Posts Tagged ‘debt’

Weekly Update 26th – 30th April 2010

Domestic markets started the week on a negative note on the back of the Greek debt issues and Goldman Sachs fraud issues, but managed to close in the positive terrain supported by firm US markets in line with less than expected hike in Policy Rates & Cash Reserve Ratio by RBI to tame the inflation; Policy rates and CRR increased by 25 bps each. The food price index rose 17.65% in the 12 months to April 10, marginally higher than an annual rise of 17.22% in the previous week. Moreover IMF announcement of India`s growth at 8.5% for the calendar 2011 boosted the sentiments.

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Additionally, announcement of government recapitalization of PSU banks stimulated banking sector and banking stocks were among the major gainers of the week. Good corporate numbers, expectation of good monsoon together with buying by foreign institutions kept the momentum intact for the rest of the week. Going forward market participants globally would be closely watching G20 finance chiefs plan to withdraw economic stimulus as the recovery strengthens.

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The IMF this week said that rising government debt is one of the biggest threats to the world economy.

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Forecast of normal monsoon season by Indian Meteorological department may keep the sentiments positive in the coming week but volatility may rise ahead of the expiry. On the global front, the UK’s economy grew at a slower than anticipated pace in the first quarter. In US, sales of new homes surged by 27 percent in March and orders for most durable goods climbed, indicating the U.S. economy is speeding ahead into the second quarter. Greece troubles that kept the markets jittery especially for the payments approaching in the month of May came to an end after it said that it has sought a relief aid from the European Union to save it from a default.

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US stock markets kept the rally intact which held the other world markets and did not let them fall.

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Shanghai remained under pressure as commodities saw some pressure and profit booking at higher levels. Indian stocks are seeing more strength in cash stocks and banking stocks. Nifty has support between 5200-5100 levels and Sensex between 17400-17200 levels.

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This week is full of event risk, especially from US economy side. Gradually, commodity is retreating from the higher levels but it will be too early to say that it is giving a clear indication for the approaching time. But yes, upside is limited.

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Negative expectation of US GDP figure for the first quarter may hammer the prices. If dollar index trades above the level of 82 then it would keep gold to be in sideways territory. Copper saw three weeks nonstop downside and it is expected to see more downside. Range trading in crude oil is indicating the saturation at the higher levels and market needs big news to see further upside..

India’s Total External Debt Touched $243 Billion

India’s Total External Debt Touched $243 Billion

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India’s total external debt rose by 8.1% to $242.8 billion at the end of September 2009 from $224.6 billion at March-end 2009.

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The long term debt increased by 10.6% to $200.4 billion, while short term debt declined by 2.3% to $42.4 billion.

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Most of the increase in the debt ($8.3 billion or 45.6%) is due to depreciation of dollar against major global currencies, out of total increase of $18.2 billion, according to a finance ministry statement.

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The total external financial assets increased by $21 billion to $378.6 billion at September end 2009 over the previous quarter.

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Total external financial liabilities increased significantly by $32.7 billion over the previous quarter and stood at $476.4 billion at Septemberend 2009.

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Direct investment and Portfolio investment in India increased by $11 billion and $10.2 billion respectively over the previous quarter.

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Long-term debt at $ 220.4 billion accounted for 82.5% of the total debt.

As a positive development, India’s short term debt, which had increased sharply between March 2005 and March 2008, went down by $985 million to $42.4 billion at September-end.

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The decline was seen in all the components of short-term debt except trade related credits for period above six months and up to one year

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Short-term credit, that is a credit of less than 180 days, short-term liabilities of banking system and investment of foreign central banks and other global financial institutions in government’s treasury bills is considered bad for economy.

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Centre’s Fiscal Deficit is Rs 2.45 Lakh Crore in First 7 months of 2009-10

Centre's fiscal deficit exceeded Rs 2.45 lakh crore in the first 7 months of 2009-10.

The Centre”s fiscal deficit more than doubled to Rs 2.45 lakh crore in the first 7 months of 2009-10.

 

With this, fiscal deficit during April-October, 2009 reached over 61% of the targeted level of over Rs 4 lakh crore for the current fiscal.

 

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However, the government projected fiscal deficit of 6.8% of GDP for the current fiscal while with GDP likely to increase with a high growth rate of 7.9% recorded in Q2, there is more room to contain the fiscal deficit within the targeted level.

 

Meanwhile, the fiscal deficit already crossed over 87% of the targeted amount for entire 2008-09 as the government was expecting fiscal deficit of just 2.5% of GDP at this point of time last time.

 

Notably, Fiscal Deficit is a economic phenomena when a government’s total expenditures exceed the revenue that it generates (excluding money from borrowings).

