Mumbai, July 13
Foreign investors have bought a net of Rs 73.12 billion (US $1.31 billion) in Indian equities so far this month, according to provisional regulatory data, after selling in each of the previous three months.

Inflows at the midpoint of July are not far off the 83.8 billion net purchases in March. Analysts say investor sentiment changed after Prime Minister Manmohan Singh assumed an additional role as acting finance minister starting June 26, sparking widespread hopes of policy reforms.

Valuations also playing a role after Indian stocks are seen by some analysts as trading below historic averages. In a report late last month, Deutsche Bank estimated Indian shares were trading at their cheapest in close to two decades on a sales and EBITDA basis.

Shares have risen 2.08% since June 26 versus a 1.2% gain in the MSCI Asia-Pacific index excluding Japan during the same period.

Meanwhile, foreign institutional investors have cut exposure in two leading private lenders, ICICI Bank and Axis Bank, but have increased their stake in HDFC Ltd and its group firm HDFC Bank.

Besides, FIIs also lowered their exposure to smaller banks like Yes Bank, IndusInd Bank, Union Bank of India and Andhra Bank during the last quarter.

According to an analysis of shareholding patterns of India’s listed banks, FIIs hiked their stake in housing finance major HDFC and the group's banking entity HDFC Bank during the quarter ended June 2012, with additional purchase of shares worth an estimated Rs 1,600 crore. On the other hand, FIIs sold shares worth an estimated Rs 3,500 crore in ICICI Bank and Axis Bank. — Agencies

New Delhi, July 13
Shrinking world trade has led to India's exports falling by 5.45% to US $25.07 billion in June but the good news is that imports are also falling and as a result the trade deficit is likely to be lower this year.

Imports fell more sharply — by 13.46% to $35.37 billion, leaving a trade deficit of $10.30 billion. During June the sectors that did well with regard to exports in percentage terms are rice, iron ore, oil meal and spices.

In absolute terms, during April-June 2012 quarter, petroleum stood at $12.9 billion, engineering goods at $14.6 billion, gems & jewellery at $10 billion, pharma at $2.1 billion and readymade garments at $3.2 billion.

Addressing a press conference, commerce secretary S.R. Rao said exports have contracted but the trade deficit is also coming down. He added exports are expected to improve as the impact of the recently announced foreign trade policy kicks in.

Rao said global trade was shrinking and the advanced markets of the US and Europe were not showing much signs of revival. He added India has embarked on a market diversification strategy to counter this effect and is increasing exports to ASEAN countries, Africa and Latin America.

In Q1of this fiscal exports have shrunk 1.7 % to $ 75.2 billion over the first quarter of 2011-12. Imports have also dipped by 6.1% during the first quarter of 2012-13 to $115.26 billion. The trade deficit in Q1 has declined to $40.06 billion, from $46.30 billion in April-June last fiscal.

Reacting to the trade data for the month of June, Federation of Indian Export Organizations (FIEO) president M. Rafeeque Ahmed said the June export data were on expected lines with contraction in global demand and deceleration in manufacturing the primary reason for the decline in exports.

However, the IIP (index of industrial production) data released a day before point to a modest recovery in manufacturing during May 2012 which will help exports in next few months. Moreover, global situation is slowly improving and exports are expected take off by October.

Ahmed exuded confidence the $350 billion export target fixed for the current fiscal would be attained. The reduction in imports would help to manage the trade deficit which can be kept below $150 billion during 2011-12.

He added the initiatives taken in the foreign trade policy would take a little time to bear results and over 30% growth in Q2 of FY13 could be expected.

New Delhi, July 13
On a day when the department of telecom discussed the issue of rollout obligations with leading telecom operators, the umbrella body of the GSM operators, the Cellular Operators Association of India (COAI), refuted TRAI’s revised report that said any tariff hike would only be in the range of 5-10 paise/ minute and yet leave the industry profitable.

With the EGoM having deferred on Thursday a decision on the rollout obligations for the operators, DoT went ahead with the consultations with telcos.

The meeting was attended by Uninor MD Sigve Brekke, MTS India president & CEO Vsevolod Rozanov, Vodafone India resident director T.V. Ramachandran and representatives from Airtel, Tata Tele and Reliance Com.

Officials said the EGoM had wanted DoT to look at the possibility of enhanced rollout obligations where the latter wants operators should cover 20% of block level headquarters by the end of second year and 30% by the third year. The operators have been asked to submit their views by Saturday, sources said.

Meanwhile, COAI said the Telecom Regulatory Authority of India’s revised report on “analysis of effects on costs, tariffs and financial returns”, continues to suffer from many flaws that have been pointed out earlier. “The analysis is flawed, nontransparent and inconsistent with market realities. The tariff, which has now risen from 4.4 paise to 15 paise is an acknowledgement of COAI’s earlier assessment that the impact on tariffs could be much higher,” it said.

