London, October 14
Asian and European stocks rallied for the second day in a row, with Japanese benchmark index Nikkei skyrocketing 14 per cent as the rescue plans worth over $1 trillion mooted by various European countries boosted market sentiments.

The stellar gains made by the American bourses overnight which saw the key Dow Jones Industrial Average Index jumping over 900 points also bolstered the shares in Asia and Europe.

London Stock Exchange's benchmark FTSE 100 Index opened on a strong note, gaining over 4 per cent at 4,432.01 points.

After being closed for a public holiday on Monday, Tokyo's Nikkei joined the Asian rally, posting the biggest one-day gain ever. The key index shot up 14.15 per cent to 9,447.57 points, leading the way for the region's two other indices — India's 30-share Sensex and Hong Kong's Hang Seng.

On the European front, France's Cac 40 Index and Germany's Dax Index, jumped over 4 per cent in the early hours of trading.

After pledging coordinated action to tide over the credit turmoil, many G-7 nations came out with mammoth bailout packages on Monday, primarily to shore up the fortunes of troubled financial institutions.

Cac 40 climbed 4.09 per cent to 3,675.99 points whereas Dax grew 4.15 per cent to 5,272.34 points.

On Monday, European economic majors, the UK, Germany, France and Spain had announced various bailout packages, together having a worth over $1 trillion.

Moreover, other major Asian indices, South Korea's Kospi, Indonesia's Jakarta Composite and Singapore's Sraits Times Index, made substantial gains.

US President George Bush is expected to make a statement on the country's response to the ongoing financial crisis.

Further, the Treasury is anticipated to announce that the government would be buying stakes in leading banks.

On Monday, in an effort to shore up the fortunes of the country's troubled banking sector, Germany announced a nearly 500 billion Euro ($685 billion) package, while France came out with a 100 billion Euro ($137 billion) lifeline.

Further, Spain has extended a lifeline of nearly 100 billion euro. Meanwhile, calling for a greater role of the IMF to tide over the credit turmoil, Japan today said the country is ready to offer financial support to the multilateral funding agency to stabilise world markets.

In addition, the Japanese finance ministry would issue 30-year Japan government bonds (JGB) with an offering amount about 600 billion yen.

The Dow Jones Industrial Average Index on Monday closed at 9,387.61 points, up 11.08 per cent while S&P 500 ended the day with a gain of 11.58 per cent at 1,003.35 points.

In addition, the Nasdaq Composite Index rose 11.81 per cent to close at 1,844.25 points. — PTI

Mumbai/Delhi, October 14
The RBI today announced that it would inject Rs 20,000 crore through short-term lending route in order to help mutual funds that are facing redemption pressure.

"RBI has decided to conduct a special 14-day repo at nine per cent per annum for Rs 20,000 crore on Tuesday with a view to enabling banks to meet the liquidity requirement of mutual funds," it said in a statement.

According to officials in the mutual fund industry, many Asset Management Companies are facing redemption pressures in liquid funds, commercial papers and deposits.

New Delhi, October 14
Deputy chairman of Planning Commission Montek Singh Ahluwalia has said that expansion of liquidity through repo rate cuts (the rate at which RBI lends money to commercial banks) is a must to tide over the international situation that is also gripping India. He also dismissed the rumour that hammering down of ICICI Bank’s shares was meant for a takeover by rival bank.

Asserting that injecting liquidity in the banking system through rate cuts is necessary, Ahluwalia said it would also bring down interest rates. “You can lower the repo rate, and it probably would be a signal but that will not determine the structure of lending rate,” Ahluwalia said.

The common man and businessmen have been burdened with high rate of interest as RBI has been increasing the CRR for the past two years to suck out excess liquidity from the system. But now the situation has drastically changed as the commercial banks that had surplus liquidity had parked these funds in derivatives and money markets abroad and at home.

Meanwhile, he also clarified that it was not possible for anyone to take over the management of any bank due to strong banking regulations in India.

“There are limits on how many shares can be bought by an individual, besides ability to change management is also dependant on regulatory approvals, so I don't think people should have any fear that all of a sudden ICICI Bank may change management because of stock manipulation,” he said.

At present, repo rate is 9 per cent and reverse repo (the rate that RBI pays when banks park funds with it) as well as bank rate stand at 6 per cent. Experts had always maintained that reverse repo rate was not lucrative enough for the banks as compared to gains from investing in the stock and money markets.

Washington, October 14
US President George Bush today announced that his government would buy equity stakes in country's banks at a cost of $250 billion as part of its mega rescue package for the financial sector.

This unprecedented move in US history would enable healthy institutions help overcome the crisis in the country.

After Bush's announcement, US Treasury Secretary Henry Paulson without naming the entities said nine large financial institutions have already agreed to participate in the programme and would sell preferred shares to the government.

"These are healthy institutions, and they have taken this step for the good of the US economy. As these healthy institutions increase their capital base, they will be able to increase their funding to US consumers and businesses," the Secretary said in a statement.

