There is no cause for panic and stability will return to currency markets as government continues to promote investment and growth — P Chidambaram, Finance Minister

New Delhi, August 22
As the rupee slide continues unabated with the currency crossing the 65-mark today, Finance Minister P Chidambaram today sought to soothe nerves by stating that there is no cause for panic due to currency market volatility.

Chidambaram and RBI Governor D Subbarao held separate briefings to defend the rupee. Chidambaram said the currency was undervalued and had overshot appropriate levels. He sought to assure investors asserting there was no need for "excessive and unwarranted pessimism". After maintaining silence for the whole of this week on rupee's steady fall, Chidambaram said there was no cause for panic and stability will return to currency markets as government continues to promote investment and growth. "There is no cause for panic that seems to have gripped the currency market and that is feeding into other markets”, he added.

Chidambaram indicated that growth has not revived in the first quarter which is expected to remain flat at 5 per cent but expressed confidence that growth would revive in the subsequent quarters.

The Finance Minister said the recent steps taken by the RBI to reduce volatility in forex market and quell speculation would be revisited. Subbarao in a separate media briefing said India has adequate forex reserves to meet the current situation and the central bank will take appropriate measures to curb rupee volatility. Chidambaram also said there was no move to introduce any capital control measures to check CAD. Global rating agency Fitch today said there is no trigger for rating action as of now but India's economy is likely to continue facing pressure on account of rupee depreciation.

Welcoming the growth narrative in Finance Minister’s statement, Ficci president Naina Lal Kidwai said industrial growth is languishing and it will be important to get the optimism back among the investors. The need of the hour is to ensure that the investment cycle returns.

“We should focus on introducing GST, ensure the stuck projects cleared by CCI make their way out of the desks of ministries into the real world of projects and get government expenditure on infrastructure back on track. Otherwise there is a growing belief that little will be achieved before elections - a delay we can ill afford”, Kidwai added. 

Mumbai, August 22
Stocks today rose for the first time in five days with the Sensex vaulting 407 points as investors chased beaten down blue chips, ignoring the continuing plunge of the rupee, which closed at a fresh all-time low of 64.55 after going past 65.5 against the dollar.

The rise in the stock markets helped investors gain over Rs 1.17 lakh crore. The rupee depreciation, largely on account of the burgeoning current account deficit, threatens to stall government moves to revive growth before the next elections.

Led by metal stocks that rose after good Chinese manufacturing data, value-buying helped BSE benchmark Sensex jump by 407.03 points, or 2.27 per cent, to end at 18,312.94.

In the previous four days, the 30-share index lost over 1,400 points, while the rupee fell from 61.1 to 64.5 in this period.

Experts feel stocks may surrender gains unless the rupee stabilises. "One should maintain cautious approach and wait for sustained recovery in rupee," said Jayant Manglik, President Retail Distribution, Religare Securities.

The rupee plunged to yet another record low of 65.56 today. Government and RBI's steps to lift the rupee have got patchy results and some experts say it will hit 70 soon.

Yesterday's US Federal Open Market Committee's minutes strongly indicated easing of the bond buying programme soon.

This led to a recovery in the US dollar index and a selloff in the global markets. Suspected RBI intervention helped the battered currency to gain some lost ground to close at 64.55, still down by 44 paise. It also breached the 102-mark against the British pound before closing at 100.6. — PTI

New Delhi, August 22
Gold prices surged by Rs 625 to Rs 31,750 per 10 gram in the national capital today on weakening rupee amid stockists buying ahead of festive and marriage season.

On similar lines, silver spurted by Rs 1,745 to Rs 51,900 per kg on increased offtake by jewellers and coin makers.

Traders said free fall in rupee which tumbled to a historic low of 65.53 (intra-day) increased speculations that it would make precious metals import costlier.

Besides, a firming global trend and stockists buying for coming marriage and festival season further supported both the precious metals.

On the domestic front, gold of 99.9 and 99.5 per cent purity surged by Rs 625 each to Rs 31,750 and Rs 31,550 per 10 gram, respectively. Sovereign followed suit and rose by Rs 200 to Rs 25,100 per piece of eight gram.

Mumbai, August 22
Private sector lenders HDFC and ICICI Bank today increased their benchmark lending rate by 0.25 per cent with effect from tomorrow. HDFC has increased benchmark lending rate by 0.25 per cent on housing loans.

As a result, the housing loans of up to Rs 30 lakh will become expensive to 10.40 per cent against existing 10.15 per cent, HDFC said in a statement.

Similarly, interest rate on housing loans beyond Rs 30 lakh will become dearer by 0.25 per cent to 10.65 per cent, it said.

The new rates would be applicable from tomorrow, it said.

ICICI Bank also effected a similar hike in its prime lending rates, which will be applicable to existing customers who are on the floating rates, an ICICI Bank statement said.

The bank added that the fixed rate customers will not be impacted by the above revision and their contracted rates will remain unchanged.

HDFC Bank, Axis Bank, Kotak Mahindra Bank and Yes Bank have raised interest rates by 20 to 25 basis points of late.

