FM to hold pre-budget consultations today

Finance Minister Pranab Mukherjee will start the customary pre-budget consultations with different interest groups on Monday for preparation of the budget, likely to be presented in the first week of July.

Mukherjee will hold consultations with trade and industry bodies, economists, agriculturists, bankers and corporate honchos in the run up to the budget, which industry hopes will be growth-oriented.

"We will meet the FM for the pre-budget consultations on Monday," FICCI President Harsh Pati Singhania said as he plans to ask the government for steps to restore economic growth, ensure national security and improve governance.

Apart from industry bodies as FICCI, CII, ASSOCHAM and FIEO, industry sources say the Finance Minister will hold discussions with corporate honchos like Ratan Tata, Mukesh Ambani, Anil Ambani, Kumarmangalam Birla and Sunil Bharti Mittal.

"The regular budget 2009-10 exercises are underway in full swing," Mukherjee had said on Thursday pointing out that the Congress in its manifesto had promised to come out with the Budget within 45 days of the government formation.



Faced with the challenge of reviving the economy, impacted by the global financial meltdown and demand contraction, Mukherjee started consultations with the top Ministry officials on budget soon after taking charge last Monday.

He said the focus of the government would be "Aam Admi" (common man) and that the budget would address the problems of sectors like textiles, leather and gems and jewellery hit hard by the financial crisis.

With inflation at low levels, the industry bodies see no reason for interest rates not falling to single digit levels.



CII President Venu Srinivasan had earlier said that interest rates in India remain high compared to many other economies.

Industry bodies like CII, FICCI, ASSOCHAM and American Chamber of Commerce in India have already presented their pre-budget memorandum to Revenue Secretary P V Bhide even before the formation of the new government.

The Prime Minister Office has also started work on the 100-day action plan for the new government and at the same time different ministries are also finalising priority programmes for the first three months.

Oil prices rise towards USD 67 in Asian trade

Oil prices rose in Asian trade on Monday to near seven-month highs, fuelled by a rise in regional equities markets and a weakening US dollar, dealers said.

New York's main futures contract, light sweet crude for July delivery, rose 56 cents to USD 66.87 a barrel.

Brent North Sea crude for delivery in July advanced 54 cents to USD 66.06.


"Oil is heading up this morning. It's actually moving in sync with stock markets in Asia.... What's really supporting oil is primarily investors buying commodities as the US dollar weakens," said Victor Shum, an analyst with Purvin and Gertz energy consultancy in Singapore.


A weak US currency makes dollar-priced oil cheaper for holders of stronger currencies and in turn, tends to stimulate demand and push prices higher.



The US dollar is losing allure among investors amid growing signs of a recovery in the global economy as they seek higher yields from other foreign currencies, analysts said.


Investors usually favour the US dollar because of its safe haven status in times of economic uncertainty despite the low returns compared with other units.


However, Shum cautioned that the rally was "very fragile" as global energy demand remained weak.


"The reality is that there is a big contradiction confronting oil markets today. Fundamentals are very weak but oil prices have increased by 50 per cent since last December amid a glut of oil," he said on Monday.

Pound falls back against dollar

Sterling has fallen back against the dollar after the US currency rallied in early trade and a Bank of England policymaker warned of "false dawns".

The pound capped a rise in recent weeks by hitting $1.60 on Wednesday for the first time since November last year.

But it fell to $1.5925 on Thursday as investors took profits and the dollar rose against a range of currencies.

The Bank of England's David Blanchflower warned that the worst of the global crisis may not be over.

"My worry is that there can be many false dawns and we shouldn't assume that everything is over," he said in an interview with the Times newspaper.

Retail sales down

Separately, a survey by the CBI provided more gloomy news on the UK economy.

The CBI's distributive trends survey said that UK retail sales had fallen by more than expected in May and that retailers were expecting a further deterioration next month.

But analysts expect the pound to remain strong as it rebounds from the 23-year low of $1.3620 against the dollar in January.

