The local market is expected to open in the green today on positive global cues. Choppiness ahead of the expiry of the futures and options (F&O) contract on Thursday, will also be evident today. The US markets ended with small gains overnight as a slide in the dollar ramped up investors’ appetite for riskier assets. Gains in the US reflected in the Asian markets, which were up in early trades this morning. The SGX Nifty was up 7.50 points at 6,062.50 compared to its previous close of 6,055.
Breaking its two-day winning steak, the Indian market ended flat with a negative bias on Tuesday. A high degree of choppiness, ahead of the expiry of the September futures and options (F&O) contract, was the characteristic of the day's session. The market made an attempt at recovery after touching a trough in the post-noon session but it ended marginally lower after inching above the neutral line. Finally the Sensex settled down 12.52 points (0.06%) at 20,105, managing to retain the crucial level of 20,100. The Nifty declined 6.15 points (0.10%) at 6,029, this too above the crucial 6,000 mark.
The US markets ended with small gains overnight as a fall in the dollar on speculations that the Federal Reserve will purchase US Treasury securities in a bid to boost the economic recovery. The gains came despite a decline in consumer confidence and a fall in home prices. The Conference Board’s sentiment index declined to 48.5 this month, lower than what analysts expected and the weakest level since February. Another report showed home prices cooled, hurt by a slump in sales following the end of a government tax incentive.
The Dow gained 46.10 points (0.43%) at 10,858. The S&P 500 rose 5.54 points (0.49%) to 1,147. The Nasdaq gained 9.82 points (0.41%) to 2,379.
Boosted by the the Fed’s assertions, the Asian pack was in the green in early trades. The Japanese market was aided by speculations that the Bank of Japan will take more action to boost the economy.
The Shanghai Composite was up 0.55%, Hang Seng was up 1.19%, Jakarta Composite was up 0.43%, KLSE Composite was up 0.13%, Nikkei 225 was up 0.64%, Straits Times was up 0.31%, Seoul Composite and Taiwan Weighted were up 0.59% each in early trade. The SGX Nifty was up 7.50 points at 6,062.50 compared to its previous close of 6,055.
The government on Tuesday said high capital inflows are a sign of "thumbs up" to the Indian economy and not a cause for concern at current levels, even as it was keeping a tight watch on the situation.
There is no overheating of the economy and so far the inflows are good and on expected lines, finance secretary Ashok Chawla said. He, however, said the government was keeping a close watch on the inflows.
They are withdrawing their funds from the apex co-operative bank; activist calls for awareness of consumers’ rights
Some co-operative housing societies are worried over reports about the financial mess in Maharashtra State Co-operative Bank Ltd (MSCB), and they have started to withdraw they money from the bank or are considering doing so soon.
Yesterday, Moneylife had reported that MSCB, the nodal bank for all co-operative banks in the state, is in deep financial trouble due to its suspicious loan distribution to some of its favoured co-operative banks and some loss-making sugar co-operative factories. (Read: http://www.moneylife.in/article/78/9431.html)
Nagesh N Kini, chartered accountant and secretary of Mahim Co-operative Housing Society, told Moneylife, "We have moved our money from the bank, because if something happens to this bank, at the most, you'll get Rs 1 lakh deposit insurance cover and that too doesn't come easily. It's advisable for people to move the money from there to stronger co-operative banks or public sector banks."
The apex co-operative bank has been found to have misreported facts and has been given a 'D' grade for the financial year 2009-10 by its auditors, Joshi Nair and Associates. The bank has shown deposits of Rs21,500 crore and a net profit of Rs2.83 crore. However, according to the audit report, the bank has suffered a loss of Rs1,070 crore, mainly due to non-performing assets (NPA). As per the provisional figures for FY10 provided on the bank's website, NPAs are 20.9%. While converting the same into net NPAs, the bank has shown the figure at 7.7%. A majority of the directors of MSCB belong to Sharad Pawar's Nationalist Congress Party and many of the others belong to some of the other mainstream parties.
