Daily Market View: In continued uptrend

Subject to minor declines, market may be headed for a new intermediate high

The market in the green for the third day in a row on positive Asian markets; however, lower-than-expected industrial growth limited the gain. The Sensex settled at 17,937, up 103 points (0.6%) and the Nifty stood at 5,383, up 30 points (0.6%). The indices started the day with support from their Asian counterparts. The market pared off some gain in the mid morning session following the announcement of the industrial output numbers. In the early afternoon session it recovered to limit some of the losses.

Asian markets were up on the positive sentiment of Wall Street's best weekly performance in a year on Friday, 9th July. Strong Chinese export data for the month of June also supported the upmove. Key benchmark indices in Hong Kong, Singapore, Indonesia, China, and South Korea were up 0.01% to 0.8%. However, Japan's Nikkei 225 was down 0.4% in volatile trade after the government lost an upper house election over the weekend.

Wall Street closed at its best week in a year on Friday. The Dow was up 59 points (0.58%) at 10,198. The S&P 500 was up 7.7 points (0.7%) at 1,078. The Nasdaq was up 21points (0.9%) at 2,196.

Industrial output, as measured by the Index of Industrial Production (IIP), in May was up at a slower-than-expected 11.5% from a year earlier, government data showed on Monday. Manufacturing output rose an annual 12.3%, the statistics office said. Mining output was up 8.7% and power generation rose 6.4%. Production of capital goods rose 34.3% year-on-year after an annual rise of 72.8% in April 2010, while consumer durables output grew 23.7%, down from a 37% rise in the previous month. Analysts opine that IIP for the second half of the calendar year 2010 will slow down to 6%-9% and end the fiscal 2010-11 with an average growth of around 9%.

The steel ministry wants a ban on the iron exports as they are non-renewable. India produced about 230 million tonnes of iron ore in the last fiscal, of which around 106 million tonnes were exported, mainly to China. This was announced by the ministry after the Karnataka government wrote a letter for banning iron ore export.

The Reserve Bank of India (RBI) is likely to soon announce a sunset clause with a deadline of 30 June, 2011 for all loans in the erstwhile benchmark prime lending rate (BPLR) system to migrate to the new base-rate model.

Foreign institutional investors were net buyers of equities worth Rs1,104 crore on Friday. Domestic institutional investors were net buyers of Rs39 crore on the same day.

Bhilwara Energy Ltd (BEL), a LNJ Bhilwara group company, plans to dilute 10.8% stake to two foreign investors as part of its plans to fund its power projects. BEL has agreed to disinvest holdings to Washington's IFC and India Clean Energy Fund for $50 million ($25 million each) or Rs230 crore. RSWM (up 6.1%) is one of the promoters of Bhilwara Energy and currently holds 19.5% in the company. 

The board of Treadsdirect (down 2.5%) has decided to restructure the company business with effect from 1 April, 2010 through a composite scheme of arrangement by amalgamating the company along with Elgi Rubber Company Ltd into Elgi Rubber International Ltd, a company which will eventually be listed on the NSE. The board has also decided to demerge certain divisions of the company to Treadsdirect (India) Ltd, which will become a wholly-owned subsidiary company of Elgi Rubber International. 

Amrit Corp (up 1.4%) informs that the promoters of the company are restructuring their shareholding in ABC Paper Ltd, pursuant to which, 22,99,900 equity shares of Rs10 of ABC Paper are proposed to be transferred to co-promoter, Esteem Finvest Ltd, at a premium to the market price.




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IPI Pipeline: India wants to resume dialogue

India has been boycotting project talks since 2008 over concerns on safe delivery of gas and frequent changes in price of gas

After a two-year lull, India has proposed to resume talks with Iran on importing gas through a pipeline passing through Pakistan, but the Persian Gulf state wants the meeting to happen in Tehran, reports PTI.

India in April proposed a meeting of the India-Iran Joint Working Group (JWG) between 23rd and 28th May in New Delhi to discuss the Iran-Pakistan-India gas pipeline project, but Tehran has not yet confirmed the dates.

Now Iran has told India that the meeting of JWG should happen in Tehran, a source close to the development said.

"New Delhi has accepted the condition, but Iran has so far not indicated any dates for the meeting," the source said.

India has been boycotting project talks since 2008 over concerns on safe delivery of gas and frequent changes in price of gas. New Delhi wants Iran to stick to the price agreed between them in 2007 and also wants it to be responsible for safe passage of gas through Pakistan.

The pipeline has been on the drawing board since the mid-1990s, when Iran and India inked preliminary agreements to transport gas through Pakistan. It was dubbed the "Peace Pipeline", because of hopes it would lead to a detente between neighbours India and Pakistan.

India fears for the safety of the pipeline in Pakistan's Baluchistan province, home to a militant Islamist separatist movement, and wants Iran to take responsibility for safe passage of the gas through Pakistan. It wants to pay for the fuel only when it is delivered at the Pakistan-India border.

New Delhi is also upset with frequent changes in the gas price. Iran had originally priced the gas at $3.2 per million British thermal unit (mmBtu), but in 2007 revised the rates to $4.93 per mmBtu at $60 a barrel crude oil prices, which was accepted by India.

Last year, it unilaterally revised the rates again and according to the new pricing formula, the fuel would cost New Delhi $8.3 per mmBtu at $60 per barrel oil price at the Iran-Pakistan border.

Added to this would be $1.1-1.2 per mmBtu towards the transportation cost and transit fee that India would have to pay for wheeling the gas through Pakistan, the source said.

Tehran, he said, wants to transfer ownership of the gas to India at the Iran-Pakistan border, while New Delhi wants it to be at the Pakistan-India border, thereby making Iran explicitly responsible for safe delivery of gas.

While the 1,100-km-long pipeline from the South Pars gas fields in the Persian Gulf to the Iran-Pakistan border would be laid by an Iranian firm, New Delhi wants to take stake in the 1,035-km pipeline section in Pakistan.

India feels that its participation in execution of the pipeline in Pakistan would make the project more bankable, reduce the financing cost, ensure timely execution and ensure transparent and efficient management of operations, the source said.


Ajel to provide eCRM mobility solutions to Talitha, Jash

Mumbai-based Ajel Infotech said it has signed contracts with UAE-based Talitha Global and Singapore-based Jash Consultants to provide electronic customer relationship management (eCRM) mobility solutions.

Ajel will upgrade Talitha and Jash Consultant's current setup with eCRM solution and integrating their back-office operations to enable customer engagement and incorporate customer analytics dashboard for easy reporting and review, it said in a regulatory filing.

On Monday, Ajel shares closed 1.4% down at Rs34 on the Bombay Stock Exchange, while the Sensex ended at 0.6% up at 17,937 points.


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