Mumbai, November 6
The bourses extended their losses to second consecutive day, pulling down the bellwether Sensex below 10k today in sync with slipping global markets amid heightened worries about a global recession, coupled with domestic inflation rate rising marginally.

Market participants said concerns over a slowdown took the centre-stage in global markets after yesterday's dismal US economic data.

In an otherwise choppy trade, the Bombay Stock Exchange 30-share barometer settled the day at 9,734.22, a net fall of 385.79 points or 3.81 per cent from its previous close.

The broader 50-share Nifty of the National Stock Exchange also dived by 102.30 points or 3.42 per cent to close at 2,892.65 from its last close.

They said bears began to tighten their grip on the market as inflation rose to 10.72 per cent for the week ended October 25 and the credit flow remained tight despite a slew of measures by the government and financial market regulator.

Metal sector was the day's worst hit segment with the BSE metal index falling by 8.41 per cent after world's largest steel maker ArcelorMittal reported poor earnings outlook for the fourth quarter.

Also, RIL's denial on the closure of its five polyester and petrochemical plants failed to prevent further slide in its stocks, which tumbled by 7.7 per cent, in addition to yesterday's 12.76 per cent fall.

According to analysts, the market is dependent on the overseas positive news and might consolidate in the current range before making any move either side.

Key metal stocks such as Tata Steel fell by 13.67 per cent, Sterlite by 11.33 per cent, JSWSL by 10.80 per cent, Hindalco by 7.50 per cent and Jindal Steel by 6.02 per cent.

Major losers from the Sensex pack were Tata Motors (12.17 per cent), Bharti Airtel (6.62 per cent), Wipro (6.31 per cent), Infosys Tech (5.50 per cent), HDFC (5.38 per cent), Rel Comm (4.63 per cent) and SBI (4.58 per cent).

The gainers included Jaiprakash Associates 4.10 per cent, Ranbaxy Lab 3.72 per cent, HUL 3.05 per cent and DLF 2.46 per cent.

The trading volume stood at Rs 4,010.92 crore. RIL was the top traded scrip with the highest turnover of Rs 391.47 crore followed by Reliance Capital (Rs 202.92 crore), SBI (Rs 173.15 crore) and ICICI Bank (Rs 165.32 crore). — PTI 

London, November 6
Britain slashed borrowing costs by a surprising 1.5 percentage points today and the European Central Bank (ECB) also cut rates as part of concerted efforts to revive world commerce and ward off deep recession.

The ECB met market expectations by reducing its interest rate by 0.5 percentage point, a move political leaders hope would limit any move into recession and curb job losses.

The Bank of England, faced with a slumping housing market, a decline in manufacturing and increased unemployment, astonished analysts by announcing a hefty 1.5 percentage point cut, the biggest since the Bank gained independence to set rates 11 years ago and a mark of the gravity of concern over the economy.

Heavy US job losses, a sharp decline in the world services sector and bleak company outlooks painted an increasingly dark picture this week.

Matthew Sharratt, UK economist at Bank of America, echoed widespread sentiment in calling the British cut “astonishing”. Jonathan Loynes of Capital Economics called it “spectacular”.

“There is still more to do," Loynes said. "At 3 per cent, UK interest rates are still well above US ones when economic conditions suggest they should be as low if not lower.”

Last month, the Bank of England joined forces with the US Federal Reserve and European Central Bank to make an emergency half-point cut in interest rates. The ECB move took its benchmark rate to 3.25 per cent.

Rate cuts may be less effective than in the past. Banks infected by a collapse of confidence within the financial system are still wary of extending loans and are reluctant to pass cuts on to borrowers. But the sheer scale of today’s cut will put pressure on British banks to conform and back smaller businesses, some facing bankruptcy. The Swiss national bank cut its rates by 50 basis points.

Toyota Motor Corp, the world's biggest automaker, slashed its annual operating profit forecast by more than half and its shares tumbled over 10 per cent, making it the latest casualty in an industry hit hard by the slump.

European stocks and Britain’s FTSE 100 index briefly pared losses after the British move before falling back again to trade around three percent down. — Reuters

New Delhi, November 6
The government is not considering reducing petrol, diesel and domestic LPG prices, as public sector oil companies continue to make losses despite fall in international crude oil prices.

"Presently, there is no proposal under active consideration to cut fuel prices," petroleum secretary R.S Pandey told reporters here.

