The Tribune, Chandigarh, India

Wall St tanks on waning hopes of Fed stimulus

New York, April 4
US stocks tumbled on Wednesday as investors digested minutes from the latest Federal Reserve meeting published Tuesday suggesting further monetary stimulus action is unlikely.

Private-sector jobs data from payrolls processor ADP showing US private employers added 209,000 jobs in March, suggested the labor market was continuing to strengthen, but it was not enough to boost investor sentiment.

Spanish borrowing costs jumped at bond auctions on Wednesday, adding more pressure to the market and spreading concern in wider European markets. The Spanish debt auction overshadowed a successful step back into debt markets by neighboring Portugal.

All 10 S&P 500 sectors were down with energy, financial and technology stocks leading the decline.

"The punch bowl is being taken away by the Fed and the ECB and the markets don't like these punch bowls being taken away. But it's all part of getting back to normal. It's a sign we don't need artificial stimulus, so I think the selloff is temporary," said Doug Cote, chief market strategist with ING Investment Management based in New York. "The economic numbers just keep coming in strongly, like the ADP report, which is a good sign for Friday's (non-farm payrolls) number."

Supportive policies by the US central bank have been a primary catalyst for the S&P 500 stock index's surge of 30 percent since October, even though improving economic conditions have also played a part in the rally.

The Dow Jones industrial average was down 153.14 points, or 1.16%, at 13,046.41. The Standard & Poor's 500 Index was down 15.79 points, or 1.12%, at 1,397.59. The Nasdaq Composite Index was down 43.94 points, or 1.41%, at 3,069.63.

GE DOWNGRADED: Moody's downgraded the ratings of conglomerate General Electric Co and its finance unit General Electric Capital each by a notch, saying there were "material risks" associated with its funding model. — Reuters

Trump scion says India top focus for realty mogul

Donald Trump (L) and son Donald, Jr. Mumbai, April 4
American property mogul Donald Trump targets India above other emerging economies, his son and business partner said, as the flamboyant tycoon looks to crack a notoriously tough real estate industry with his brand of luxury homes and hotels.

Trump's eponymous real estate group expects to sign multiple deals for Indian residential projects and hotel contracts over the next five years, despite a market riddled by regulatory uncertainty and bureaucratic red tape.

"India, among other emerging markets, is the biggest push for our organisation," Donald Trump, Jr, an executive vice president of The Trump Organization, said on Wednesday.

Trump, whose portfolio includes projects in South Korea and Turkey, in addition to hotels and skyscrapers in the United States, is close to signing a couple of deals with Indian developers, the younger Trump said without providing details.

"Equity investment will depend on individual projects and partnerships but first we would like to form relationships which allow us to understand the processes and spectrum better," the 34-year-old said on the sidelines of a hotel conference.

The developer entered India last year with a joint venture partnership with Rohan Lifescapes to build a 45-storey luxury residential tower in Mumbai.

However, work on the tower, which will bear the Trump name but involves no equity from the US developer, has been halted for about nine months since authorities said it lacked the necessary permits, a common problem in an industry wrapped in red tape.

Indian developers are often hit by changing regulations.

But Trump, whose father is worth an estimated $2.9 billion, according to Forbes, says the lure of an emerging India outweighs the regulatory headaches.

"I like the regulatory changes I’m seeing. It may slow things down a bit but will create a level playing field and will help in eliminating the unknown for an outside investor coming in," he said.

The company plans to focus expansion in the country on luxury residences and hotels, and would look at cities including Mumbai, Delhi, Bangalore and the state of Goa. Some local players such as privately held Lodha Developers and Godrej Properties are emerging as strong brands in India's luxury housing space, but the market remains fragmented. — Reuters

FinMin to rethink excise levy on jewellery
Sanjeev Sharma/TNS

New Delhi, April 4
Following prolonged strikes and widespread protests, the finance ministry is having a relook at the budget proposal to levy excise duty on unbranded jewellery.

Jewellers across the country have been on strike and protesting against the move to levy excise duty of 1% on unbranded jewellery of precious metals (other than silver). As a result, jewellery and gold sales have dropped drastically.

In order to understand their concerns, Finance Minister Pranab Mukherjee has convened a meeting with representatives of jewellery makers from major cities on Friday. The ministry has received several representations on behalf of the manufacturers including artisans and goldsmiths seeking reconsideration of this proposal on the ground the industry is unorganized and fragmented and would find it difficult to comply with the central excise provisions.

While the move may have been planned as an anti-tax evasion measure, it has run into stiff opposition from the industry. The flip side of the protest is that concern may not be so much that the excise duty has been introduced but more so on account of the fact that the industry will have to report sales and revenue.

The Gold and jewellery trade sees a large amount of transactions in cash as the organized players are few. It is a big avenue for unaccounted money and there was also a provision in the Budget that any purchase above Rs 2 lakh would require a PAN card.

One strong theme in the budget has been to discourage gold consumption as its huge imports have been leading to a huge current account deficit. Import duty on gold has been doubled and all these provisions together seek to cut down on gold consumption which is an unproductive asset as it cannot be invested in the economy and also has been putting pressure on the balance of payments.

