Banks like State Bank of India had refused to facilitate payments for Iranian oil after the RBI on 23rd December clamped down on the main conduit used by the Indian companies to pay for the Persian Gulf nation imports
New Delhi: Ending a six-week long stalemate, India today decided to use the euro to pay for Iranian crude oil but will route the payment through a German bank instead of its central bank, reports PTI.
Banks like State Bank of India (SBI) had refused to facilitate payments for Iranian oil after the Reserve Bank of India (RBI) on 23rd December clamped down on the main conduit used by the Indian companies to pay for the Persian Gulf nation imports, which make up for over 12% of the nation's oil needs.
But, Iran had continued to supply oil on credit despite the outstanding amount crossing a staggering $3 billion.
"It was decided today that euro payments will be made through Hamburg-based Europisch-Iranische Handelsbank AG (EIH Bank)," a finance ministry official said after a high-level meeting called to end the deadlock.
The meeting was attended by national security advisor Shiv Shankar Menon, economic affairs secretary R Gopalan, foreign secretary Nirupama Rao and oil secretary S Sundareshan.
"SBI has been instructed to start clearing the backlog payments beginning this evening," the official said. Oil companies like Essar Oil will transfer money to SBI, which in turn will use its Frankfurt branch to route payments to EIH.
The nation's largest lender will first clear the over $2 billion payment backlog for the four-month period beginning September 2010.
An additional $1.3 billion worth of oil was bought after 23rd December, when the RBI disallowed payments for Iranian crude using a long-standing clearing house system run by the central banks of nine countries-including India and Iran-dubbed as the Asian Clearing Union.
National Iranian Oil Co (NIOC) has an account in EIH and the Central bank of Germany, Deutsche Bundesbank (DBB) had cleared it for receiving euro payments for Iranian crude.
DBB has agreed to receive euro payments for the Iranian oil, provided the importing entity or its bank issues a certificate that the money will not be used for trade in any commodity that is under UN or European sanction, the official said.
He added import of crude oil from Iran has not been banned by either UN or European Union.
EIH was suggested for routing payments even earlier but SBI had resisted it fearing its business in US might get affected. It wanted a comfort from the government and both NSA and the foreign secretary fully backed euro payments through EIH, he said.
India imported 21.3 million tonnes of crude oil from Iran in 2009-10 and imports in 2010-11 are expected to amount to around 18 million tonnes, as Reliance Industries has totally stopped using crude oil from the Persian Gulf nation.
The Sensex and Nifty ended positive today at 18,449 and 5,527, the market is not likely to run away. Nifty may reach 5,700 from here over the next few days
The market opened on a steady note this morning, riding on its own strength in the absence of any triggers from the Asian bourses. Overcoming initial hiccups and a sharp rise in the weekly food inflation numbers, the indices continued their upward journey that began yesterday. The market witnessed some consolidation in the noon session, with buying support improving later to take the indices to a higher trajectory in post-noon trade.
Both Bombay Stock Exchange (BSE) Sensex and National Stock Exchange (NSE) Nifty finally settled off the day's highs, ending higher by 2% thus making it a second straight day of gains.
Yesterday we suggested that a fresh sharp decline may be on the cards and this could be the last in the current phase of decline. Our forecast was that this would lead to a retracement of some of the fall. However, the market did not break the recent bottom of 5,402 and 17,982 (Nifty and Sensex) and so the bulls tried to push the market up today. The Sensex and Nifty fell a bit in the morning session below yesterday's lows to 18,065 and 5,418 but a rally started soon which took the Sensex and Nifty above yesterday's high.
The Sensex even briefly crossed the Tuesday's high of 18,452. The intra-day low on the Sensex was 18,466 and 5,533 on the Nifty. Although both the key indices ended positive today at 18,449 (up 359 points) and 5,527 (up 95 points) the market is not likely to run away. The advance-decline on the NSE stocks was 1,191:676. However, the short-term indicators are at extreme levels of bearishness and we expect that from today a slow rally has started.
The market breadth on the Sensex and Nifty was also in line with the overall performance of other indices. The Sensex had 29 gainers and one loser and the Nifty went home with 42 advancing stocks, seven in declining list while one stock remained unchanged. Although the broader indices settled in the positive zone, they underperformed the Sensex. The BSE Mid-cap index gained 1.09% and the BSE Small-cap index rose 1.21%.
The sectoral space was a sea of green today, led by BSE Realty (up 3.93%), BSE Capital Goods (up 2.51%), BSE Metal (up 2.19%), BSE Bankex (up 2.04%) and BSE PSU (up 1.71%).
The top performers on the Sensex were DLF (up 7.42%), Jaiprakash Associates (up 6.06%), Bharti Airtel (up 5.12%), Hindalco Industries (up 4.62%) and Tata Motors (up 4.08%). Bajaj Auto (down 0.51%) was the lone loser today.