Among the public sector lenders, only small-sized Andhra Bank has hiked the base rate so far, while others like Bank of India and Union Bank have in fact slashed the rates in late June.

The upward spike in interest rates follows fears within the system that the recent RBI tightening measures to prop the battered rupee are here to stay longer than expected. — PTI

New Delhi, August 22
The Coal Ministry has come out with ‘Request for Proposals’ for engaging merchant bankers and selling brokers for the disinvestment in Coal India Ltd (CIL), country’s largest coal producing company.

In a notice brought out yesterday, the Coal Ministry has sought the proposals from the merchant bankers and brokers interested in being part of the 10 per cent stake sale in the CIL, which could fetch the national exchequer over Rs 15,000 crore.

As per the earlier decision, cleared by the Union Cabinet, the government is looking at disinvesting 5 per cent paid-up equity capital (31,58,18,220) shares of CIL out of its shareholding of 90 per cent through Offer for Sale (OFS) of shares by promoters through the stock exchanges method as per SEBI rules and regulations.

The government is also considering to allot shares to eligible and willing employees of Coal India at a discount of 5 per cent. This is being done as a sweetener to the protesting unions. The employees would be offered shares at a five per cent discount on the discovered price up to a maximum of 10 per cent of the Offer for Sale size.

"The employees will be eligible to apply for shares up to Rs 2 lakh only," officials said.

The method and procedure of allotment of shares to the employees has been worked out in consultation with the merchant bankers/selling brokers and legal advisers to the past issues.

As per the notice brought out by the ministry, all those interested would have to submit their bids latest by 5 pm on August 26.

The bids would be opened on August 27. The qualified and interested bidders would have to make a presentation in front of the Inter Ministerial Group (IMG) on August 29, which would make the evaluation and give its recommendations for the appointment of the merchant bankers and selling brokers.

Officials in the Coal Ministry said the government may appoint up to seven merchant banker(s), who together will form a team and would be called Book Running Lead Manager. The disinvestment of 31.58 crore shares will be through the offer-for-sale (OFS) or auction route.

The proposed 5 per cent stake sale in the world's largest coal miner could raise over Rs 8,400 crore at current prices and give a much-needed boost to the ambitious disinvestment programme that aims to garner Rs 40,000 crore from sell-off proceeds this fiscal.

The authorised capital of the Coal India Limited is Rs 8,904.18 crore (904.18 crore of non-cumulative 10 per cent redeemable preference shares plus Rs 8,000 crore of equity shares) of which the issued and subscribed equity capital as on March 31, 2012 is Rs 6,316.36 crore.

Chandigarh, August 22
Beer guzzlers in Punjab and Haryana will soon get a taste of Cobra beer. Global beer manufacturing giant, Molson Coors Cobra, which launched its King Cobra brand of beer in May, is set to start selling its Cobra brand across the region.

The company, which has a tie-up with Mount Shivalik Breweries in the region for brewing beer at their breweries in Punjab, Haryana and Rajasthan, sees a massive growth in business coming from this region.

Talking to mediapersons here today, Krishan Anand, president, Molson Coors International and Lord Karan Bilimoria, chairman of Molson Coors Cobra, said during the first year itself, they were looking at capturing a sizeable market share.

Though globally the beer market was witnessing a negative growth, Anand and Bilimoria said India was still an untapped market for beer. “The beer consumption in India is just 1.5 litre per person per year as against 35 litre per person per year in China and 150 litre per person in the Czech Republic. Thus we see a huge market here and we are slowly expanding our outreach in the country,” said Lord Bilimoria. Other than Punjab and Haryana, the company is also looking at expanding its footprint in West Bengal.

The company is also in the process of enhancing its brewing capacity. "The brewing capacity has been doubled and the packaging capacity has been tripled after we took over a local brewery near Patna in 2011," said Anand, adding the company has invested Rs 63 crore in the project to date.

Bilimoria's Cobra had entered into a joint venture with Molson Coors in June, 2011, to brew and market the beer in India and overseas. In the global venture, the US company has a 50.1 per cent stake and the rest is with Bilimoria while in India it is a 51:49 venture. 

New Delhi, August 22
The Income Tax Department is conducting searches on the business premises of two dozen members of the National Spot Exchange Limited (NSEL) which is facing alleged irregularity charges in settling Rs 5,600 crore dues to investors.

Multiple teams of I-T sleuths visited the offices of the firms of the 24 members, a number of which are either small entities or are suspected to be front companies for other people, sources said.

The searches are being done in cities like Mumbai, Hyderabad, Ahmedabad, Kolkata, Nagpur, Jaipur and few other locations.

The I-T action has been launched to check the stocks and goods stored in the warehouses of these firms, to check the account books and transactions in order to ascertain any possible tax evasion by these entities and verify their claims of huge dues, they said.

NSEL is facing the problem of settling Rs 5,600 crore dues after its suspended trade on July 31, following the government direction in the wake of violation of certain rules by the exchange.

As of now, the Exchange could settle only Rs 92.12 crore out of the scheduled of Rs 174.72 crore payment it had committed to FMC. — PTI