Mumbai: Indian investors can start trading in large indices of 24 exchanges worldwide within a month, following market regulator Securities and Exchange Board of India's (SEBI) approval for the same, reports PTI.
SEBI has given the green signal to domestic exchanges to offer trading in derivatives contracts of these global indices, including those in the US, Europe and Asia.
Bourses are giving the final touch. Investors can start trading in these global indices within a month, according to sources in both the Bombay Stock Exchange (BSE) and National Stock Exchange (NSE).
However, one of the world's largest bourses the London Stock Exchange (LSE), with whom two Indian exchanges NSE and MCX SX have tied up for cross listing of their indices, is not on the list approved by SEBI for the new guidelines.
Sources said that LSE is not in the approved list since derivative trading is not conducted in that bourse.
The London exchange's benchmark index-FTSE 100-is traded on many other global exchanges, which are part of the SEBI-approved list of 24 bourses.
"It has been decided to permit stock exchanges to introduce derivatives contracts (future and options) on foreign stock indices in the equity derivatives segment," SEBI said in a circular.
The index should have a market capitalisation of at least $100 billion and it should consist of at least 10 constituent stocks.
"No single constituent stock (should have) more than 25% of the weight, computed in terms of free float market capitalisation, in the index," the circular noted.
Trading in derivatives on foreign indices would be restricted to Indian residents only.
The market regulator also pointed out that after the introduction of derivatives on a particular stock index, if that index fails to meet the eligibility criteria for three months consecutively, no fresh contract shall be introduced on that index.
In March 2010, National Stock Exchange (NSE), the largest stock exchange in India, and CME Group, the world's leading and most diverse derivatives marketplace announced cross-listing arrangements, including licence agreements covering benchmark indices for the US and Indian equities.
This had allowed S&P 500 and Dow Jones Industrial Average to trade in NSE, subject to regulatory approvals.
Besides, BSE has similar arrangement with Eurex Frankfurt AG, Europe's leading financial futures exchange.
New Delhi: State Bank of India chairman OP Bhatt expects the Reserve Bank of India (RBI) to raise its key policy interest rates by at least 25 basis points in the forthcoming quarterly review to tame inflation, reports PTI.
"Conventional wisdom says that there should be at least 25 basis points hike in interest rate" Mr Bhatt said on the sidelines of an event here.
RBI is scheduled to unveil its third quarterly review of monetary policy on 25th January.
Food inflation for the week ended 25th December stood at 18.32%, while core inflation during November was 7.48% putting pressure on RBI to raise policy rates.
"My personal view is that with things going on in the economy if you look at what has happened to the stock market, if you look at uncertainty and concerns...if interest rate is hiked at this point of time they might add to (problems)," he said.
On the other hand, he said, "If you look at inflation, if the interest rate is hiked at this point of time it would not dampen inflation...my personal view is that interest rate can be hiked any time."
All the think-tanks in the country are saying that inflation should come down to 7% by March, he said, adding, some of the price rise are structural.
In terms of absorbing the increase by the RBI, Mr Bhatt said, "Market sentiment is such that 25-50 basis points it can absorb."
Meanwhile, bankers requested the RBI to slash the cash reserve ratio (CRR) and statutory liquidity ratio (SLR) in its upcoming Third Quarter Review of Monetary Policy 2010-11 on 25th January, besides keeping the key policy rates unchanged amid tight liquidity situation and rising credit demand.
After the customary pre-policy meet with the central bank yesterday, Indian Banks Association chief executive R Ramakrishnan had said bankers demanded reduction in both the CRR and SLR.
They said it will help in tiding over the tight liquidity situation and poor deposit growth, as the credit offtake is growing above the industry's and RBI's own estimates.
"We requested the RBI to slash both the CRR as well as the SLR (amount of prudential reserves that banks keep in the form of government securities, bonds, etc), even though we admit that inflation is a big concern. We see inflation at 7% by the fiscal-end. However, this is 50 basis points above RBI's estimates for this fiscal," Mr Ramakrishnan said.
At present, CRR-the mandatory cash balance that banks park with the RBI- stands at 6%, while SLR stands at 24%.
Era Infra Engineering Ltd said it has achieved financial closure for Rs1,951 crore Bareilly-Sitapur road project in Uttar Pradesh, awarded to it by the National Highways Authority of India (NHAI).
"The 151-km highways project has achieved commitments for the entire debt component of Rs1,350 crore-Rs675 crore each by State Bank of India and Union Bank of India," Era Group chief financial officer Joy Saxena said.
The financial closure documents have been submitted to NHAI for their final clearance, Saxena said.
The Delhi-based company had bagged the project for upgrading National Highways no 24 section last year.
The Rs290-crore equity for the project on engineering, procurement and construction (EPC) basis would be infused by the company, while the NHAI will be contributing Rs290 crore as grant, he said.
Construction on the project has commenced and it is likely to be completed by 2013, he added.
The company had received the contract for four laning (widening) of Bareilly-Sitapur section under National Highways Development Project Phase-III on Design, Build, Finance, Operate and Transfer (DBFOT) toll basis.
Apart from Rs1,350-crore projects in the road sector, including Gwalior bypass that are scheduled for completion by June this year, the company has recently bagged Rs1,659 crore order from NHAI for four laning of Muzaffarnagar-Haridwar and Haridwar-Dehradun sections of National Highway.
On Wednesday, Era Infra ended 0.62% up at Rs211.65 on the Bombay Stock Exchange, while the benchmark Sensex closed 1.76% up at 19,534.10 points.