"The bullish momentum is stronger than it has been since December 2006," said Nicole Elliott of Mizuho Corporate Bank.

An early rally by the dollar also saw it strengthen against the euro. One euro dropped to $1.3867 from $1.3965 on Wednesday.

US begins GM bankruptcy planning

General Motors and the US Treasury have improved the offer to GM's bondholders, as they prepare for the firm's move into bankruptcy protection.

Bondholders with $27bn (£17bn) of GM debt are now being offered the option to buy an extra 15% of GM shares as part of a proposed bankruptcy deal.

This is on top of the 10% they had previously been offered.

If bondholders back the new offer, it will allow GM to exit bankruptcy protection more quickly.

The US car giant is expected to apply for bankruptcy protection by 1 June.

GM said it had already secured the backing for the new offer from bondholders representing 20% of the bond debt.

Under its plans to reorganising its share base, the US government will take a 72.5% stake.

Sensex soars 350 pts in opening trade on global cues

The Bombay Stock Exchange benchmark Sensex surged by over 350 points in early trade on Wednesday on increased buying by funds as well as retail investors after strong rally in the global markets.

The 30-share index surged by 354.22 points to 13,943.45 points with most of the index stocks rising sharply.

The BSE barometer had lost 323.99 points on Tuesday.


The wide-based National Stock Exchange index Nifty rose by 103.90 points, or 2.52 percent, to 4,220.60 points.

Marketmen said sentiments were largely bolstered on firming trends in global markets after US consumer confidence showed its biggest monthly jump in six years.


Short-covering by speculators ahead of tomorrow's May month expiry in the derivatives segment also supported the rally, they added.

Major gainers were Reliance Industries (1.54 per cent at Rs 2,177.00), Infosys (1.93 per cent at Rs 1,573.00) and ICICI Bank (4.71 per cent at Rs 698.50).

Reliance Communications spurted by 5.51 per cent to Rs 307.50, DLF Ltd by 3.44 per cent to Rs 348.50, Tata Steel by 3.66 per cent to Rs 374.20, Sterlite Industries by 4.65 per cent to Rs 565.00, Larsen and Toubro by 2.94 per cent to Rs 1,291.70, State Bank of India by 2.91 per cent to Rs 1,737.

Meanwhile, Hong Kong's Hang Seng was up 3.86 per cent and Japan's Nikkei gained 1.84 per cent in early trade.

Surprise trade surplus for Japan

Japan's export slump eased in April, leading to an unexpected trade surplus for the world's second largest economy, official figures show.

Exports fell by 39.1% compared with the same month last year, slightly better than the 45.6% fall recorded in March.

This resulted in a trade surplus of 68.9bn yen ($722.7bn; £452.7bn), much better than economists had expected and Japan's third straight monthly surplus.

Japan's economy shrank at a record rate in the first three months of this year.

'Optimistic'

"Today's release supports our view that exports are past the worst," said Chiwoong Lee at Goldman Sachs.

A slump in exports, triggered by the global economic slowdown that hit demand for Japanese cars, electronics and other goods, led to an economic contraction of 4% between January and March this year.

But some economists are predicting a turnaround in the country's economic fortunes.

Government stimulus and a recovery in exports should ensure that the economy avoids contraction in the current quarter, said Masamichi Adachi at JP Morgan.

"In the short term, we are rather optimistic. But after that, there are many challenges facing the Japanese economy," he added.

Last week, Japan's central bank upgraded its economic outlook, saying the worst of the recession might be over.

Rupee surges 41 paise against dollar in opening trade

The Indian rupee on Wednesday soared by 41 paise against the dollar on anticipation of heavy foreign capital inflows as stock market may open higher in tandem with other Asian markets.

At the Interbank Foreign Exchange (Forex) market, the domestic unit was quoted at 47.51 a dollar in the opening trade, a rise of 41 paise over the previous close.

Rupee had nosedived by 64 paise to close at 47.92/93 on Tuesday, its biggest fall in almost three months.