 

Deficit differs from debt, which is an accumulation of yearly deficits.

 

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Moreover, when excise duty was cut by 6% and service tax by 2% from December onwards and plan expenditure rose as part of stimulus package, the government revised its target to 6% of GDP, which later turned out to be 6.2%.


The rise in fiscal deficit could be gauged from the fact that tax revenues decreased by around 8% to 2.13 lakh crore till October this fiscal against Rs 2.32 lakh crore a year ago.

 

The Centre’s revenue deficit, which is a gap between revenue receipts over revenue expenditure like salaries, rose by 138 per cent to stand at Rs 20.76 lakh crore during April-October, 2009.

 

Dubai Debt News Sent a Shudder Throughout World Markets

Just a year after the global downturn  derailed  Dubai’s explosive growth, the  city is now  so  swamped  in  debt that  it’s  asking  for a  six-month  reprieve  on  paying  its bills.

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Dubai Debt Fears Grip World Markets

 

This has cast a shadow on a world only just emerging from the worst economic crisis since the 1930s,  knocking markets  from Sydney to Sao Paulo and raising questions about Dubai’s reputation  as a magnet for international investment.

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For India, which has tens of thousands of its citizens living  and working in the emirate,  the concerns are more direct:  thousands of its expats staring at job losses and  the economy, sharply reduced trade.

India, which gets nearly a quarter of the remittances from the United Arab Emirates and  has lakhs of laborers working in the region, could be worse off than most other nations  if the crisis escalates into a full-blown one  like the Russian or Argentinean crises of the past.🙂

India’s exports to the UAE stood at $23.92 billion in FY09.

It is very likely that we may see one more leg of job losses in Dubai.

The only consolation for the region is that Abu Dhabi is booming.

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Indian shares and the rupee fell in sync with other global markets where investors are fleeing for safety after Dubai debt trap concerns.

The Bombay Stock Exchange benchmark Sensex on Friday tumbled over 451.63 points to 16,403.30 points in the first ten minutes of trading on hectic selling by funds in line with weak global cues and concerns over Dubai’s debt.

Similarly, the wide-based National Stock Exchange index Nifty dropped by 140.50 points to 4865.05 points.

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Brokers said the selling focus was more on banking and realty stocks after Dubai’s debt problems revived concerns about the global financial system and rattled markets across Europe and Asia.

Indian rupee fell 24 paisa to 46.55 against the dollar.  The MSCI Emerging Markets Index lost 1.4%.

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Most European indices were about 2% lower after Asia tumbled.

The Shanghai Composite Index slumped 3.6%, its biggest drop since August, and Brazil’s Bovespa Index slipped 1.1%. U.S. markets were closed for the Thanksgiving holiday.

Credit-default swaps tied to debt sold by Dubai rose as much as 131 basis points to 571.

“Dubai isn’t doing risk appetite any favours at all and the markets remain in a vulnerable state of mind,” said Market analysts.

“We’re still in an environment where we’re vulnerable to financial shocks of any sort and this is one of those.”

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Uncertainty over stocks leads to price volatility in turmeric futures

Hello Friends here we come up with the Latest Agri Commodities updates from various parts of the globe.

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Uncertainty over stocks leads to price volatility in turmeric futures:

In an unusual situation this week, far-term turmeric contracts were trading much below near-term ones, offering a big arbitrage opportunity for hedgers and speculators, on the National Commodity & Derivatives Exchange (NCDEX).

The price difference was 39 per cent.

Last year’s carryover stock is estimated to have declined steeply, at around 150,000 bags (a bag is 70 kg) as of today, as compared to around 700,000 bags around the same time last year.

Arrivals at the Erode market were 2,000 bags and sold at Rs 10,900-11,000 a quintal.

In Duggirala, prices were placed at Rs 9,800-10,500 a quintal and in Warangal at Rs 9,900-10,500 a quintal.

Turmeric exports climbed seven per cent to 4,000 tonnes in October 2009 from the same period last year.

Weak turmeric futures put downward pressure on spot markets, to send the product down by Rs 800 a quintal.

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In Other major Commodities Updates also read Soybeans and Wheat Drop as Dubai Default Risk Dents Confidence of the Investors.

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Soybeans, Corns and Wheat Drop as Dubai Default Risk Dents Confidence:

Soybeans, corn and wheat slumped after Dubai’s bid to reschedule debt sent equities tumbling and eroded investor confidence in commodities.

Soybeans for January delivery dropped as much as 2.7 percent to $10.2625 a bushel, the lowest level since Nov. 19, in electronic trading on the Chicago Board of Trade and were at $10.385 at of 10:50 a.m. Tokyo time.