On the much-talked about restrictions on executive pay of financial entities participating in the bailout package, Paulson said, "Institutions that sell shares to the government will accept restrictions on executive compensation, including a clawback provision and a ban on golden parachutes during the period that Treasury holds equity issued through this program." Paulson said the $250-billion plan is to make capital available on attractive terms to banks and thrifts, which in turn would help in injecting credit to the economy.

"From the $700 billion financial rescue package, Treasury will make $250 billion in capital available to US financial institutions in the form of preferred stock," the Secretary said in a statement. — PTI

New Delhi, October 14
Even though the crude oil prices are heading south, India is not likely to get any relief soon. The good news is that the Indian basket of crude oil fell to new low of $72.20 per barrel, the lowest level this year, brightening the hope of a price cut. However, for the month of October, the domestic oil companies have bought crude from the international market at an average price of $79.70 a barrel.

There are two reasons why the rate cut will not come so easy. One, our basket of crude equivalent to the price we pay at the petrol pumps has been pegged at $67 per barrel. This means that only at $67, it is viable for the oil companies to process the crude and sell it in the open market despite the fact that petrol, diesel, LPG and kerosene are hugely subsidised.

The second reason why the relief could be a bit far is the depreciation of the rupee against the dollar since the past 6-8 months. The rupee, which stood at around 38-40 levels around January 2008, is now at 46-48 levels. This is an exchange rate loss for the oil companies, who have to pay more rupees to buy the dollar today.

IndianOil, Hindustan Petroleum and Bharat Petroleum are losing about Rs 350 crore per day on fuel sales as of today.

When the petrol prices were hiked in June 2008, it was on the basis of crude oil prices at $67 per barrel. This price calculation comes factoring in international crude oil price, plus cost of processing and marketing products (petrol, diesel etc).

Chandigarh, October 14
Punjab, the land of milk and ghee, is facing a shortage of ghee. The rising gap between demand and supply is now being eyed by the ghee manufacturers to raise the prices by Rs 20 per litre.

During the past two months, the price of ghee has increased from Rs 180 a litre to Rs 200 a litre. With milk production in the state unable to keep pace with the demand, there is a shortage of most by-products of milk, including ghee. Though the ghee production in the state has gone up substantially over the past one year, the demand, too, has gone up.

What has made the situation worse now is that the festive season began before the flush season for milk could begin in November. Also, with prices of all other cooking mediums (refined oil, mustard oil) having gone up substantially over the past six months, ghee prices have now started showing an upward revision.

In fact, most of the dairy companies, including the state cooperative, Milkfed, say that this year they have no buffer stocks. Whatever ghee is being produced in the state is immediately being sold in the open market. A private dairy company owner in Punjab, requesting anonymity, said since export of ghee has become very lucrative because of the higher prices being fetched in the global market, most of the producers were keen on exporting ghee rather than releasing it in the open market. It is learnt that the dairy companies are getting anything between $4.1-$4.25 a litre for ghee exported to countries in West Asia, mainly Dubai, besides New Zealand, Australia and Phillipines.

Officials in the Punjab State Cooperative Milk Producers Federation (Milkfed) informed TNS that they are procuring seven lakh litres of milk a day.

“We are producing 500 tonnes of ghee a month, which is all being sold and we have no buffer stocks. In order to ensure that we procure the maximum amount of milk in the state, we have hiked the procurement rate to Rs 300 per kg fat. Last year, we were procuring milk at the rate of Rs 240 per kg fat,” said V.K. Singh, managing director, Milkfed, Punjab.

With festive season on, Milkfed is coming up with a wide range of sweets to suit the taste buds. While sohan papdi, dhoda and panjiri will be sold at Rs 140 for 800 gm, kaju barfi will be sold for Rs 250 per 800 gm. S.K. Dudeja, regional manager, said they would be producing 60 tonne of sweets this year at their Chandigarh plant, and retailing it throughout Punjab.

Mumbai, October 14
As gold breached the Rs 14,000-mark just days before the festive season, a pall of gloom hangs over Zaveri Bazaar.

The hustle and bustle of customers that is a regular feature here in the run up to Diwali is remarkably subdued. The crowds are thinner and the smiles on the face of jewellers decked up in thick chains, bracelets and studded rings strained as customers haggle over 'making charges', the one arbitrary item that differs from shop to shop.

"Sales are determined by prices. When prices fell below Rs 12,000 per 10 grams there were big queues outside. Now customers have disappeared," says Dhiren Jhaveri, a Mumbai jeweller. He goes on to say that a few people are selling their gold stocks as well. "There is some amount of profit-booking though it is not much as people expect gold prices to remain high for some time," says Jhaveri.

According to the Bombay Bullion Association, gold prices have been steadily going up as investors hurt by the global financial crisis seek refuge in the yellow metal. Suresh Hundia, president, BBA, says demand for gold is rising across the world with China buying the precious metal in large quantities.

