Mumbai/New Delhi, Nov 27
The Bombay Stock Exchange Sensex gained more than 300 points on Tuesday as investors expected new highs in December as hopes rise about the government's willingness to push through reforms, which would eventually aid growth and avoid a downgrade threat. The surge came after credit rating agency Moody's said India's outlook is stable and reports of a debt relief package to Greece that boosted stock markets globally.

Banking shares led the gains with HDFC Bank rising 2.9% and ICICI Bank ending 1.6 percent higher. Infosys added 2.2%, while Bharti Airtel rose 5.3%.

The 30-scrip Sensex ended up 305.07 points or 1.65%, while the The wider 50-scrip S&P CNX Nifty of the National Stock Exchange was up 91.55 points or 1.62% at 5,727.45 points..

The benchmark index touched a high of 18,862.70 points and low of 18,616.55 points intraday. The BSE midcap index was up 84.37 points, while the smallcap index was higher by 53.88 points.

Dipen Shah, head of PCG research at Kotak Securities, said the signing of the Greek debt deal had a positive impact on sentiments. Asian markets traded higher and the European indices also opened in the green. Moody’s reiterated its positive outlook on India. Also, expectations were high that, the government may be able to muster enough support on the multi-brand retail issue.

He added telecom stocks continued to attract buying while metal stocks were higher post the signing of the Greek deal and increase in LME prices. While the benchmarks performed strongly, there were also significant stock-specific gains in some of the midcap stocks.

According to Shah, the next few days will be very important from the reforms perspective. Apart from reforms, markets will focus on developments on the ‘fiscal cliff’ issue in US, IIP and inflation data and on the rate decision from the RBI.

"Positive international cues and reaffirmation of stable outlook on India by Moody's sentimentally aided the rise in the markets," Inventure Growth & Securities research head Milan Bavishi said.

Investor sentiment also got the boost following news that Greece's official creditors, including the IMF and the EU, have agreed on a deal to lower the country's debt burden. Market sentiment also improved on indications that the UPA government may tide over the political storm over FDI in retail sector that has paralyzed Parliament the past four days.

The BSE bank index was up 242.09 points, while the consumer durables index edged higher by 240.51 points, followed by the metals index (up 134.99), FMCG index (up 124.30), capital goods index (up 107.70) and auto index (up 101.41).

Mumbai, November 27
Global ratings agency Moody's Investors Service said on Tuesday that the outlook on its Baa3 rating for India is stable, in part due to the country's high savings and investment rates, as debate rages in New Delhi over whether the country can avoid credit downgrades from other rating agencies.

In its annual credit analysis on India, which Moody's said does not constitute a rating action, the agency also cited the country's large, diverse economy and strong gross domestic product growth as supportive of the rating.

However, Moody's said: "The rating is constrained by the credit challenges posed by India's poor social and physical infrastructure, high government deficit and debt ratios, recurrent inflationary pressures and an uncertain operating environment."

Last month, Standard & Poor's warned India still faced a one-in-three chance of a credit rating downgrade over the next 24 months, although it said a series of reform steps launched in September had slightly improved the country's prospects.

Fitch also has a negative outlook on India.

Having faced a series of revenue-raising setbacks, the Indian government is grappling with a widening fiscal deficit that threatens to undermine the country's credit standing and possibly trigger a downgrade to junk status.

Finance Minister P. Chidambaram has an ambitious target of holding the government's fiscal deficit for 2012/13 at 5.3 per cent of gross domestic product, even as sceptical private economists forecast a deficit closer to 6%. — Reuters

According to a research report by Karvy Stock Broking, "GDP growth for the second quarter of this fiscal is estimated to drop to nearly three and a half year low of 5.1%." This is mainly expected to be driven by sluggish growth in electricity generation and sharp drop in trade sector's growth as compared to last year, it said. Echoing similar sentiments another domestic brokerage firm Religare said :"We expect Q2 GDP at 5.1%, the lowest since March 2009, largely driven by sustained weakness in the industrial sector where we expect muted growth of 0.4%". India had been growing around 8-9% before the global financial meltdown of 2008. — Reuters, PTI

Mumbai, November 27
Lenders to wind turbine maker Suzlon Energy, which last month defaulted on a US $200 million convertible bond redemption, have agreed to restructure about Rs 110 billion of its debt, sources with direct knowledge of the situation said Tuesday.

Shares in the world's no. 5 wind turbine maker, which has been squeezed by debt and tight working capital, were up more than 10 percent after Reuters reported that it had been admitted to the country's corporate debt restructuring (CDR) process.

The rupee debt, which was due in five and six years, will be restructured with a two-year moratorium on interest and principal repayment, after which the loans will be repaid over eight years at a lower rate, one of the sources said, declining to be identified.

Another source who declined to be identified said details were still being finalized, with discussions around reducing interest on the loans from about 14% now to 11%.

The recast does not apply to Suzlon's overseas bonds, and does not ease the company's net debt, which stood at about Rs 130 bn at the group level at the end of June, although it does give Suzlon breathing room to fund its operations.

The debt to be restructured is held by about 20 Indian banks, led by SBI, which had exposure to the company of about $659 million as of last month. — Reuters

Paris, November 27
The Organization for Economic Cooperation and Development slashed its global growth forecasts on Tuesday, warning that the debt crisis in the recession-hit euro zone is the greatest threat to the world economy.

In light of the dire economic outlook, the OECD urged central banks to prepare for more exceptional monetary easing if politicians fail to come up with credible answers to the debt crisis.

The Paris-based think-tank forecast in its twice-yearly Economic Outlook that the global economy would grow 2.9% this year before expanding 3.4% in 2013. The estimate marked a sharp downgrade since the OECD last estimated a rate in May of 3.4% for this year and 4.2% in 2013.

The eurozone is facing two years of economic contraction, while the US risks a recession if lawmakers there fail to agree a deal to avoid a combination of tax hikes and budget cuts that will otherwise go into effect next year. Providing the deadlock in Washington is overcome, the world's biggest economy will grow 2.0% next year, the OECD estimated, cutting its forecast from 2.6% in May.

"The US fiscal cliff is a very important source of concern, but the greatest downside risk remains the euro zone," OECD chief economist Pier Carlo Padoan told Reuters in an interview. "The reason for that is not only recession, but also the fact that different negative policy (feedback) loops between sovereign debt, the banking situation and exit risks remain. So the overall zone remains in a state of fragility."

Cutting its estimates, the OECD forecast that the euro zone economy would contract 0.4% this year and another 0.1% next year, only returning to growth in 2014 with a rate of 1.3%. — Reuters

New Delhi, November 27
The important 800 MHz CDMA spectrum auction having failed miserably, with not even a single bidder queuing up in the recent 2G auction, the GSM operators have apparently approached the government for letting them use it for GSM operations.

Reports said the GSM operators have asked the department of telecom to enable them to use the 800 MHz band for GSM operations. In a letter written to DoT, the three major telcos — Airtel, Idea Cellular and Vodafone — said: "We recommend the 800 MHz spectrum band is harmonized with the international band plan to become part of an ‘extended’ 900 MHz band; this will increase the availability of spectrum in the 900 MHz band by up to 10 MHz (or over 40%)". The letter came after serious discussions between the GSM operators and DoT following the debacle of the 2G CDMA spectrum auction.

An industry source had earlier said GSM operators would urge the government to allow use of the 880 MHz band as an extended GSM band, which was a common practice worldwide. If the government agrees to this proposal, it may get willing participants in a re-auction that it may hold for the 800 MHz band of spectrum.