March 31, 2012. — Reuters
	FIIs cut exposure to aviation stocks New Delhi, November 23 Foreign investors have cut their exposure to stocks of the three listed Indian air carriers — Jet Airways, Kingfisher Airlines and SpiceJet — amid concerns over escalating operational costs because of high crude oil prices, weakening rupee and other factors. According to data available with the stock exchanges, the holding of foreign institutional investors declined in all the three listed aviation firms during July-September quarter of this year. Market analysts said airline stocks had become less attractive in recent past due to high operational costs, following a surge in fuel prices and the rupee depreciation. "FIIs are reducing their stake in the Indian aviation sector because of lack of clarity from the government's part. — Agencies