Mumbai, January 25
The Reserve Bank of India is expected to reward the government next week for its efforts to reform the economy and bring its finances under control by announcing its first cut in interest rates in nine months.

The RBI has been growing in confidence that the government, gripped by inertia for much of last year, is finally doing its bit to lift an economy that has slumped to its slowest pace of growth in a decade.

"The government has gone ahead with all the promises it had made 3 to 4 months earlier. There have been pretty substantial measures on the fiscal deficit front," said Samiran Chakrabarty, head of research at Standard Chartered Bank in Mumbai.

"To an extent, that will be comforting for the RBI."

Inflation is also heading in the right direction as far as the central bank is concerned. Wholesale price inflation, the main price gauge, fell to a three-year low of just over 7 percent in December.

Since mid-December, yields on 10-year Indian government bonds have pulled back to 7.865% from above 8% in anticipation of a rate cut. The slide marked the first time the yield had dropped below 8% since early 2011.

However, the RBI remains cautious with inflation around 7%. Last week, governor D. Subbarao said inflation remained too high, a comment that dashed financial market expectations for a more aggressive rate cut of 50 basis points.

Most economists expect the central bankto cut its policy repo rate by 25 basis points on Tuesday to 7.75% and follow it up with a cumulative 75 bps of cuts by the end of September, a Reuters poll showed last week.

"The RBI cannot be very aggressive in rate cuts. Our view is that inflation is unlikely to fall sustainably below 7%. There are lot of suppressed inflationary pressures that will add to it," said Sonal Varma, India economist at Nomura in Mumbai.

The central bank last cut rates in April 2012 by 50 basis points but warned at the time there would be limited scope for further cuts.

FISCAL HOUSE: For much of last year, the government was in turmoil as a fractious coalition struggled to push through new policies to arrest an economic slide that analysts forecast will leave growth for the full-year to March 2013 at just 5.5%, almost half the pace seen before the global financial crisis. But in September it announced big bang reforms in a package of measures to revive growth, saying it would open up its supermarket sector to foreign chains and allow more foreign investment in airlines and broadcasters.

More recently, it gave oil companies more room to set regulated diesel prices and in a sign of a fresh measure that could be in the pipeline, Finance Minister P. Chidambaram said Thursday India should consider hiking taxes for the "very rich". The moves are intended to bolster investor sentiment, mend battered government finances and stave off a possible credit rating downgrade to junk status. — Reuters

Sensex rebounds 180 points on rate cut hopes; Maruti suzuki in limelight

The BSE benchmark Sensex today bounced back by nearly 180 points to close at 20,103.53 on heavy buying in interest-sensitive stocks ahead of the RBI’s credit policy on Tuesday and encouraging earnings by Maruti Suzuki. After a better start, the Sensex spurted 179.75 points, or 0.90% to end at 20,103.53 helped by a rise in Tata Motors, Maruti Suzuki, SBI, L&T and HDFC Bank shares. Rate-sensitive sectors like real estate, auto, consumer durables, capital goods and banks saw good buying on hopes the central bank will cut rates by at least 0.25% on January 29 to boost economic growth, brokers said. The broadbased NSE Nifty rose 55.30 points, or 0.92%, to close at 6,074.65. — PTI

Davos, Switzerland, Jan 25
Enthused by improving global economic scenario and a renewed wave of reforms back in India, IT giant Infosys says it is bullish over better growth prospects of IT sector in 2013 and expects greater job creation this year.

"I believe 2013 to be better than 2012 for the IT sector as globally lots of uncertainties have been removed, the US elections are over, Europe isn’t going to split and people believe it’s going to stay together," Infosys co-founder and executive co-chairman S. Gopalakrishnan told PTI here.

‘Kris’, as he is known, is here for the annual meeting of the World Economic Forum along with the top executives of a host of other Indian IT firms such as TCS, Wipro, HCL and Mahidra Satyam-Tech Mahindra.

"When I say 2013 is going to be better, this means growth opportunities for the Indian IT industry are going to be better and that’s what I expect," he said. "That also means more jobs will be created by the industry, which currently employs 2.5 million people. Even if you look at 10% growth, then you’re looking at 200,000 to 250,000 additional jobs and that’s very good”, he added.

Gopalakrishnan said a clearer picture would emerge after Infosys and other IT firms announce their full fiscal results for 2012-13.

About the broader economic scenario, he said: "Reforms that have happened in the last few months have improved the sentiment, increased the confidence, and I expect growth to reach 7% or more in 2013. This is the right signal to the investment community. It's actually a very positive thing and the reaction that I’m getting from the foreign investment community and business leaders here is that they want this to be continued and sustained and I’m hoping we’ll see more annoucements and more initiatives from the government and that will help us achieve 7% growth and even more”.

Gopalakrishnan, along with N.R. Narayana Murthy and five others, founded Infosys in 1981. Before becoming CEO & managing director in July 2007, he served as the company's chief operating officer, president and joint managing director, responsible for customer services, technology, investments, and acquisitions. He took over as the sotware major’s executive co-chairman on August 21, 2011. — PTI

New Delhi, January 25
Maruti Suzuki Ltd, India's biggest carmaker by sales volume, said its third quarter profit more than doubled, its first increase in 18 months posting a turnaround after an unstable period marked by strikes, plant shutdowns and a demand slowdown.

