A sole mosquito has supposedly caused 3,000 cases of malaria in June in Mumbai
Pressure from the US has kept global markets lower
Indian stocks are likely to open range-bound on unsupportive global cues. The US markets closed lower for the second day in a row on Tuesday as concerns about the stalemate over the debt ceiling and a possible credit-rating downgrade kept investors on the sidelines. The Asian pack was mostly lower in initial trade on Wednesday, weighed down by the US debt issues. The SGX Nifty, fluctuating between gains and losses, was up 2.50 points at 5,580 over its previous close of 5,577.50.
The market came tumbling down yesterday after the Reserve Bank of India (RBI) raised key interest rates by a more-than-expected 50 basis points in the fight against inflation. The Nifty fell below the 5,613 level to close 105 points down at 5,575. But while the uptrend in the market has been interrupted, the drop may not be severe. While Tuesday’s fall was supported by higher volumes, above the past 10 days' average, in the previous three trading sessions the market had tried to climb higher with a higher high each day.
The market opened marginally higher, tracking its Asian peers that were trading in the positive in early trade. The Nifty resumed trade at 5,688, up eight points from its previous close, and the Sensex opened up 21 points at 18,898. Nervousness ahead of the RBI's quarterly monetary policy review kept the indices range-bound. The indices touched their intra-day high in the first hour, with the Nifty up at 5,702 and the Sensex at 18,945.
But immediately after the announcement of the sharp rate hike, the market plunged and the losses expanded as trade progressed. The decline hurt all sectoral indices with rate-sensitives like capital goods, realty and banking leading the slide.
The market touched the day's low in the last 30 minutes, with the Nifty falling to 5,560, down 142 points from the day's high. At the day's low the Sensex was down to 18,482. However, the market closed off the lows, the Nifty at 5,575 (down 105 points) and the Sensex at 18,518 (a loss of 353 points).
Markets in the US continued their fall for the second straight day overnight as the political stalemate over raising the country’s debt ceiling kept investors away from equities. A House vote on Speaker John Boehner’s two-step plan to raise the U.S. debt ceiling was postponed amid growing Republican opposition to the measure that the Obama administration has threatened to veto. The new development cast doubts on whether lawmakers and Obama could agree on a plan raising the nation’s debt limit before the 2nd August deadline.
Meanwhile, 3M declined 5.41% after it said that the March earthquake in Japan reduced revenues and profit margins, BP declined 1.26% on earnings below expectations. Among the gainers, Amazon.com rose 0.32% Broadcom jumped 9.42%, Google gained 0.57% and Apple Inc rose 1.23%.
In economic news, the Conference Board, an industry group, said its index of consumer attitudes rose to 59.5 in July from a downwardly revised 57.6 in June.
The Dow fell 91.50 points (0.73%) at 12,501.30. The S&P 500 declined 5.49 points (0.41%) at 1,331.94 and the Nasdaq shed 2.84 points (0.10%) at 2,839.96.
Markets in Asia were mostly lower in initial trade on Wednesday as the stalemate over the US debt ceiling continued. The development hurt exporters in the region. Samsung Electronics lost 1.3% in Seoul and Japan’s Hino Motors fell 2.3%.
In economic news, South Korea’s gross domestic product (GDP) grew a seasonally adjusted 0.8% in the April-June period from the first quarter, the central bank’s advance estimates revealed, slowing after a revised 1.3% rise in the January-March quarter.
The Hang Seng fell 0.11%, the Nikkei 225 declined 0.56%, the Straits Times fell 0.33% and the Seoul Composite was down 0.17%. On the other hand, the Shanghai Composite rose 0.16%, the Jakarta Composite gained 0.25%, and the Taiwan Weighted added 0.09%. The KLSE Composite was unchanged with an addition of 0.01 points.
Back home, RBI governor D Subbarao yesterday said higher-than-expected rate hike of 50 basis points could have an adverse impact on the asset quality of banks but asserted that it would not pose any systemic risk as of now.
