Tesco is the first global retailer to apply for multi-brand retailing after the Indian government allowed 51% FDI in the segment
The Foreign Investment Promotion Board (FIPB) on Monday approved UK-based Tesco Plc's proposal to enter Indian multi-brand retail segment in a joint venture with Tata Group with an initial investment of $110 million (about Rs680 crore).
After the approval, Tesco will pick up a 50% stake in Trent Hypermarket Ltd, a wholly-owned unit of Trent Ltd. Trent Hypermarket operates retail business under the name of ‘Star Bazaar’.
Tesco is the first global retailer to apply for multi- brand retailing after the government allowed 51% foreign direct investment (FDI) in the segment in September last year.
Trent Hypermarket runs 16 outlets in the southern and western regions with support from Tesco.
The UK retailer plans to sell 14 categories of products, official sources said. The items to be sold at its stores include tea, coffee, vegetables, fruits, meat, fish, dairy products, wine, liquor, textiles, footwear, furniture, electronics and jewellery.
The FIPB, headed by Economic Affairs Secretary Arvind Mayaram, considered 12 items including Tesco's FDI proposal.
India allows FDI in most of the sectors through automatic route, government approval is required in certain sectors sensitive for the economy.
RBI’s inflation indexed bonds will be available till 31st March. The earlier deadline was 31st December. Is the extension due to poor response?
The Reserve Bank of India (RBI) has extended the deadline for its Inflation Indexed National Savings Securities-Cumulative (IINSS-C) securities subscription to 31 March 2014 from 31st December. The issuance can be closed earlier than 31st March with a prior notice. The central bank is using authorised agency banks and Stock Holding Corporation of India (SHCIL) to invest in IINSS-C. The authorized banks are State Bank of India (SBI) and its associates, all nationalized banks, HDFC Bank, ICICI Bank and Axis Bank.
The Union Budget of 2013-14 had announced the introduction of instruments that will protect retail savings from inflation. These are internationally known as inflation-linked securities or simply linkers. The distribution/sale of linkers would be through banks, for retail investors. Interest rate on these securities would be linked to final combined consumer price index [CPI (Base: 2010=100)]. Interest rate would comprise two parts: fixed rate (1.5%) and inflation rate, based on three-month lag CPI which will be compounded with the principal on a half-yearly basis and paid only at the time of maturity.
So, if a bond is being valued in December, the reference rate will be CPI of September. The issuance of non-cumulative inflation indexed bonds for retail investors will be examined in due course. The minimum and maximum investment per annum is Rs5,000 and Rs5 lakh, respectively. The tenor is fixed at 10 years. The new offering should attract higher attention from savers, especially due to its link to CPI instead of wholesale price index (WPI) which is a less accurate gauge of inflation. In June 2013, RBI sold WPI-linked bonds offering a yield of 1.44% above WPI, but the retail response was dismal. In November 2013, the WPI was 7.52% and CPI was 11.24%. The new offering linked to CPI will fetch 12.74% compared to the WPI-linked bonds that would give only 8.96%; a 10-year bank FD gives approximately 9%.
A move above Monday’s high may mean a resumption of Nifty uptrend
After trading in the green for a few minutes, the market was drawn into the negative zone where it traded for the entire session on Monday. On Friday, we had mentioned that the climate favours the bulls and that the Nifty may drift higher subject to short dips.
The Sensex and Nifty opened the week with a high opening gap of 67 points and 23 points at 21,260 and 6,336, respectively. Soon after hitting the days high at 21,305 and 6,344, the indices plunged into the red. At the end of the session the indices hit its respective low at 21,089 and 6,273. From the days low the benchmark mad a quick recovery but ended in the negative. The Sensex closed at 21,143 (down 51 points or 0.24%) while the Nifty closed at 6,291 (down 23 points or 0.36%). The NSE recorded a volume of 53.01 crore shares.
Among the other indices on the NSE, the only gainers were Metal (0.65%); MNC (0.33%); FMCG (0.26%); Media (0.26%) and Energy (0.08%). The top five losers were Realty (1.66%); IT (0.83%); PSU Bank (0.83%); Bank Nifty (0.73%) and Auto (0.57%).
Of the 50 stocks on the Nifty, 18 ended in the green. The top five gainers were Bhel (4.13%); Coal India (2.72%); H D F C (1.22%); Reliance Industries (0.76%) and Hindustan Unilever (0.75%). The bottom five losers were DLF (3.38%); ACC (2.56%); Ranbaxy (2.42%); Jaiprakash Associates (2.32%) and UltraTech Cement (2.23%).
Of the 1,224 companies on the NSE, 570 companies closed in the green, 610 closed in the negative while 44 closed flat.
As the general elections draw closer, RBI governor Raghuram Rajan said in his foreword to the eighth edition of the RBI's Financial Stability Report 2013 (FSR), warned that any political instability after May 2014, post-results, will drag the beleaguered economy further down, and that a stable new government would be desirable.
Investor sentiment was hit adversely after the RBI's latest FSR said that the risks to the Indian banking sector have further increased since the publication of the previous FSR in June this year.
RBI is also concerned about the asset quality of banks. But the report also adds that under improved conditions, the present trend in credit quality may reverse during the second half of 2014-15. Gross non-performing assets (NPA) ratio is expected to rise initially to around 4.6% by September 2014 from 4.2% as at end September 2013, which may subsequently improve to 4.4% by March 2015.
According to the results of RBI's systemic risk survey during October, global risks and domestic macro-economic risks were perceived to be the two most important factors affecting the stability of Indian financial system.
US indices closed marginally in the negative on Friday. Market now awaits the November report on pending US home sales.
Except for Shanghai Composite (down 0.18%) all the other Asian indices closed in the positive. Jakarta Composite was the top gainer which rose 1.45%.
Chinese President Xi Jinping will head a group steer economic and social reforms, the official Xinhua news agency said on Monday, underscoring his determination to push through change amid fears of resistance from vested interests.
European indices were trading marginally in the negative while the US Futures were trading marginally in the green.