The contract has lost 0.7 percent this week, the first such drop in three weeks.

Wheat for March delivery in Chicago lost as much as 2.4 percent to $5.5775 a bushel before trading at $5.595.

The grain dropped 3.7 percent this week, falling for the first time in four weeks.

Production may be around 21 million metric tons, down 2 percent from last harvest and lower than the 23 million tons forecast in October,2009.

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Note : For More Latest Industry, Stock Market and Economy News and Updates, please Click Here

Record Fund Raising by India Inc,through QIPs, is on the Cards.

 

Record Fund Raising by India Inc,through QIPs, is on the Cards

Record Fund Raising by India Inc,through QIPs, is on the Cards

 

 

Indian companies are all set to  raise record fund through share sales to institutional investors in the next few months as they attempt to reduce debt accumulated during their takeovers.

Hindalco, Aban Offshore and Tech Mahindra, which bought the scandal-hit Satyam Computer, will lead this record fund raising by India Inc.

Indian companies have approvals from shareholders to raise as much as Rs 68,000 crore by selling shares to institutional investors under the so-called qualified institutional placement route.

This is in addition to around Rs 26,000 cr that has been raised by companies such as real estate developer Unitech and Suzlon Energy in the last six months, thanks to the signs of economic revival and  record stocks rally.

India Inc raised as much as Rs 26,430 cr in the last thirty-six QIP issues since March this year, according to the analysis.

These companies which raised funds in the last six months still have room to raise another Rs 23,000 cr based on the approvals shareholders have given them.

There are several companies which have received approval for QIPs between June and October with a potential to raise as much as Rs 44,000 crore, but are yet to hit the market.

Hindalco, which is saddled with debt after it acquired Canada’s Novellis, plans to raise Rs 2,900 crore and Tech Mahindra plans to raise to partly repay the loan it took to buy Satyam Computer.

Essar Oil which is negotiating to buy Shell’s refineries in the UK plans to raise around Rs 9,000 cr, whereas JSW Steel has a mandate raise Rs 4,853 cr.

Shareholders’ approval is valid for a year and most of these companies took approval after June this year.

“The issues that have come till now got strong interest from institutional investors, and predominantly from foreign buyers who bought over 90% of the QIP issues.  Given the current market conditions and the kind of interest that Investors displayed in the Indian growth story, the proposed issues should be subscribed successfully,” said Jagannadham Thunuguntla, equity head, SMC Capitals.

The fund raising gets bigger when one takes into account the potential IPOs and government share sales which may run into billions of dollars more.

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India’s United Spirits to Sell New Shares to Cut its Debt :)

India's United Spirits set to sell new shares to institutions to help cut its debt

India's United Spirits set to sell new shares to institutions to help cut its debt

India’s United Spirits is set to sell new shares worth about $300-350 million to institutions to help cut its debt, after efforts to sell a stake to private equity firms and Diageo failed.

The world’s third-largest spirits maker by volume is set to place the shares with institutions (QIPs) as early as this week, three sources with direct knowledge of the deal said.

“The market is good enough for a share sale. Why opt for a PE firm that buys at the same price and adds little value otherwise,” one source said.

United Spirits has debt of 65 billion rupees ($1.4 billion), which it took partly to fund the acquisition of scotch whisky maker Whyte & Mackay, and has said it aims to cut this to 40 billion rupees by the end of March 2010.

Chairman Mallya said in early September he planned to cut the firm’s debt by end October.

KINGFISHER FACTOR

In June, United Spirits sold treasury stock, carried on its books from past mergers and acquisitions, at an average 900 rupees a share to raise about $186 million, which it used to repay some of its loans.

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It still has over 8 million shares of treasury stock which it can sell or issue fresh ones.

Sources said United Spirits would opt for the latter. It got shareholders approval last month to raise up to $350 million.

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“Private equity investments through preferential allotment have a lock-in of one year, there’s more due-diligence involved and they also look for board seats,” said Jagannadham Thunuguntla, equity head of investment bank SMC Capitals.

“Institutional investors coming through the QIP route have no such hassles, it is also faster,” he added.

United Spirits’ loss-making group firm and airline operator Kingfisher Airlines which is also looking to raise funds, could be a possible factor in PE firms being hesitant to invest in the company.

United Spirits has pledged shares to secure loans for Kingfisher Airlines.

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Valuation, a major reason for the break-down of talks between it and Diageo is another factor to watch out for as its margins come under pressure from a rise in molasses prices due to the poor sugarcane crop, analysts said.

Shares of United Spirits, valued at $2.1 billion, have risen just 3.3 percent so far this year compared to a 76 percent rise in the main index.

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