Dealers said expectations of a surge in the domestic stock markets in line with other firming Asian markets leading to capital inflows strengthened the rupee sentiments.


However, month-end dollar demand from importers and refiners capped the rupee's gains to some extent, they added.


The Asian equity markets rose by up to 3.7 per cent in the morning trade on Wednesday.

Consumer confidence buoys market

US shares have risen after a survey suggested US consumer confidence was at its highest level since last September.

The Conference Board's Consumer Confidence Index jumped to 54.9 for May from 40.8 last month - well beyond the average 42.3 predicted by economists.

The indicator is being closely watched as a guide to whether consumers are likely to start shopping again.

The Dow Jones added 2.4%, despite other data showing record house price falls in the first quarter of 2009.

The Conference Board index suggested consumer confidence had hit its highest level since last September.

That was when the collapse of Lehman Brothers accelerated the global financial crisis.

No recovery signs

House prices fell by 19.1% in the first three months of the year from the same time last year, the Standard & Poor's/Case-Shiller National Home Price index suggested.

It also showed home prices had fallen 32.2% since peaking in the second quarter of 2006.

However, it suggested that the pace of month-on-month declines had slowed.

The housing index, which looks at 20 key cities, saw prices fall by 18.7% in March from the year before.

These declines were slightly better than February's falls, and it was the second straight month that indexes did not post record drops.

But there were still no signs that home prices had hit the bottom, said David M Blitzer, chairman of the S&P index committee.

"We see no evidence that a recovery in home prices has begun," he said.

Rupee down 22 paise against USD in early trade

The Indian rupee depreciated 22 paise against the US dollar in early trade on Monday, snapping its six-session upward journey, on expectations of fresh capital outflow by foreign funds as domestic bourses may open in the negative zone, in line with other Asian markets.

At the Interbank Foreign Exchange (Forex) market, the local unit, which had gained nearly 4.9 per cent during the last week, turned weak and fell 22 paise to 47.32 a dollar.


On Friday, the domestic currency had ended 27 paise higher at 47.10/12 against the greenback.


Forex dealers said the benchmark Sensex is likely to open on a weak note in line with other Asian markets, which are down up to 1.5 per cent, leading to capital outflow by foreign funds.


Month-end dollar demand also put pressure on the rupee, they added.

Oil holds above USD 60 in Asia

Oil held above USD 60 a barrel in Asian trade on Monday ahead of a meeting this week of the Organisation of Petroleum Exporting Countries (OPEC).

New York's main futures contract, light sweet crude for delivery in July, was down 33 cents to USD 61.34 a barrel in morning trade.


Brent North Sea crude for July delivery retreated 23 cents to USD 60.55.


Prices eased as investors cashed in on profits ahead of the OPEC meeting on Thursday.


"Traders are taking profit from the markets," said Mark Pervan, a senior commodities analyst with ANZ Bank in Melbourne.


"It's probably a view that there is less likelihood of an output cut. OPEC has been fairly quiet on cutbacks so far," he said.


Algerian oil Minister Chakib Khelil was quoted by Newswires as saying that he expected oil prices to hit USD 70 dollars a barrel next year.



Oil at USD 70 a barrel is widely seen as the sustainable level for producers to resume large efforts to search for oil and gas.


The global economic crisis which towards the end of 2008 has seen energy demand plummets, dragging prices along with it.


Oil prices have fell from a record around USD 147 per barrel in July to about USD 32 in December as demand dropped off but have since risen gradually.

Shares rebound after test shock

Shares in South Korea suffered sharp falls following news of North Korea's nuclear test, before recovering.

South Korea's Kospi index fell as much as 6%, before rebounding strongly to end just 2.85 points lower at 1400.90.

There was little impact elsewhere in the region, with Tokyo's Nikkei index closing up 1.3% and Hong Kong's Hang Seng closing up 0.35%.

European markets opened lower, while the UK and the US markets are closed for a public holiday.

At 1000 BST France's Cac 40 index was less than 1% down at 3198.66 points. In Frankfurt the Dax was 1.2% lower at 4858.16.