Bank values in Europe fail to lure buyers

European banks are struggling to find buyers for at least $32 billion of businesses earmarked for sale as the sovereign-debt crisis drags on, raising the likelihood they’ll have to settle for fire-sale prices.

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Bulls hope for a bounce now. Or else… Thursday Closing Report

After an immediate support at 4,915, next support for the Nifty lies at 4,865

Despite the weekly inflation coming in at a 39-month low, the market settled with a deep cut as investors were concerned about the stability of the government at the Centre. The strenuous uptrend has been paused with the Nifty closing in the negative. If the index falls below 4915, it may go down to the level of 4,865 and the next support lies at 4,785. The National Stock Exchange (NSE) saw a volume of 59.05 crore shares, slightly higher than the last two days.   

The market started the day in the negative tracking the weak Asian bourses on nervousness ahead of the key European Union summit on Friday, which is expected to discuss a plan to end the debt crisis plaguing the continent. The Nifty opened 26 points lower at 5,037 and the Sensex started the day at 16,820, a loss of 57 points over its previous close.

Selling pressure from institutional investors led the market lower in the morning session. The sharp decline in the weekly inflation numbers did not soothe matters as across-the-board selling saw all the sectoral indices trading lower today.

The benchmarks fell to their intraday lows in the late session with the Nifty falling to 4,921 and the Sensex going back to 16,422. The market settled slightly above the lows with the Nifty declining 119 points to 4,944 and the Sensex closing the day at 16,488, down 389 points.

The advance-decline ratio on the NSE was a dismal 386:1317.

Tracking the decline in the benchmarks, the BSE Mid-cap index declined 1.77% and the BSE Small-cap index fell by 1.61%.

All sectoral gauges ended lower with the BSE Capital Goods index (down 4.40%) emerging as the top loser. It was followed by BSE Realty (down 3.80%); BSE Metal (down 3.15%); BSE Power (down 3.02%) and BSE Oil & Gas (down 2.98%).

The top gainers on the Sensex were Wipro (up 2.35%); Sun Pharma (up 1.49%); Cipla (up 0.88%); Tata Power (up 0.61%) and Bajaj Auto (up 0.29%). The major losers on the benchmark were Jaiprakash Associates (down 5.41%); BHEL (down 5.28%); Larsen & Toubro (down 5.11%); Hindalco Industries (down 5.02%) and Sterlite Industries (down 4.38%).

The 50-share Nifty list was led by Wipro (up 2.20%); Sun Pharma (up 1.88%); Punjab National Bank (up 1.63%); Cipla (up 1.52%) and SAIL (up 0.63%). On the other hand, Reliance Communications (down6.54%); JP Associates (down 6.03%); BHEL (down 5.95%); Sesa Goa (down 5.84%) and L&T (down 5.39%) were the major losers.

Markets in Asia settled lower as investors turned cautious ahead of the EU summit on Friday and on weak economic indicators. Meanwhile, Bank of Korea kept its key rate unchanged 3.25% for the sixth successive month amid signs that exports are slowing and as domestic demand cools. This apart, Japanese factory orders fell 6.9% in October from September, lower than analysts’ expectations of a 0.5% rise.

The Shanghai Composite shed 0.12%; the Hang Seng fell by 0.69%; the Jakarta Composite declined 0.30%; the KLSE Composite slipped 0.68%; the Nikkei 225 contracted 0.66% the Straits Times tanked 1.95%; the Seoul Composite fell 0.37% and the Taiwan Weighted was down 0.71%.

Back home, foreign institutional investors were net buyers of stock totalling Rs135.36 crore on Wednesday. On the other hand, domestic institutional investors were net sellers of equities amounting to Rs190.11 crore.

Coal India has cuts its production target to at least 440 million tonnes for the current financial year from an estimated 452 million tonnes in its annual plan. The state-run company has lowered its production target due heavy rainfall, strike and delays in the grant of forestry and environmental clearances to coal projects. The stock declined 2.98% to close at Rs314 on the NSE.

Suven Life Sciences has been granted four product patents, two in Australia and two in Canada for its New Chemical Entities (NCEs) for the treatment of disorders associated with neuro-degenerative diseases. These patents are valid through the year 2027 and 2028, the company stated. The stock fell 1.69% to close at Rs14.55 on the NSE.

Confectionery major Britannia Industries has sacked some employees across levels in India on the basis of non-performance. The company, however, did not give the exact number of employees it has sacked. The stock ended 1.95% lower at Rs459 on the NSE.


Cairn announces completion of Vedanta deal

The transaction was originally announced in August last year, but its completion was delayed as state-owned ONGC, which partners Cairn India in its crown jewel Rajasthan oilfields as well as seven other properties, demanded sharing of royalty it pays before the deal was cleared

New Delhi: British oil firm Cairn Energy Plc today said it has completed the sale of a controlling stake in its Indian unit to mining giant Vedanta after protracted wrangling over royalty payments, reports PTI.

Cairn Energy, which had in July sold a 10% stake in Cairn India to Vedanta for about $1.4 billion, got another $4.1 billion from the sale of the remaining 30%, the company said in a press statement.

“Cairn is pleased to announce that the transaction has now completed,” it said.

Sesa Goa, a unit of London-listed Vedanta Resources, had yesterday stated that it has raised its stake in Cairn India to 20% following the acquisition of 28.8 million additional shares, amounting to a 1.5% stake.

The Vedanta Group now holds 60% in Cairn India, while Cairn Energy retains about 22%.

The transaction was originally announced in August last year, but its completion was delayed as state-owned Oil and Natural Gas Corporation (ONGC), which partners Cairn India in its crown jewel Rajasthan oilfields as well as seven other properties, demanded sharing of royalty it pays before the deal was cleared.

ONGC, being the licensee of the Rajasthan block, pays 20% royalty on not just its 30% share of production, but also on the 70% share of Cairn India.

It wanted this payment to be treated like other project costs and taxes and recouped from revenues earned from oil sales, a demand opposed by Cairn India.

Cairn India also felt the Rs2,500 per tonne oil cess was a liability of the licensee and was opposed to deviating from the signed contract to share any of this burden.

The government, however, supported ONGC’s stand and made sharing of royalty and acceptance of cess liability by Cairn India preconditions for giving its nod to the transaction.

Despite Cairn India’s reservations, its current and future promoters—Cairn Energy and Vedanta, respectively—accepted the government conditions, following which ONGC waived its pre-emption rights over the deal.

The home ministry also late last month gave security clearance to a Vedanta takeover of the operations of India’s biggest onland oil discovery in more than two decades, besides other properties of Cairn India.

Vedanta acquired 40% of Cairn Energy’s stake at Rs355 per share.

Cairn Energy said it would return $3.5 billion to shareholders from the net proceeds of $5.5 billion from the stake sale in Cairn India.

Shareholders would have “an element of choice as to when and in what form they receive cash,” it said.

Cairn discovered significant quantities of oil in Rajasthan in 2004 and full production began in August 2009.

The block is estimated to have the potential to produce 300,000 barrels of oil per day at its peak.

Cairn Energy Plc chief executive Simon Thomson said: “I am delighted to announce completion of this transaction, which represents a major milestone in Cairn’s history. It crystallises the very significant value creation that we have delivered from our Indian business and allows us to return around three and a half billion dollars to shareholders.”

“Our remaining 22% shareholding in Cairn India, retained cash and balance sheet strength provides financial flexibility and an excellent platform for future growth opportunities,” he added.


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