The US markets achieved another milestone on Wednesday with the S&P 500 closing double it post-crisis low of 666.79, which it touched in March 2009. Tracking the US, most markets in Asia were higher in early trade today
The local market is likely to see a flat-to-positive opening after the two-day consolidation kept the market in a tight range. Post-close yesterday, news of ADAG chairman Anil Ambani being questioned by the CBI in connection with the 2G spectrum scam is expected to impact the group’s stocks today. Besides, the weekly food inflation figures might give it some direction as the day progresses. On the global front, the US markets achieved another milestone on Wednesday with the S&P 500 closing double it post-crisis low of 666.79, which it touched in March 2009. Most Asian markets were in the green in morning trade on Thursday, tracking the US markets that closed higher overnight. The SGX Nifty was down 14 points at 5,480 against its previous close of 5,494 on Wednesday.
On Wednesday the market witnessed a listless opening on the back of subdued cues from the global arena. Trade lacked momentum as the key indices hovered on both sides of the neutral line and remained range-bound for most part of the morning. With prime minister Manmohan Singh's interactions with TV editors along expected lines, the market continued its sideways movement in post-noon trade. The consolidation, which began on Tuesday, continued for another day, and the market closed in the green.
The Sensex closed 27 points up at 18,301, while the Nifty ended flat (up 0.70 points) at 5,482. The market needs to sustain above the 20-day moving average and cross 5,555 on the Nifty and 18,500 on the Sensex for the rally to sustain.
US markets closed on a firm note overnight on better-than-expected profit estimate by Dell Incorporated and on the minutes from the minutes of the latest meeting of the Federal Reserve’s Federal Open Market Committee that portrayed optimism about the US economic outlook. Officials also expected inflation to stay muted and unemployment to remain high. However, a new concern arose as Israel warned that two Iranian warships crossing the Suez Canal into the Mediterranean Sea were “provocations” that Israel couldn’t ignore.
The Dow surged 61.53 points (0.50%) to 12,288.17. The S&P 500 added 8.31 points (0.63%) to 1,336.32 and the Nasdaq gained 21.21 points (0.76%) to 2,825.56. The S&P 500 closed above 1,333.58, double the intra-day low hit in early March 2009. On a closing basis, the market has risen more than 96% since 9 March 2009.
Markets in Asia were mostly higher in early trade on Thursday, supported by a positive close in the US markets on Wednesday. Optimism by the US Federal Reserve helped the US bourses’ performance yesterday. In regional news, China said it will stop publishing its index of national property prices, scrapping a set of data whose accuracy was widely questioned but which also had become a rallying point for public anger over rapidly rising housing prices. Brent oil prices surged to near two-and-half year highs on Wednesday as fresh tensions between Israel and Iran ignited fresh tensions.
The Shanghai Composite rose 0.02%, the Hang Seng gained 0.15%, the Jakarta Composite was up 0.23%, the KLSE Composite surged 0.34%, the Nikkei 225 gained 0.38% and the Taiwan Weighted was up 0.15%. On the other hand, the Straits Times fell by 0.31% and the Seoul Composite lost 0.48%.
Back home, leading think-tank CMIE in its latest review said that the Indian economy is likely to grow by an impressive 9.2% in the financial year 2010-11.So far, real GDP has expanded by 8.9% in the first-half of FY11. In the quarter ended March 2010, real GDP grew by 8.6% and in the subsequent quarters, improved further to 8.9% in each quarter, CMIE added.
In an address to TV editors, prime minister says he was restricted by the compulsions of the coalition government and that he did not take quicker action on 2G as he did not think there was anything wrong at that time
Prime Minister Manmohan Singh today underlined that he would stay in office to take the reforms process forward, while denying that a series of corruption scandals had made him a lame duck leader.
Allegations that the government may have lost up to Rs1,76,000 crore in revenues on account of allocation of 2G spectrum at very low prices in return for kickbacks have rocked the government, practically paralysed Parliament and worried the stock markets.
"Whatever some people may say, that we are a lame duck government, that I am a lame duck prime minister, we take our job very seriously," Dr Singh, said at a media roundtable with TV editors. "We are here to govern, and to govern effectively. Tackle the problems as they arise and get this country moving forward."
The prime minister denying talk about his possible resignation is further indication of the impact that the scandals have had on his second term in office, after being re-elected with an increased majority in 2009.
He said that things were not entirely the way he would like them to be, "but quite frankly I never felt like resigning because I have a job to do."
The prime minister has said it before and he repeated it today that he was not afraid of appearing before any committee, including a Joint Parliamentary Committee. "This is an entirely wrong impression that I was the one blocking the agreement on a JPC," he said.
To a question about what was his biggest regret in UPA-II, Dr Singh said that "these irregularities have happened. They should not have happened. I am not very happy about these developments".
He virtually disagreed with the calculations of the Comptroller and Auditor General (CAG) on the loss figure in the 2G scam, saying the CAG itself had called it presumptive. There are various methods of computing the figures, he said and went on to question whether the Rs80,000 crore being spent on foodgrains subsidy, Rs60,000 crore on fertilisers and subsidy on kerosene could be called a loss.
The prime minister's remarks got an immediate response from the Bharatiya Janata Party (BJP), the principal opposition party, which said that his statements were disappointing and showed his helplessness. "In a way, an effort has been made to cover up the corruption. He has accused the media and opposition of spreading misinformation while maintaining that all is well. He has expressed his helplessness," Nitin Gadkari, president of the BJP, said.