Mumbai, July 13
HDFC Bank, India's no. 3 lender, beat forecasts with a 30.6 percent rise in quarterly profit, led by stronger loan growth, better fee income and higher net interest margins.

The Mumbai-based bank said Friday its net profit was Rs 14.17 billion in the fiscal first quarter-ended June, against Rs 10.85 billion a year earlier.

According to Thomson Reuters I/B/E/S, analysts had expected a net profit of Rs 13.7 billion for the bank, which is also listed in New York and competes with bigger local rivals State Bank of India and ICICI Bank.

Net interest margin, a key gauge of profitability, stood at 4.3% in April-June, compared with 4.2% in the March quarter. The bank aims to keep this figure in a range of 3.9-4.2% in the near term.

HDFC Bank's net advances grew 21.5% from a year ago to Rs 2.13 trillion as of end-June. Net interest income rose 22.3% in the quarter to Rs 34.8 billion, driven by strong loan growth and higher net interest margin.

The lender reported steady asset quality, with the ratio of net nonperforming assets to net advances at 0.2% as of end-June, unchanged from a year ago. Total restructured loans, including applications received and those under processing, were at 0.3% of gross advances, it said.

The bank sees its loan book growing more than 17% expected for the domestic banking sector in the current fiscal-ending March 2013.

The RBI cut rates by an unexpected 50 basis points in April, after raising it 13 times between March 2010 and October 2011, to boost the sagging economy. — Reuters

Mumbai/Singapore, July 13
US private equity firm Bain Capital is in advanced talks with the Government of Singapore Investment Corp (GIC) to make a joint bid for a 40 percent stake in IT outsourcing company Genpact for $1.5 billion to $2 billion, three sources with direct knowledge of the matter said.

Private equity firm Apax Partners LLP is also competing for the stake in New York-listed Genpact, the sources said, declining to be identified because they were not authorised to speak to the media.

Most of Genpact's employees are in India, where IT outsourcing firms have thrived by providing Western firms with services such as processing insurance claims, managing payrolls and customer support at sharply lower cost.

Private equity firms General Atlantic LLC and Oak Hill Capital Partners, the two top shareholders of Genpact with stakes of 20.1 percent each, are looking to exit the company, the sources said.

A deal is expected to be completed by the year-end, two of the sources said.

Genpact, GIC and Bain declined to comment, while Apax Partners, Oak Hill and General Atlantic could not immediately be reached for comment.

General Atlantic may sell its full 20 percent holding in Genpact or retain a small stake and sell it later through secondary share deals in the United States, the sources said.

Genpact, which has a market value of about $3.7 billion, was set up by General Electric Co in 1997 in Gurgaon to provide back-office services to its group companies. In 2004, General Atlantic and Oak Hill together bought a 60 percent stake in the company from General Electric and it became an independent service provider.

Genpact, the seventh largest IT and back-office employer in India according to industry group Nasscom, was listed on the New York Stock Exchange in August 2007. Citigroup and Morgan Stanley are managing the stake sale process, the sources said.

Bain, the private equity firm co-founded by Republican presidential hopeful Mitt Romney, has completed fundraising for its second Asia fund, closing at $2.3 bn, one of its senior executives said Tuesday.

It had previously talked with other would-be partners about joining it in a bid for the Genpact stake, sources said.

US-listed software firm iGate, backed by Apax Partners, last year bought a majority stake in India's Patni Computer Systems for $1.2 billion. — Reuters

New Delhi, July 13
Amid the backdrop of high inflation, the RBI may not cut interest rates in its month-end policy review to boost industrial growth that slipped to 2.4% in May, say experts. "I don’t think there’ll be either infusion of liquidity or cut in policy rates by the RBI in its quarterly policy review," HDFC Bank chief economist Abheek Barua said.

The index of industrial production, the gauge of industrial activity in terms of production, showed 2.4%growth in May, down from 6.2% a year ago. Although industry has been pitching for cut in interest rates by the RBI in its policy review on July 31, the experts are of the view that the central bank may continue with the status quo stance in view of inflation which is still much above the comfort level of 4-5%.

While wholesale price-based inflation was 7.55% in May, retail inflation was at 10.36%.

Crisil chief economist Deepak Joshi said: "Monetary policy isn’t going to be changed. I think the RBI will keep it on hold. Going by the assessment of the economy, I think there won’t be any rate cut." HSBC Global Research said though the IIP had picked up on an improved sequential momentum and last year's low base, inflation was still high. — PTI