Mumbai, July 29
Hinting at status quo on policy rates, the RBI today said its immediate focus was to stabilise rupee and made a case for calibrated action to contain the current account deficit (CAD), which is a major reason for the steep fall in currency.

"The priority for monetary policy now is to restore stability in the currency market so that macro-financial conditions remain supportive of growth. (However) this strategy will succeed only if reinforced by structural reforms to reduce the CAD and step up savings and investment," RBI said in its macroeconomic and monetary developments review released on the eve of the policy announcement. "Amplifying macro-financial risks warrant cautious monetary policy stance," it added.

A survey of external professional forecasters done by RBI increased its median expectation on rupee value to the 59.5 level to the dollar by March 2014 - nearly the same level at which the domestic currency is now trading. This is compared to the earlier expectation of 54.

A majority of RBI watchers expect the policy to be a "no show" event, but are looking forward to the guidance which Governor D Subbarao gives in the quarterly policy announcement, which would be the last before he demits office early September.

The depreciation in the rupee, which has shed over 10 per cent this fiscal, will weigh heavy on RBI, they said, adding that this is a shift from the central bank's focus on bringing down inflation and propping up economic growth.

"While monetary policy is largely guided by the growth-inflation dynamics, it is also tempered by considerations of risks of external imbalances," the report said.

Depreciation in the rupee to a record low of 61.21 against a dollar has forced the RBI to take some unconventional measures to curtail liquidity and curb speculation in the past fortnight.

Flagging consumer price inflation, which has been constantly hovering in the double digits for the past 15 months, even though wholesale price index has eased, it said the high retail inflation number puts pressure on public finances and erodes domestic savings, which in turn widen CAD.

The CAD will improve only on structural reforms, it said, adding that CAD is expected to come lower in FY14 than the 4.8 per cent last fiscal. However, the 3.8 per cent achieved in the last quarter of FY13 is likely to be breached in the June quarter, it said.

On the growth front, RBI raised concern saying that the recovery is likely to be slower.

"The pace of recovery is likely to be slow in view of the structural constraints," RBI said, adding that the recovery will come in the latter part of the fiscal on the back of a good monsoon.

The professional forecasters have also downwardly revised their FY14 GDP growth expectations to 5.7 per cent - at par with RBI’s estimate given in the annual policy -from the earlier 6 per cent, the survey finding said. — PTI

Mumbai, July 29
Ahead of the RBI's quarterly monetary policy review, the rupee today snapped three days of gains and closed 37 paise lower, the most in a week, to 59.41 against the dollar.

The currency also declined amid fresh month-end dollar demand from importers and a drop in local stocks. A weak dollar overseas ahead of the US Federal Open Market Committee meet this week and fresh capital inflows restricted the rupee's fall, a forex dealer said.

At the Forex market, the rupee opened lower at 59.10 a dollar from the previous close of 59.04. After touching a high of 59.08, it declined to a low of 59.45 and settled at 59.41, a fall of 37 paise or 0.63 per cent. The rupee last fell by 37 on July 22.

The rupee had gained 72 paise, or 1.2 per cent, in the past three sessions. — PTI

Mumbai, July 29
Capital market regulator SEBI today tightened disclosure norms for hedge funds and other Alternative Investment Funds (AIFs) using complex trading strategies, especially for those leveraging investments for higher returns or borrowings.

Such funds have been asked to have a comprehensive risk management framework and a strong compliance function as per their size, complexity and risk profile. They have also been asked to maintain appropriate records of their trades and provide full disclosure of their trade management practices and any conflict of interest to SEBI.

The directions have been made by SEBI through its 'Operational, Prudential and Reporting Norms for Alternative Investment Funds (AIFs)', which were introduced by the regulator last year as a separate product class.

The AIFs have been divided into three categories. The category I AIFs include those investing in start-ups, social ventures, SMEs, infrastructure or other areas that can get government incentives for being 'socially or economically desirable'.

The category II AIFs include private equity funds and debt funds which do not get any incentives or concessions from the government and do not undertake leverage or borrowing other than to meet day-today operational requirements.

The other AIFs have been placed under Category III and they employ "diverse or complex trading strategies and may employ leverage, including through investment in listed or unlisted derivatives". These include hedge funds or funds which trade with a view to make short-term returns.

SEBI today said category III AIFs, which undertake leverage would need to submit a report to SEBI on a monthly basis about their activities.

The others who do not undertake any leverage can, however, submit such reports on a quarterly basis.

In today's circular, SEBI also said AIFs employing leverage need to provide full disclosure and transparency about conflicts of interest and how they manage them from time to time to investors. — PTI

Mumbai, July 29
Continuing its downward march for the fourth session, the benchmark S&P BSE Sensex today tumbled 155 points to end at a nearly three-week low of 19,593.28 on the eve of the RBI's monetary policy review.

The index fell on selling in FMCG, PSU, metal and realty stocks, while weak Asian cues amid mixed European openings also weighed on market sentiment.

The 30-share Sensex initially touched a high of 19,751.03 and then declined on weak Asian trends to settle at 19,593.28, a fall of 154.91 points or 0.78 per cent. That was the lowest close since 19,294.12 on July 10.

The National Stock Exchange's Nifty index fell 54.55 points, or 0.93 per cent, to 5,831.65. The SX40 index on the MCX-SX closed at 11,695.58, down 0.81 per cent.