Though IndianOil, Bharat Petroleum and Hindustan Petroleum have started making profit on sale of petrol, they lose about Rs 155 crore per day on sale of diesel, domestic LPG and kerosene.

"Under-recoveries (on fuel sales) haven’t stopped. We will wait for under-recoveries to stop (before considering a reduction)," he said, adding, "I am not aware of any move to cut fuel prices (before companies break-even or stop making losses)." The three companies are projected to lose Rs 1,28,135 crore in revenues on fuel sales this fiscal. While they make a profit of Rs 4.12 a litre on petrol, the firms lose Rs 0.96 on sale of every litre of diesel, Rs 22.40 per litre on kerosene and Rs 343.49 per LPG cylinder.

"Look at the second quarter net losses that these companies have made. Do you expect a cut when they continue to make losses?" Pandey threw the poser.

IOC posted its largest-ever net loss of Rs 7,047.13 crore in July-September quarter. BPCL posted a net loss of Rs 2,625.17 crore in second quarter on top of Rs 1,066.70 crore in April-June, while HPCL reported Rs 888.12 crore loss in Q1 and another Rs 3,218.92 crore in Q2.

He said fluctuations in rupee-dollar rate and global oil prices had made things difficult. "At present, no reduction in prices is under consideration."

IOC, BPCL and HPCL lost Rs 92,853 crore on fuel sales in April-September and they are projected to lose Rs 35,282 crore in the second half of 2008-09 fiscal. — PTI

Washington, November 6
Google has scrapped its Internet advertising partnership with struggling rival Yahoo, abandoning attempts to overcome the objections of antitrust regulators and customers who believed the alliance would give Google too much power over online commerce.

The retreat announced yesterday represented another setback for Yahoo that had been counting on the Google deal to boost its finances and placate shareholders still incensed by management’s decision to reject a $47.5-billion takeover bid from Microsoft six months ago.

To Yahoo’s dismay, Google backed off to avoid a challenge from the US Justice Department that had said it would sue to block the Yahoo deal to preserve competition in Internet advertising.

“The arrangement likely would have denied consumers the benefits of competition - lower prices, better service and greater innovation,” said Thomas Barnett, an assistant attorney general who oversees the Justice Department’s antitrust division.

Without Google’s help, Yahoo now might feel more pressure to renew talks with Microsoft and ultimately sell itself for much less than the $33 per share that Microsoft offered in May. Yahoo shares were up in a move reflecting investor hopes that Microsoft might renew its pursuit.

Surrendering the chance to sell ads on Yahoo’s popular Web site won’t be a significant financial blow for Google, which already runs the Internet’s largest and most prosperous advertising network. — AP

Chandigarh, November 6
The credit squeeze in the market is now forcing corporates to raise capital through the public deposits. By offering a higher rate of interest than what is being offered by the banks in term deposits, these companies are wooing the customers in a big way.

As a result, these corporates are seeking public deposits at 11.5 per cent rate of interest for a three year period. Comparatively, the banks are offering 10 per cent rate of interest on term deposits. According to information gathered, a leading edible oil manufacturing company and a health drink manufacturing company in Punjab, and a leading steel major in Haryana, are now seeking capital through the public deposit route.

Officials of all three companies said though they had sound financials, they had started public deposit schemes to pursue their expansion plans. A top executive in the Rajpura-based edible oil company said this helped the company borrow funds from a larger segment of public and, thus, reduce the dependence of the company on financial institutions.

Inspite of the cuts announced by the RBI, the banks continue to be wary of lending money to corporates. The banks are not even increasing the credit limit of the corporates, and loans continue to be sanctioned on a case to case basis.

G S Chawla, director, Master Trust, a stock brokerage here, said since public deposits was a relatively hassle free way to raise money from the market. “The companies have to inform the RBI and the registrar of companies that they are raising public deposits, and can start raising capital. Though the trend has just started in the region, it is likely to build into a phenomenon as companies feel the liquidity crunch,” he said.

Interestingly, the rate of interest payable by the company on public deposits is lower than the interest on loans from banks and other financial institutions — thus making these more attractive for the corporates. 

London, November 6
Global mining major Vedanta Resources today said it may reduce its investment in India by $5.1 billion and resort to cut in production in response to falling metal prices and slump in demand as it had an over 9 per cent dip in profit for the first half of FY '09.