There has been a view that there should be an effort to divert savings from gold into financial instruments as it will lead to more productive use in the economy. On the other side, gold is a touchy issue in India due to social, emotional and cultural reasons. India has a huge love affair with gold and was the second largest importer this year after China. India has been the world’s largest consumer of gold for years now.

Last week Mukherjee had hinted the government was considering the demand to withdraw the 1% excise duty. He had also promised to reconsider the proposal to make it mandatory to produce a PAN card for purchase of jewellery of over Rs 2 lakh.

Fruit, vegetable output falls, heat to keep food inflation simmering

Mumbai, April 4
Food inflation is likely to pinch Indians at least until July as fruit and vegetable output shrinks, hurt by rising temperatures and a lack of water, while edible oil and pulses prices are rallying on lower production and a more expensive world market.

Rising food prices will add to problems for the fractious coalition government, which has been weakened by a slew of scandals, and will make it difficult for the Reserve Bank of India (RBI) to cut high interest rates, which are hindering growth.

"Based on market prices we see a sharp rise in vegetable inflation. Overall food inflation we see in double digits in March. This will have a very significant impact on overall inflation," said Sujan Hajra, chief economist at Anand Rathi Securities.

Food inflation is problematic for the central bank, which can do little about it. Surging food prices were a key driver of headline inflation that only began to ease significantly towards the end of 2011 as food prices fell, in part due to the base effect from surging prices a year earlier.

However, headline inflation edged up to 6.95 percent in February, and the central bank has been forced to push back the expected start to a cycle of interest rate cuts.

"Going by the sub component analysis of the wholesale price index (WPI), pulses...and edible oils would remain inflationary and would pressurize the headline WPI going ahead," said Shakti Satapathy, fixed income strategist at A.K. Capital Services.

The price of potatoes, the most widely consumed vegetable in the country, jumped 45 percent in the past month, while prices of cabbage and cauliflower jumped more than 30 percent.

"A disease attack during the maturity stage has affected potato production," said R.P. Gupta, director at the National Horticultural Research and Development Foundation.

Potato futures are hovering near their highest level in nearly three years.

India's vegetable prices often rise in summer as output falls on water shortages and higher temperatures, but this year a cold wave and even less water threaten sharper price gains.

"Supplies of vegetables have been falling continuously," said Vilas Bhujbal, a vegetable trader based in Poona, in the western state of Maharashtra. — Reuters

First integrated customs checkpost on Wagah border to open April 13
Perneet Singh/TNS

Amritsar, April 4
After a delay of almost a year, the first integrated checkpost at the Indo-Pakistani border near Attari is all set to be inaugurated by Home Minister P. Chidambaram on Baisakhi, April 13, while its trial run will begin from April 8.

According to sources, the checkpost will see cargo as well as passenger movement through it from April 13. They added all agencies involved in different works at the border check post have been directed to shift their offices to the checkpost before April 8.

The checkpost will lead to opening of a new gate on the border which will be dedicated to passenger and cargo movement, while the old gate will only be used for the famous retreat ceremony.

At present, the cargo and passenger movement comes to a halt at the time of the retreat ceremony every evening.

Talking to The Tribune about the quantum of trade via Attari-Wagah land route, deputy commissioner of customs R.K. Duggal said once the checkpost was operational bilateral trade would rise substantially as the ICP has a huge capacity in terms of cargo movement. “We can receive a large number of trucks as compared to the current figure, but initially we expect it to double up.”

The trading community is also buoyant with the checkpost finally being inaugurated after a long wait. Amritsar Exporters Chambers of Commerce vice-president Rajdeep Uppal said the lack of infrastructure was restricting the trade between the two countries earlier, but with the checkpost getting functional the quantum of imports as well as exports will witness a major increase. “We expect bilateral trade via Attari-Wagah will grow by 25% to 30% in the first year itself,” he said.

CII zonal council chairman DP Singh said the checkpost would give a major boost to trade and industry in the state. Khanna Paper Mill director Suneet Kochhar said with ample warehousing facilities the checkpost would facilitate exports from even far-off places in the country.

However, doubts remain whether exporters would gain as much as importers, the reason being the lack of matching infrastructure with Pakistan.

Spread over 130 acres and built at a cost of Rs 150 crore, the foundation stone of the ambitious project was laid by P. Chidambaram on February 20, 2010.

SC rejects plea by Essar Oil in $1.2 bn tax case

Mumbai, April 4
Essar Energy Plc said the Supreme Court had dismissed its unit Essar Oil's petition to review an earlier verdict that asked Essar Oil not to defer the payment of $1.24 billion in sales tax.

London-listed Essar Energy said the decision would not have any new impact on the company's business.

Essar Oil, 87% owned by Essar Energy, had deferred $1.24 billion under a tax benefit provided by the western state of Gujarat, where the company's Vadinar refinery is located.

On Jan. 17, the court ruled against Essar Energy, saying its India-listed business Essar Oil would no longer be able to defer payment of the sales tax. A month later, Essar Oil filed a petition asking the court to review its judgement. — Reuters