Food inflation for the week ended 22nd January rose to 17.05%, which led finance minister Pranab Mukherjee expressing "grave concern" and assured steps to moderate it.
Driven by higher prices of vegetable, fruits and eggs, food inflation increased for the second week in a row, soaring by 1.48 percentage points from 15.57% in the previous week. Food inflation had stood at 20.56% during the same period a year ago.
Speaking on the performance of the markets, the finance minister said stock markets have seen volatility over the past few days due to selling pressure from foreign institutional investors (FIIs) but the government still expects a growth of 8.5% in the current financial year ending March 2011.
In Asian markets, the Nikkei 225 closed 0.25% lower today as quarterly numbers from corporates were below expectations. Concerns about the crisis in the Middle East also weighed on investor sentiments. All other markets were closed due to the Lunar New Year holiday.
Back home, FIIs were net sellers of stocks worth Rs81.73 crore on Wednesday. On the other hand, domestic institutional investors were net buyers and bought equities worth Rs680.38 crore. At close, the Instanex FII Index was up 1.95% at 385.61 and the Instanex DII 15 portfolio was up 1.96%.
Sun Pharmaceutical Industries (up 0.54%) has received an approval from the US health regulator to sell generic drug galantamine hydrobromide used in treating mild to moderate Alzheimer's disease in the American market. The approval is for an abbreviated new drug application (ANDA) to market the generic version of Razadyne ER, a registered trademark of Ortho-McNeil Janssen Pharmaceuticals. Sun Pharma will market the drug in multiple strengths of extended-release capsules, 8 mg (base), 16 mg (base) and 24 mg (base).
Oracle Financial Services Software (down 3.27%) has informed BSE that Allied Irish Banks plc (AIB), a customer in Ireland, has filed a lawsuit in the Irish High Court against the company and one of its subsidiaries, claiming damages of upwards of Euro 84 million. AIB claim alleges breach of contract, misrepresentation and negligence.
CNI Research (up 13.56%) has announced its foray into the print media. The company, however, is awaiting the final approval from the Registrar of Newspapers for launching a newspaper. The foray into print media is in line with the company's philosophy of diversifying its revenue streams and creating value for various shareholders.
Court remands Raja, two others in CBI custody for five days
New Delhi: The Central Bureau of Investigation (CBI) today accused former telecom minister A Raja of causing a loss of Rs22,000 crore to the exchequer by favouring some telecom firms in awarding 2G licences and spectrum and it named Swan Telecom and Unitech as receiving favourable treatment in this process.
This was stated before the court by special public prosecutor Mr Akhilesh, representing the CBI, while seeking the custody of Mr Raja, former telecom secretary Siddartha Behura and Raja's former personal secretary RK Chandolia for five days. Special judge OP Saini granted the plea, reports PTI.
The CBI arrested Mr Raja and the two others on Wednesday over irregularities in awarding licences and spectrum at below market prices. "Undue favours were granted in the allocation ... The companies were favoured and spectrum and licences were awarded at a low rate," Mr Akhilesh told the court.
The CBI said that the custody of the former minister was essential for further questioning, because he had been evasive in replying to their queries during his interrogation at the agency's headquarters. It is for the first time that the CBI has directly accused Mr Raja of complicity in the 2G scam after it had filed an FIR against unidentified officials and private persons and companies on 21 October 2009.
The 47-year-old DMK member of parliament, who was dressed in a grey suit, appeared cool and composed and greeted the judge with folded hands. At the outset, Mr Raja's counsel Ramesh Gupta sought time for a private conversation, which the judge allowed for ten minutes.
Seeking the custody of the three men, Mr Akhilesh argued that Mr Raja had caused a loss of Rs22,000 crore to the public exchequer by favouring some telecom firms in awarding 2G licences and spectrum. Though the agency has pegged the loss at Rs22,000 crore, based on the calculations made by the Central Vigilance Commmission, the Comptroller and Auditor General had in its report projected a presumptive loss of Rs1.76 lakh crore.
Norway's Telenor, which is 54% owned by the Norwegian state, has a majority stake in Unitech Wireless. UAE's Etisalat owns about 45% of Swan, which has since been renamed as Etisalat DB. Both companies were not immediately available for comment, but they have in the past denied any wrongdoing.
Both Telenor and Etisalat bought their stakes at a considerable premium after the Indian firms were given the licences.
Mr Raja's lawyer opposed the CBI plea saying that his client was innocent and that all the decisions with regard to granting of 2G licences and spectrum had the approval of the Union Cabinet and various statutory panels. "Accordingly, Mr Raja was not solely responsible in the alleged scam," Mr Gupta said.
He said, "All documents had been seized by the CBI in 2009 itself and Mr Raja had already been interrogated at the agency's headquarters several times in the past."
The CBI should not be awarded Mr Raja's custody just for the sake of interrogation, Mr Gupta said. "There has to be a justification for the same."
However, the judge gave the CBI custody of Mr Raja and the two others for five days.