NRI billionaire Anil Agarwal-led company has taken several initiatives to lower the size of investment lined up for a number of projects in India, including its aluminium and alumina project in Orissa, the company said in a statement.

The company had planned to invest about $14 billion in the country for over four years.

“We have cut the cost of our projects by reducing our capital expenditure without impacting the size of our projects including the 2.6 million tonne aluminium plant or one million tonne zinc and copper projects,” Vedanta Resources executive vice-chairman Naveen Agarwal said.

The mining major has also deferred its USD 2 billion investment in the 1,980 MW captive power plant at Jharsuguda, the statement said.

The company may also lower the capital expenditure in the $2.1 billion Talwandi Sabo power project in Punjab to $500 million, it added.

Moreover, the company said it would also resort to temporary cuts in production to bolster the falling prices of metals, which have plummeted due to the slump in demand. — PTI

New Delhi, November 6
Centre's direct tax collections, which were revised upwards mid-way for this fiscal, rose by just 10.66 per cent at Rs 19,708 crore in October, mainly due to advancement of last date for filing of corporate tax returns this year. The collections stood at Rs 17,809 crore in the corresponding fiscal last year.

However, according to official sources the figures for October are not comparable with the year ago period, since corporates paid shortfall in their tax liability in September after the last date of filing returns was advanced to September 30 this year from October 31.

At the time of filing of returns, corporates usually pay shortfall between their actual liability and taxes paid earlier, the sources said.

During April-October, the direct tax collections grew by 29.52 per cent at Rs 1,66,905 crore. It was at Rs 1,28,864 crore in the same period a year ago, according to a finance ministry release here.

Corporate tax collections were up 33.49 per cent at Rs 1,05,174 crore, while personal income tax rose by 23.14 per cent at Rs 61,433 crore during the period.

The release said: “Momentum of growth in direct taxes could be maintained, despite present global financial crises/ recession and its resultant impact on the Indian economy, mainly on account of improvement in tax deduction at source mechanism and encouraging better tax compliance”.

Earlier this year, direct tax revenues targets were revised to Rs 3,95,000 crore from Rs 3,65,000 crore for this fiscal. The revised figures were over 25 per cent higher than the direct tax collections of about Rs 3,14,000 crore last fiscal. — PTI 

New York, November 6
Goldman Sachs Group has begun notifying about 3,200 employees globally that they have lost their jobs as the world’s biggest investment bank slashes expenses to ride out the financial crisis, a person familiar with the situation said.

The job cuts, which were first reported last month, are a reflection of the ongoing downturn in the credit and lending markets that triggered massive losses for banks around the world. Goldman Sachs had been considered the strongest investment bank on Wall Street, and earlier this year had expected its payrolls to expand.

Positions will be cut across Goldman’s offices globally and among various business lines, and will bring the company’s staffing to 2006 and 2007 levels, the person said yesterday. He spoke on condition of anonymity because the company hasn’t publicly disclosed details of the plan.

According to CapitalIQ, Goldman has more than 37,000 employees across its operations. There also have been reports that Goldman’s army of bankers might see their bonuses cut in half this year. — AP

BRIEFLY

NEW DELHI
FCI gets new chairman: Food Corporation of India (FCI) on Thursday said it has named Deepak Kumar Panwar as its new chairman. Panwar, who replaces Alok Sinha, is an IAS officer of the 1974 batch from Andhra Pradesh, the FCI statement said. 
— PTI

SINGAPORE
Oil below $65 in Asia: Oil prices slipped below $65 a barrel on Thursday in Asia amid as renewed concerns about the severity of a global economic slowdown triggered an exodus from stocks and commodities. — AP

CHENNAI
BNP Paribas Securities: Sundaram Business Services (SBS), the BPO arm of Sundaram Finance, on Thursday signed an MoU with BNP Paribas Securities Services eyeing the rapidly growing securities services industry. — PTI

NEW YORK
Cisco net at $2.2 b: Cisco Systems on Thursday reported an almost flat net income at $2.2 billion for the first quarter ended October compared to the same period a year-ago. Net sales increased over 8 per cent to $10.3 billion for the first quarter against $9.5 billion for the corresponding period last fiscal, it said in a statement. — PTI

MUMBAI
Reliance Money: Reliance Money on Thursday said the BSE’s former CEO Rajnikant Patel has joined the company as president of its exchange business. Last week, Patel joined the board of Wall Street Finance, a foreign exchange and money remittance services provider, as a director. — PTI