Wednesday’s Market Preview: Green opening on the cards

The Indian market is likely to witness a green opening on the back of positive cues from the global arena. Wall Street closed higher on Tuesday as minutes from the Federal Reserve meeting raised hopes that the central bank will take additional steps to boost the economy. Optimism in the US helped the Asian markets open in the green today. The SGX Nifty was up 27 points at 6,140 compared to its previous close of 6,113.

The domestic market snapped its two-day winning streak, ending in the red yesterday on dismal global cues and profit booking in heavyweights. Sentiments were also down as government data showed a fall in industrial growth for the month of August. The market traded sideways in the post-noon session as the key European barometers were trading with deep cuts. It ended the session down nearly three-quarters of a percent.

The Sensex closed 136.55 points (0.67%) at 20,203. The Nifty settled at 6,090, down 44.95 points (0.73%).

The US market closed in the positive terrain on Tuesday as minutes of the 21st September Federal Reserve meeting released yesterday indicated that the central bank will take new steps to boost the economy as unemployment continued to be a major concern. Investors hope the Fed will unveil additional stimulus measures at its November meeting.

The Dow rose 10.06 points (0.09%) to 11,020. The S&P 500 rose 4.45 points (0.38%) to 1,169. The Nasdaq rose 15.59 points (0.65%) 2,417.

Boosted by reports that the US central bank is ready to take additional steps to spur the economy, Asian markets were trading firm this morning. Meanwhile, Japan's finance minister on Tuesday said that the government would take ‘decisive’ action, if necessary to stem the yen's rise.

The Hang Sang was up 0.90%, KLSE Composite was up 0.45%, Nikkei 225 was up 1.04%, Straits Times was up 0.81%, Seoul Composite was up 0.29% and Taiwan Weighted was up 0.39%. Bucking the trend, China’s Shanghai Composite was down 0.10%. The SGX Nifty was up 27 points at 6,140 compared to its previous close of 6,113.

India was elected to the United Nations Security Council (UNSC) on Tuesday after a gap of 19 years, with substantial support, taking over from Japan a position which would help it push more aggressively for the reform of the world body's top organ.

Out of the 191 countries that voted, India received 187 votes, including Pakistan's, India's envoy to the UN Hardeep Puri said, after the ballot. While one member state abstained from the vote, three votes were polled against India. However, it was not clear which three countries voted against India.

Expressing concerns over deceleration in industrial output for August, India Inc on Tuesday demanded that Reserve Bank of India (RBI) should not increase policy rates any further as it will hurt the recovery process.

"... The RBI should not raise policy rates any further as it could have a negative impact on consumer demand as well as corporate investment and thereby slow down in economic growth," CII said in a statement.

Industrial production growth rate nearly halved to 5.6% in August from a year ago. The apex bank is scheduled to announce its mid-term policy review on 2nd November.


Govt decides to make RBI governor head of FSDC sub-committee

New Delhi: In a step towards addressing the central bank's concern about the autonomy of regulators, the government has said that the Reserve Bank of India (RBI) governor will head a sub-committee of the Financial Stability and Development Council (FSDC). The Council will be headed by the finance minister, reports PTI.

This was announced in a statement from the finance ministry today after finance minister Pranab Mukherjee met with the regulators, including RBI governor Dr D Subbarao and Securities and Exchange Board of India chairman C B Bhave to work out the details of the framework for FSDC. J Hari Narayan, chairman of the Insurance Regulatory and Development Authority, Yogesh Agarwal, chairman of the Pension Fund and Regulatory Development Authority, and Ashok Chawla, finance secretary also attended the meeting.

Asked when the Council would be formalised, Mr Mukherjee said that an announcement would be made shortly.

The decision to make the RBI governor the head of the sub-committee to deal with inter-regulatory issues comes after the apex bank had expressed apprehension over possible breach of autonomy of the regulators in the working of the council.

Dr Subbarao had said that the central bank's role was larger than that of containing inflation, indicating that its task was also to maintain financial stability for which FSDC was being set up.

The finance ministry's statement issued after the regulators' meeting with Mr Mukherjee, said that without prejudice to the autonomy of regulators the council would engage in macro prudential supervision of the economy, including the functioning of large financial conglomerates and address inter-regulatory co-ordination issues. "It was agreed that with a view to strengthen and institutionalise the mechanism for maintaining financial stability and development, the central government would set up the apex council (FSDC)," it stated.

Asked for his opinion on the meeting, Dr Subbarao said, "We gave our suggestions." Mr Bhave, Mr Hari Narayan and Mr Agarwal chose not to comment.


Government fixes Coal India IPO price band at Rs225-Rs245 apiece

New Delhi: The government today fixed the price band of Coal India Ltd's (CIL) initial public offer (IPO), billed as country's largest, at Rs225 to Rs245 a share - a range which could help it raise over Rs15,000 crore if the next week's public offer is subscribed fully.

The decision was taken by a ministerial panel, headed by finance minister Pranab Mukherjee.

"Coal India IPO price band has been fixed at Rs225-Rs245 a share. We expect to raise over Rs15,000 crore from the issue," Coal minister Sriprakash Jaiswal told reporters after the meeting of an Empowered Group of Ministers (EGoM).

The government is diluting 10% stake in CIL through the public offer. At present, the government owns a 100% stake in the company.

The coal behemoth will offer 631,636,440 shares with a face value of Rs10 each and will offer 5% discount to retail investors and it's employees over the issue price.

"There is a 5% discount in the IPO for retail investors and 5% for our employees," Mr Jaiswal said.

Sources said the EGoM fixed the price band at Rs225-Rs245 a share to garner maximum from the four-day initial public offering (IPO), billed as the biggest ever to hit the Indian capital market on 18th October.

The four-member EGoM includes home minister P Chidambaram, coal minister Sriprakash Jaiswal and Planning Commission secretary Sudha Pillai.

Among other factors, EGoM considered the share prices of major global coal companies including China Shenhua Energy Company, the world's most valuable coal producer, to arrive at a figure, sources added.

Citigroup Global Markets India, Deutsche Equities (India) Private, DSP Merrill Lynch, Enam Securities, Kotak Mahindra Capital and Morgan Stanley are the book-running lead managers.

CIL filed the prospectus (Red Herring Prospectus) for the issue with the Securities and Exchange Board of India (SEBI), after being cleared by the Registrar of Companies, in the last week of September. Its board cleared the revised papers incorporating 78 changes suggested by the market regulator.

CIL is the world's largest coal producer and accounts for over 80% of the domestic production. In 2009-10, the country produced about 532 million tonnes of coal and CIL's contribution was 431 MT.

With over 63 billion tonnes of coal reserves under its fold, CIL is targeting an output of 461.5 million tonnes in the current financial year.

The biggest IPO in India till date is that of Anil Ambani Group company Reliance Power. In January, 2008, it raised Rs11,500 crore.


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