Maruti, controlled by Japan's Suzuki Motor Corp, said net profit for the Oct-Dec quarter was Rs 501 crore, up from Rs 205 crore in the same quarter of FY2011. Sales (net of excise) stood at Rs 10,960 crore, a 45.6% jump over the same period in the previous year. Analysts had expected profit of Rs 5.24 billion, according to Thomson Reuters I/B/E/S.

At 2:36 pm, shares in the automaker were up 3.5% at Rs 1,593, outperforming a Mumbai market that was up 0.80%.

The small car champion, which two years ago produced every other new car sold in India, outperformed a miserable market during the quarter to end-December, bouncing back after a deadly factory riot in July led to a $250 million production loss.

Maruti Suzuki sold 27% more cars in the quarter, helped in part by strong sales of a cheaper and more fuel-efficient version of its Alto, the world's best-selling small car, during India's October-November festival season when people typically make big purchases.

The growth in profit was primarily due to higher sales and a positive consumer response to new car models like utility vehicle Ertiga and Swift DZire low-cost sedan, Maruti said in a statement, adding that cost cuts also boosted profit.

Car sales in India so far this fiscal year are down on the previous twelve months and are on track to post their lowest growth in nine years, according to the Society of Indian Automakers (SIAM), an industry lobby group. High interest rates, rising fuel prices and slowing economic growth is hurting India's car market, once the toast of the global industry, tempting a slew of carmakers to invest billions of dollars setting up plants.

Analysts expect Maruti to cut its capital expenditure by about 12% in the next 12 months, which would be the second biggest cut among 40 top Asian automobile firms, according to Thomson Reuters Starmine's SmartEstimates.

SmartEstimates accords greater weight to recent forecasts from historically more accurate analysts.

Toronto, Ontario, Jan 25
A senior Lenovo executive said Thursday that the Chinese computer maker may consider Research in Motion as a takeover target, sending the Blackberry maker’s shares up 2% just a week before it launches a make-or-break line of redesigned smartphones.

But Levovo, which vaulted into the personal computer market with its 2005 purchase of IBM's PC division, would face formidable hurdles if it tried to buy a company that Canadian Prime Minister Stephen Harper once described as a national "crown jewel." The Chinese company would also encounter tough regulatory scrutiny in Washington, cybersecurity experts say.

Lenovo, on track to become the world's largest PC maker, has held talks with RIM and its bankers about various combinations or strategic ventures, its chief financial officer, Wong Wai Ming, said on Thursday.

"We are looking at all opportunities — RIM and many others," Wong told Bloomberg in an interview at the World Economic Forum's annual meeting in Davos, Switzerland. "We'll have no hesitation if the right opportunity comes along."

A spokesman for Lenovo said Wong was asked about RIM by the Bloomberg journalist and that Wong was speaking broadly about Lenovo's M&A strategy.

CRUCIAL JUNCTURE: RIM, once a pioneer in the smartphone industry, has struggled in recent years as its aging line-up of devices have ceded market share to Apple Inc's iPhone and devices based on Google Inc's Android operating system.

RIM hopes its new touchscreen and keyboard devices, powered by its new BlackBerry 10 operating system, will help it claw back some of the lost ground. Optimism surrounding the launch has powered the stock higher in recent weeks. Last May the Waterloo, Ontario-based company announced a far-reaching strategic review under which it was expected to examine all options, from software licensing deals to an outright sale of the firm.

Earlier this week, RIM shares surged to a 13-month high after chief executive Thorsten Heins said RIM might consider strategic alliances with other companies after next week's BlackBerry 10 launch.

In an interview with a German newspaper on Monday, Heins said RIM's ongoing strategic review could lead to the sale of its handset business or the licensing of its software to rival smartphone companies.

Even so, analysts expressed skepticism about a Lenovo bid. "Anybody who's serious about buying a company doesn't go talking it up... It sounds to me like a comment made more for publicity's sake than a serious approach for RIM," said Charter Equity analyst Ed Snyder. — Reuters

New Delhi, January 25
In a move which could again kick up another storm, the coal ministry is all set to allocate some of the coal blocks to state-run companies without fixing their reserve price.

Sources said almost 8.5 billion tonnes of coal reserves will be allocated to PSUs without a reserve price as the state-owned coal exploration company could not verify the value of the coal reserves.

The sources added that the Central Mine Planning & Design Institute Ltd (CMPDI) had been asked to carry out the exploration of the mines to decide the base price. However, the slow pace at which the exploration is being done has left the coal ministry with no other option but to go ahead with allocating the coal mines without the base price.

Reports said January 30, is the deadline by which state-own firms have to submit applications for coal blocks. However, till now the coal ministry has not received a single application leading to allocation without a base price.

The ministry has been looking at valuation of the coal blocks by CMPDI before going ahead with allocating them. However, with no such valuation in place, it has not been able to fix the reserve price. Had the valuation been in place the ministry would have calculated the reserve price, invited applications from PSUs and then selected one of them for allocating the block.

A total of 54 coal blocks are in line to be allocated to public and private sector companies under the Auction by Competitive Bidding of Coal Mines Rules notified in February 2012. In the first phase of allocation, the coal ministry has invited applications from state-owned companies for allocation of 17 blocks. However, none of the 17 blocks on offer have been explored.

As a result, the coal ministry would have no other option but to ask the selected firms to carry out exploration themselves, following which it would calculate the reserve price to be paid by these companies. The calculation of the reserve price would be based on the estimate of reserves made in the geological reports after exploration.