Vinod Sampat, advocate and founder, Vinod C Sampat and Co, said that the profit claimed by MSCB was nothing but "window dressing." He said, "Co-operative banks are not following proper laws and it is not run on a professional basis. There is lack of accountability and they are surviving because of monopoly and patronage of the co-operative department. No one likes to invest in a co-operative bank, but they are forced to do so under the statutory rules. There is a lot of political interference also. It is full of double-standards."
Mr Sampat was critical of the NPAs reported by the bank. "Anything becoming an NPA is a clear example of the casual approach of the bankers. In one day, the account will not become an NPA. There has to be continuous defaults for an account to become an NPA," he said. "When an amount is not being paid, why should there be political patronage? One of the basic reasons for NPAs is inefficiency and political patronage."
Mr Kini's Mahim Co-operative Housing Society is among the oldest in central Mumbai, and as MSCB was the only bank available to them when the society was set up, they opened an account with the bank. According to Mr Kini there are thousands of housing societies in Maharashtra that have their money locked up in MSCB. "Earlier, according to co-operative laws, you had to put your money in a co-operative bank only. But, now one has the choice of banking with a stronger co-operative bank, such as Saraswat Bank, or with any of the public sector banks."
SS Pai, advocate, S.S. Pai & Co., however, called for a "middle path" approach to resolve the crisis. "We have to go to the root cause of the problem and see whether we can have a middle path, so that there will be no political revenge. In future, if they are diverting funds to sugar co-operatives, we should stop them. Now, we should see that the bank survives after taking strong action. Maybe the Reserve Bank of India should call them and tell them to improve, and take stern action as the last resort."
Mr Pai pointed out that the sugarcane industry should be modernised. "If the bank survives, then also the industry survives. Otherwise, what will happen is that if the bank goes into trouble, small depositors will lose their money. So let there be no political revenge and let us have the best possible solution," he said.
On the NPAs reported by the bank, Mr Pai said that the focus should be on development and not entirely on NPAs. "Admitted, NPAs are high. But we are a developing country. Money in a stock exchange and money in the corpus of a bank are like lockers. They don't lose anything unless someone is using that money in an improper way. More than NPAs, we should think of development and look forward. Chinese banks have so much NPAs but they have moved forward. We should take precautions and move forward."
Mumbai-based consumer activist, Achintya Mukherjee, has called for awareness regarding the crisis in the Maharashtra apex co-operative bank. "Many consumers are not aware of this as many leading newspapers have not even carried the news," he said.
Mumbai: India Inc raised nearly $1.09 billion overseas during August, 2010 via External Commercial Borrowings (ECBs) and Foreign Currency Convertible Bonds (FCCBs), reports PTI quoting the Reserve Bank of India (RBI) data.
Around 50 companies raised $87,44,95,019 through the automatic route for various projects, while $21,49,12,149 was raised by five companies under the approval route.
Essar Shipping Ports & Logistics raised $280 million in under the automatic route for its overseas acquisitions.
Adani Power Ltd raised $175 million in two tranches under the automatic route for its two projects.
ECBs are used as additional source of funding by Indian corporates to build capacity and raise fresh investments to augment the resources available domestically.
Corporates, registered under the Companies Act, 1956, can access ECBs, up to $500 million in a financial year, under the automatic route. The ECB, which is not covered by the automatic route, is considered under the approval route on a case-by-case basis by RBI.
Foreign Currency Convertible Bonds (FCCBs) are also governed by norms similar to ECBs.
Other major raisings in August under the automatic route were done by offshore drilling major Jagson International ($42.3 million, for import of capital goods), pharma firm Teva API ($30.5 million, for modernisation) and Ranbaxy Laboratories ($30 million, for overseas acquisitions).
Under the approval route, Export-Import Bank of India raised $150 million for onward lending. Besides, Damodar Valley Corporation raised $32.7 million, for a power project; while the National Aviation Company of India raised $24 million for import of capital goods.