Quoting bankers, who met him after the credit policy this morning, the RBI governor said at post-policy press conference, “They [bankers] told us that the NPA [situation] can come under stress especially in some interest-rate sensitive sectors.”
The government's nod to the transaction is subject to Cairn or its successor agreeing to treat royalty payments on Rajasthan oilfields as recoverable from oil sales. Also, Cairn India will have to withdraw the arbitration it has initiated disputing its liability to pay Rs2,500 per tonne oil cess on its 70% share in the fields
New Delhi: More than three weeks after the Cabinet Committee on Economic Affairs (CCEA) gave conditional nod to the $9-billion Cairn-Vedanta deal, the oil ministry today sent a formal letter to the companies informing of the decision, reports PTI.
"The letter was collected by Cairn India representatives this afternoon," an oil ministry official said.
Cairn Energy Plc, which is selling 40% out its 62.4% stake in its Indian unit to London-listed, India-focused mining group Vedanta Resources, was eagerly awaiting the formal letter so that it can quickly conclude the transaction.
Sources said the letter was immediately faxed to Edinburgh, where the board of Cairn India, whose chairman is Bill Gammell (the head of Cairn Energy), was meeting to approved earnings for the first quarter ended 30th June.
Cairn Energy wants the approval letter to be taken up by the Cairn India board at today's meeting itself, they said.
The CCEA had on 30th June given its approval to Cairn Energy for selling its Indian unit to Vedanta subject to the new owner agreeing to share royalty and pay oil cess on mainstay Rajasthan oilfields.
Sources said since the approval involved conditional access, the oil ministry sent the letter informing of the decision to the law ministry for vetting.
Law minister Salman Khurshid yesterday approved the draft and today the oil ministry sent the letter to Cairn India, which is the company that applied for permission for change of control in its 10 properties, including the crown-jewel Rajasthan oilfields.
The government's nod to the transaction is subject to Cairn or its successor agreeing to treat royalty payments on Rajasthan oilfields as recoverable from oil sales.
Also, Cairn India will have to withdraw the arbitration it has initiated disputing its liability to pay Rs2,500 per tonne oil cess on its 70% share in the fields.
Besides, the approval will be subject to ONGC, which has a stake in all the three oil and gas producing properties and five out of seven exploration assets of Cairn India, waiving its pre-emption rights, which CCEA termed as the partner's no-objection certificate (NOC). The deal would also need the security clearance, they said.
Last August, London-listed miner Vedanta proposed buying 51%-60% of oil and gas explorer Cairn India for up to $9.6 billion in cash, but the deal has been delayed due to lack of government and regulatory approvals.
Approval has been delayed over royalty payments that ONGC makes on behalf of Cairn India in Rajasthan oilfields.
ONGC owns a 30% stake in Cairn India's Rajasthan oilfield but pays the entire royalty on production under the government's previous policy of giving discounts to attract investors.
ONGC had, much before the Cairn-Vedanta deal was announced, cited contractual provisions to demand that the royalty to be recovered as a cost from revenue.
The state-owned firm maintained that as a partner it has pre-emption, or right of first refusal, and the deal should not proceed without its concurrence, Mr Reddy said.
Both Cairn and Vedanta disputed royalty being made cost recoverable as it would dent Cairn India profits. They also opposed the need for partner consent for the transaction.
A Group of Ministers headed by finance minister Pranab Mukherjee, which was asked by the CCEA to vet the deal, held that ONGC's views were correct and recommended to the Cabinet that the deal be approved if Cairn or its successor agreeing to adding royalty to the project cost and recovered from oil sales besides agreeing to pay its share of Rs2,500 per tonne oil cess.
Sensing the mood, Cairn last month lowered the price it is demanding from Vedanta to make up for reduced profitability on acceptance of the preconditions. It removed a non-compete provision and related non-compete fee of Rs50 per share.
Vedanta's total payment at the reduced price of Rs355 per share for a 40% stake in Cairn India will now be $6.02 billion instead of $6.84 billion previously.