Gyeongju (South Korea): Finance minister Pranab Mukherjee has said today that huge foreign institutional investor (FII) inflow reflects foreigners' confidence in the Indian growth story and is not a matter of concern as of now since the appreciation in the value of rupee is not abnormal, reports PTI.
"The rupee appreciation is not abnormal. As and when Reserve Bank of India (RBI) feels that intervention is necessary, they start intervening.
But I'm not very much worried because our situation will not be of that level," Mr Mukherjee said ahead of G-20 finance ministers meeting here.
RBI had intervened in markets last week to restrain a sharply appreciating rupee.
The finance minister said that if rupee continued to appreciate for longer, exports would be impacted.
"Export is definitely affected if it continues for a longer period of time," he said.
The Indian rupee has appreciated by around 5% this year so far, to stand at around Rs44.36 against a dollar.
The finance minister said FII inflows reflects momentum in growth of Indian economy.
"One of the reasons is that when the recovery process in industrial world is slow, naturally those who have investible resources would like to come to emerging markets and confidence of Indian economy has allured the investment," he said.
The Indian economy grew by 8.8% in the first quarter of this fiscal, while major countries in Europe and the US are struggling to revive from the global financial crisis.
FIIs have poured in record over Rs1 trillion in Indian stock markets in the current year so far.
Mr Mukherjee favoured dialogue to resolve the issues of currency war, particularly between US dollar and Chinese yuan, instead of confrontation.
He said he was not sure whether somebody will raise the issue at G-20 finance ministers meeting, and that India's stand would depend on how the issue was raised at the meeting.
The Indian market is likely to open higher tracking the global markets. Wall Street ended with marginal gains in the midst of a volatile session on a stronger dollar and positive earnings reports. Markets in Asia were trading mixed in early trade on strong earnings figures posted by US companies and a fall in initial jobless claims in the world’s largest economy. The SGX Nifty was up 15 points at 6,135 compared to its previous close of 6,120.
The local market opened on a strong note on Thursday on positive cues from across the globe. Easing of weekly inflation numbers and good earnings figures gave the indices the much-needed boost, enabling them to erase the losses suffered over the past two days. The Sensex ended the day's proceedings at 20,260, up 388.43 points (1.95%). The Nifty settled at 6,101, up 119.40 points (2%).
US markets closed with marginal gains on Thursday amidst a choppy session torn between positive earnings reports and a strong dollar. The markets gave up gains seen in the morning session as the dollar rose, raising fresh concerns about a currency imbroglio.
On the economic front, initial jobless claims fell last week by 23,000 to 452,000, Labor Department figures showed on Thursday. The Conference Board’s measure of the outlook for the next three to six months rose 0.3%, in line with expectations.
The Dow added 38.60 points (0.35%) to 11,146. The S&P 500 rose 2.09 points (0.18%) to 1,180. The Nasdaq gained 2.28 points (0.09%) to 2,459.
Markets in Asia were mixed in early trade on strong earnings figures posted by US companies and a fall in initial jobless claims in the world’s largest economy. However, investors remained cautious ahead of the Group of Twenty (G20) meeting in South Korea, speculating that a consensus on the currency imbroglio remains obscure.
The Jakarta Composite was up 0.30%, KLSE Composite was up 0.15%, Nikkei 225 was up 0.37%, Seoul Composite was up 0.77% and Taiwan Weighted gained 0.34%. On the other hand, the Shanghai Composite was down 0.50%, Hang Seng shed 0.06% and Straits Times was down 0.02% in early trade. The SGX Nifty was up 15 points at 6,135 compared to its previous close of 6,120.
The finance ministry is believed to have disfavoured the imposition of import duty on power equipment for ultra mega power projects (UMPPs) for now — a move that could benefit private players that are looking to source equipment from abroad.
Sources said the finance ministry has decided against the imposition of import duty after consultations with the power ministry and public sector equipment major BHEL, besides representations made by private sector players through the Association of Power Producers.
In Coal India’s prospectus, two figures have got altered. SEBI, whose decisions are often biased and whimsical, has insisted that investors must be allowed to withdraw their bids on such a negligible mistake
The Securities and Exchange Board of India (SEBI), whose decision-making has always attracted charges of inconsistency, bias and whimsicality, is probably out to redeem itself. It is out to show that it is a stickler for rules and willing to throw the rulebook at even large public sector companies.
Therefore, in a bizarre instruction, it has also forced Coal India Limited (CIL) to give all investors, including the institutional bidders, the option to withdraw their bids for a trivial mistake in the prospectus. CIL was asked to issue advertisements in newspapers to make the small correction but part of the ad is an offer to investors to withdraw their bids just because two figures got interchanged.
Consequently, at a time when the Disinvestment Ministry and CIL should be celebrating the extraordinary success of a 12-time oversubscription of a gigantic Rs15,000-crore issue, that too only to retail investors, they are smarting under what is considered SEBI's rigid stance.
Coal India today issued a notice to investors, which essentially corrects one typographical error. The figure under 'accretion in stock' and that under 'other income' for the quarter ended 30th June 2010 got inadvertently inter-changed. So accretion in stock should read as Rs54.45 million instead of Rs31,945 million and other income should read the opposite. While the numbers seem huge, there is no change in total income figures or the summary statement of profit and loss.
In any case, it is clear that it was a tiny slip.
Stunningly, for such a minor error, SEBI has asked CIL to not only issue a correction advertisement, but also asked it to give investors an option to withdraw their shares for this correction. According to sources, SEBI was acting on a complaint received from an investor.
In ads issued today, CIL has said, "In view of the above kindly note that Bidders (including QIB bidders), if they so desire, may withdraw their bids." The request for such withdrawal will have to be made before 5pm today before the retail issue closes.
It is another matter that this correction is hardly going to affect the subscription of CIL, unless the original complaint itself was mischievously designed to disrupt the disinvestment process. However, so strong is the momentum for buying good stock that investors whom Moneylife spoke to this morning were unconcerned.
We also learn that there were discussions at the highest level of the government to allow CIL to issue a correction without the offer of withdrawal, but SEBI refused to budge. The question is, was SEBI adhering to the highest standards of fairness and discipline or was it being stubborn to send a signal to the government that it cannot be 'influenced'? There will always be two opinions on the issue. But two facts are abundantly clear. One, the mistake is inconsequential. It is not an omission but a mere typographical error with no material impact on profitability numbers.
More pertinently, public sector companies, ever since the disinvestment programme began in 1991, have not followed the normal disclosure rules. It may be remembered that Mahanagar Telephone Nigam Limited (MTNL) was listed even without a prospectus! Even today, government companies are listed with a floating stock that is way below the mandatory 10% applicable to all companies. Interestingly, SEBI has not implemented the minimum shareholding norm ever, despite the occasional warning by the previous SEBI chairman.