"Caution was seen ahead of RBI's monetary policy," said Nidhi Saraswat, a senior research analyst at Bonanza Portfolio Ltd. "RBI has been taking measures to curb rupee weakening against dollar and market has reacted negatively to it in last few weeks, particularly the rate-sensitive stocks being the worst hit." FMCG giants ITC and Hindustan Unilever declined after their recent rally and together contributed almost 100 points to the Sensex fall.— PTI

New Delhi, July 29
The Supreme Court today issued notice to the Centre, Reliance Industries Ltd (RIL) and four others, seeking their response to a PIL pleading for quashing the government’s decision to double the natural gas price from $4.2 per million British thermal unit (mbtu) to $8.4 per mbtu from April 2014.

The PIL has been filed by CPI leader Gurudas Dasgupta, an MP, and former Union Power Secretary EAS Sarma, contending that the hike would result in a “massive hike in power tariffs and fertiliser costs,” besides benefiting RIL at the cost of poor people and the government.

The other respondents to the PIL are Petroleum and Natural Gas Minister M Veerappa Moily, the ministry, NIKO Resources Ltd, a company registered in Canada, and BP Exploration (Alpha) Ltd. A Bench comprising Chief Justice P Sathasivam and Justices Ranjana Desai and Ranjan Gogoi passed an order asking them to send their response within four weeks. The case would be taken up for next hearing on September 6.

Appearing for the petitioners, senior counsel Colin Gonsalves said Moily “is batting for Reliance” by ignoring the formula suggested by the Rangarajan committee and over-ruling the views of the officials.

Senior counsel Harish Salve, arguing for RIL, questioned the logic behind the PIL at a time when the dispute relating to recovery of the investments made by the company in gas exploration and production under the production sharing contract (PSC) for the Krishna-Godhavari Delta block (KG-D6) had gone for arbitration.

The Bench, however, said it was not inclined to reject a senior MP’s PIL at the initial stage.

Dasgupta said he was forced to file the PIL as Prime Minister Manmohan Singh had failed to respond to his letters on the issue. The ministries of fertilizer and power had opposed the price hike.

RIL stood to gain by Rs 81,000 crore from KG-D6 in just five years from April 2004 following the hike, the petition said. Further, the present government had no right to place such a huge burden on the nation at the time of Lok Sabha elections due early next year, it contended.

The PIL has also sought pricing of gas in rupees instead of in dollars or any other currency. Pending the price hike in April, the production at KG-D6 had been brought down from 42 mmscmd in 2011-12 to 25 mmscmd in 2012-13. In view of this, the government should not allow cost recovery to the extent of $2.7 billion, the petitioners pleaded. 

New Delhi, July 29
Reliance Telecom Ltd (RTL) today contended in the Supreme Court that the CBI had sought to make Reliance ADAG chairman Anil Ambani and his wife Tina as witnesses in the trial court in a desperate attempt to revive its 2G scam case. “It should be the funeral of the case when the prosecution has been unable to prove its case after examination of 140 witnesses” in the trial court, senior counsel Mukul Rohatgi pleaded.

The trial court’s July 19 order summoning Anil and Tina would also prolong the trial which was against the SC order for expeditious disposal of the case, he said.

Instead of focusing on additional witnesses, the trial court should examine the remaining 20 witnesses named in the charge sheet, he pleaded.

Ahmedabad, July 29
Restrictions on gold imports will continue following a surge in inward shipments of the metal in July after moderating in the previous month, Finance Minister P Chidambaram said today.

"Imports were low in June but in July it has turned again...in July the imports have risen, therefore those measures (to contain imports) will continue," Chidambaram said at a function here.

Gold imports were 141 tonnes in April and rose to 162 tonnes in May.

"About 302 tonnes of gold was imported in two months. If we multiply it by six, then 1,800 tonnes of gold is to be imported (in the fiscal). So where is the money to import 1,800 tonnes," he asked, justifying steps taken by the government and the RBI to curb gold imports.

While the government increased customs duty on gold to 8 per cent, the RBI imposed a series of restrictions on import and financing of gold.

The minister said India imported 845 tonnes of gold in 2012-13 for which the nation had to shell out $50 billion (about Rs 3 lakh crore) in foreign exchange.

Admitting that it was difficult to persuade people not to buy gold, Chidambaram said, "I just ask them to moderate gold purchases. If they are buying 20 grams, I ask them instead to buy 10 grams." — PTI 

New Delhi, July 29
Bharti Infratel, the tower arm of telecom major Bharti Airtel, today reported a 67.6 per cent jump in net profit at Rs 357.6 crore for the first quarter ended June 30, 2013.

BRIEFLY

L&T bags $1,403m Riyadh project
Mumbai: Engineering major Larsen & Toubro (L&T) and its consortium partners have bagged an order valued at $1,403 million or Rs 8,250 crore to develop a metro project in Saudi Arabia. L&T Construction won the turnkey contract from ArRiyadh Development Authority in Saudi Arabia for the design, construction and commissioning of the metro project in Riyadh. — PTI

IOC raises $500 m in bond issue
New Delhi: Indian Oil Corp (IOC) said on Monday it has raised $500 million by selling 10-year dollar-denominated bonds, its fourth such issue overseas in three and a half years. The company priced the senior unsecured bonds at 3.224 percentage points over comparable US Treasuries. The paper carries a coupon of 5.75 per cent. — PTI

Ginger hotels’ expansion plan
New Delhi: Roots Corporation, a subsidiary of Tata group firm Indian Hotels, said on Monday it will open eight new properties under 'Ginger' budget hotel chain across India by the end of next financial year. The hotels will be opened at Mumbai, Bhubaneswar, Vapi, Jaipur, Greater Noida, Vadodara, Chandigarh and Amritsar. — PTI

Gold extends gain for 3rd day
New Delhi: Gold prices extended gains for the third day by adding Rs 50 to Rs 28,475 per 10 grams in the national capital on Monday on sustained buying by stockists. However, silver fell further by Rs 230 to Rs 41,000 per kg.— PTI