The prime minister tried to reassure the country that his government would deal with the scandals effectively. "I wish to assure you and I wish to assure the country as a whole that our government is dead serious in bringing to book all the wrongdoers, regardless of the position they may occupy."
On the scandals, he said that as far as who gets licences, the first-come-first-served policy, how it is implemented, "that was never discussed with me." Dr Singh said that licences were not a matter which ever got referred to him or the cabinet. "That was a decision exclusively of the telecoms ministry."
The prime minister has been criticised frequently for his apparent indecision on various matters and he has also been hampered by an impression that Congress Party chief Sonia Gandhi wields the real power. And today, there came some explanation for the indecision as when he was asked why he did not act quickly on the problems in the allocation of telecom licenses and on the reappointment of former telecommunications minister A Raja.
"In a coalition government you can suggest your preferences, but you have to go by what the leader of that coalition partner ultimately insists. Raja ... was the DMK (Dravida Munnetra Kazhagam) party choice and at that moment I had no reason frankly speaking that anything seriously wrong had been done."
"I did not feel I had the authority to object to Mr Raja's entry because quite honestly in May 2009, although complaints were coming in, although complaints were coming from all sides, some from companies not benefitting (from the telecoms spectrum allocation) ... I was not in a position to make up my mind that anything seriously was wrong," he said.
The Indian stock market is down nearly 11% this year, the worst performer among Asian markets, due to the scandals that have worried investors. Foreign investors have pulled out huge amounts from the market recently, while foreign direct investment has fallen over the past three years. This is also due to the global economic slowdown, but uncertainty is a major factor.
"This sort of atmosphere is not good. It saps our own self-confidence. It also spoils the image of India," Dr Singh said, but he denied they had hurt FDI. "It is not our mistake. The international situation is such that funds are moving out of emerging markets. We are today functioning in an environment where what happens outside affects us. Therefore, it is not easy to say that what happens to fund flow is entirely a function of our policy."
Policymaking has suffered severely after the last parliamentary session was totally disrupted by opposition protests demanding a probe into the telecoms scam. But today, the prime minister promised clearer measures in the forthcoming budget, saying, "We have not given up, we will persist. There are difficulties, particularly when Parliament is not allowed to function. I think Parliament is not able to perform its essential function, being a forum for legislation."
On inflation that has hit the common citizen hard, Dr Singh said, "We want to deal with it (inflation) in a manner that the growth rhythm is not disturbed. If we were concerned only in curbing inflation we could have done with pursuing tighter monetary policies...if in the process the growth rate gets hurt that would not do our country any good."
Rejecting criticism that the government has given up on economic reforms, the prime minister said, "I sincerely hope in the (upcoming) Budget we will see a clearer picture of the reform agenda."
Hinting at big initiatives for infrastructure development, he said: "I believe we are going to have a fresh wave of infrastructure investment with the help of PPP (public-private partnership) model." He said discussions were going on to create an infrastructure development fund and that finance minister Pranab Mukherjee may make some announcements.
It has been estimated that India needs investment to the tune of over a trillion dollars in the 12th Five Year Plan (2012-17) to sustain a growth rate of 8-9%. When asked where the country would mop up such resources from, Dr Singh said, "We must create a viable corporate debt market. I think that is the direction in which we must move."
ADAG says Anil Ambani not summoned by CBI, but that its chairman met agency officials to discuss various issues related to the telecom sector, including licenses and related matters of the last decade
Anil Dhirubhai Ambani Group (ADAG) chairman Anil Ambani met officials the Central Bureau of Investigation (CBI) on Tuesday, in relation with the ongoing inquiry in the telecom spectrum case, the company said in a statement today.
"During the course of his weekly visit to New Delhi, Anil Ambani met CBI officials today to clarify ongoing issues, relating to telecom matters for the years 2001 to 2010, and virtually every telecom operator in the country," ADAG said. It, however, clarified that the CBI had not issued any summons to Mr Ambani.
The statement reiterated that no one from the ADAG group held any shares in Swan Telecom Ltd in January 2008, when the 2G licences were issued by the Department of Telecom (DoT) and that not a single individual from the group had obtained any monetary gain or other benefits from it.
According to some media reports, the CBI questioned Tata Realty and Infrastructure chief financial officer Kishore Saletore and managing director Sanjay Ubale, S-Tel's CFO Arun Mandhana and chief regulatory officer Rupinder Sikka, as well as Loop's chief executive Sandip Basu. However, this could not be confirmed from the CBI.
The Supreme Court has directed the CBI to check the eligibility criteria of operators who won 2G spectrum licences. Earlier, in a report, the Comptroller and Auditor General (CAG) said that Swan Telecom, which won telecom licences in 13 circles, appeared to have acted as a front company for Reliance Telecom, a unit of ADAG company Reliance Communications.
As per existing rules, no telecom operator is allowed to hold more than 10% shares in another operator in the same circle, directly or indirectly. However, the CAG said it had found that in all the 13 circles where Swan had got licences, RCom was also present and together with preferential shares equivalent to 0.9%, RCom had a 10.7% stake in Swan, which was against the prescribed norms.
But RCom has maintained that it held 9.9% stake in Swan through Reliance Telecom till December 2007 and that it had offloaded the stake before Swan was awarded telecom licences on 10 January 2008.
According to the CAG report, 85 out of 122 new licences did not meet the eligibility criteria prescribed by the Department of Telecommunications. Moreover, 45 out of these 85 licences failed to satisfy conditions of the main object clause in their Memorandum of Association. The government has already issued a show-cause notice to all 85 licence-holders asking them why their licences should not be cancelled.