"However retail buyers in India put off purchases when gold prices shoot up sharply," says Hundia. He, however, felt that there could be some increase in demand over the next couple of months.

According to the BBA, gold sales have fallen by more than 90 per cent due to the rise in prices. From around 3000 kg per day, the sale of gold has fallen to around 200 kg daily, says the BBA.

Those in the jewellery trade say only those who really need to buy gold for events like weddings in the family are buying.

"The high demand for gold coins traditionally seen during Dussehra was missing this year. Even those who bought gold were buying smaller coins due to the high price," an executive at HDFC Bank at Borivli in suburban Mumbai told The Tribune.

The sudden surge in prices and the fall in demand has caught a number of traders on the wrong foot, according to sources in the trade. Over the past two-three months, jewellers had been booking 100-gm gold bars ahead of the festival season. Some of them had even borrowed money in advance to buy the gold bars. These jewellers are said to be liquidating their inventory to clear their dues, according to trade sources.

Apart from the slump in the Mumbai market, demand for gold has also taken a hit in other places. For instance, in Ahmedabad the rising gold prices coupled with the stock market crash has badly hit business, say jewellers. Some of small jewellers are also said to be shutting shop in Gujarat.

According to the World Gold Council, India is the biggest consumer of gold accounting for 800 tonne of the yellow metal every year or 20 per cent of global consumption. The official figures, however, belie the fact a big chunk of the gold sold in the souks of Dubai are purchased by Indians with unaccounted money and is brought back to the country via unofficial channels or stashed abroad.

Some in the trade believe that business may pick up to some extent when the pay arrears to government employees are cleared in the next few weeks. This sector is said to be very conservative and invests a big portion of its savings in the yellow metal.

Mumbai, October 14
Country's oldest financial institution IFCI today reported a net profit of Rs 259 crore for the second quarter ended September 30, a decline of 48 per cent over the corresponding period a year ago.

The company had a net profit of Rs 497.29 crore in the second quarter of FY'08, IFCI said in a filing on the Bombay Stock Exchange. At the same time, total income of the company also dipped by 26 per cent to Rs 441.7 crore in the quarter under review from Rs 595 crore in the same quarter a year ago.

However, other incomes have improved substantially to Rs 58.65 crore compared to Rs 4 crore earned during the second quarter last year. The company also informed that the shareholders at the AGM last month approved reduction of share capital for aligning stake of LIC to 8.39 per cent.

IFCI which had made NPA recovery of about Rs 700 crore, had posted a net profit of Rs 1,020 crore during 2007-08.— PTI

BRIEFLY

Oil hovers at $83
Singapore: Oil rose more than $2 on Tuesday amid a broad-based commodities rally, extending a 4 per cent gain from the previous session as government moves to rescue banks raised hopes for an economic recovery. US crude gained $1.75 to $82.94 a barrel by 0504 GMT after climbing by more than $2 earlier, while London Brent crude rose $1.35 to $78.81. — Reuters

R-Money’s acquisition
Mumbai: ADAG group firm Reliance Money has acquired a 15 per cent stake in Hong Kong Mercantile Exchange (HKMEx) for $7.5 million, a move that will help it to leverage on the growth potential of commodity trading in the Asian region, including India.— PTI

Tata Motors’ buyout
New Delhi: Auto manufacturer Tata Motors on Tuesday said it has acquired majority stake in Norwegian innovative solutions maker for electric vehicles Miljo Grenland Innovasjon, with which it is developing the electric Indica in the country. The company's UK arm Tata Motors European Technical Centre Plc has acquired 50.3 per cent holding in Miljo for 12 million krone (Rs 9.40 crore), Tata Motors said.— PTI

Tucker is Ford’s VP (sales)
New Delhi: Ford India on Tuesday appointed Timothy Tucker as new vice-president (sales). Tucker will be based at Ford India's Delhi office. An auto industry veteran, Tucker joined Ford in 1985 and has held a variety of senior management positions in North America, Asia, Europe, and the Middle-East in operations, sales and marketing. — TNS

Andhra Bank scheme
Hyderabad: Andhra Bank has launched AB Super,' a new fixed and reinvestment deposit scheme, with effect from October 8. The deposit scheme with a fixed period of 650 days will earn 10.25 per cent interest for amounts less than Rs 15 lakh and 10.50 per cent for amounts more than Rs 15 lakh. — UNI

Intel unveils Atom processor
Bangalore: Eyeing the burgeoning market for handheld devices in India, leading chip maker Intel on Tuesday announced the availability of Atom processor and reference designs for development of local platforms based in Intel architecture. Atom processor N270, in the size of a 25 paisa coin implemented in 45 nanometer technology, is power optimised and delivers robust performance at a consumption of below 3 watt of power. — UNI

ONGC’s investment plan
New Delhi: ONGC on Tuesday said it would invest Rs 6,500 crore in the North-East region on upstream activity during the 11th Five-Year Plan.This was disclosed by CMD R.S. Sharma at a conference on North-Eastern States Investmart here. — UNI