Pound hits 2009 high against euro

Sterling has reached its highest level against the euro since the start of the year after data suggested the UK recession may be over.

One pound was worth 1.1758 euros in early afternoon trading, having closed the previous day at 1.1672 euros.

On Wednesday the National Institute of Economic and Social Research estimated that the economy grew in April and May.

The pound was also boosted by data showing industrial output rose in April - the first monthly rise in 14 months.

In addition, the pound's rise was aided by a survey on attitudes to inflation by the Bank of England, which showed inflation expectations for the coming year rose to 2.4% in May from 2.1% in February, the first rise since August.

Sterling was also up against the dollar, rising one cent to $1.6429.

The pound had fallen against both the euro and the dollar last week and at the beginning of this week amid concerns about possible challenges to the leadership of Gordon Brown.

However, in the past couple of days the political situation appears to have stabilised.

Industry asks Govt to decontrol fuel price, restore tax holiday

Freeing petrol and diesel prices from official control, restoring tax breaks on natural gas production and tax holiday for private oil refiners should be part of the government's agenda in the first 100 days, industry wished.

The Petroleum Federation of India, the apex body of public and private oil firms has submitted to the Oil Ministry a 100-day agenda for the new Government.


On top of its list is decontrol of petrol and diesel prices. Currently, public sector retailers sell auto fuel at Government-dictated rates which the private sector competition is unable to match in times of high input cost (crude oil prices).


Petrofed has asked the Government to operationalise the 28th March 2002, resolution that freed petrol and diesel price from administrative control. State retailers fixed retail selling price every fortnight based on international rates till 2004 when the UPA came into power for the first time and brought back administrative controls.


The Federation also wanted the Government to gradually phase out subsidy on domestic LPG through provision of subsidy to families through coupons/smart cards.

Also, it wanted the Government to provide targeted direct subsidy administered through a smart card system for distribution of kerosene.


It wanted the tax holiday on natural gas to be restored and the same extended to private oil refiners.



The Finance Minister P Chidambaram had in 2008 denied natural gas production of seven year break from payment of income tax like the one enjoyed by producers of crude oil and Petrofed wanted this to be restored. The tax holiday should be enhanced to 10 years from 7 years currently.


"Provide flexibility to claim tax holiday for oil as well as gas production in any 10 years during the first 15 years after the commencement of commercial production under section 80IB(9) of Income Tax Act," its memorandum said.


Petrofed also wanted the seven-year income tax holiday on setting up of refineries to be extended to the private sector.


Currently, this is available only to public sector firms setting up units by March 2012. It also suggested granting 'declared goods' status to natural gas and raising price of gas sold under administered price regime.


Further, it asked the Government to unburden the exploration and production sector of sticking Service Tax since it cannot be set-off, include petroleum products under the Goods and Services Tax (GST) regime, and waive fully the custom duty on import of materials used in transmission projects and removal of anomaly in Naphtha taxation.



Petrofed wanted the Finance Ministry to enlarge the list of goods that could be imported duty-free while also simplifying custom procedures for drilling tools and equipments imported under duty concessions.


"Provide single window clearance for the upstream companies to expedite the process of clearance related to exploration blocks and reduce time and cost overruns," it said.


It recommended developing Petroleum Economic Zone for developing a world-class global upstream services hub in India.

India's economy to grow by 7.2 per cent in 2009-10: Assocham

Indian economy may grow at 7.2 this fiscal on the back of improvement in consumer sentiment, policy reforms and projected growth in agriculture and industrial sector, Assocham survey said.

In a survey of 300 businessmen, about 42 per cent of the respondents said that policy reforms would cast large impact on the GDP growth.


"Indian economy is expected to register a GDP growth rate of 7.2 per cent in 2009-10 on account of improvement in consumer sentiment, rural India and policy reforms," the chamber said.


Majority of the respondents said that the government would be able to bring about significant reforms this year, and about 91 per cent believed that there are good chances of improvement in consumer sentiments in the following months.


About 40 per cent respondents felt that isolation of the rural India from the impact of recession has a huge impact on the GDP growth rate, it said.


"The agriculture sector is expected to record the growth rate of 3.5 per cent as good monsoons, better crop prices and upward revision of the crop forecast has ensured a healthy growth rate for the agriculture sector," it said.


The industry sector which was reeling under pressure due to high interest rates, reduced demand and global recession is expected to record the growth rate close to 4.6 per cent in the fiscal.



With the improvement in consumer sentiment, increased government spending and anticipated reforms, the services sector is estimated to chart 9.7 per cent growth in 2009-10, Assocham said.


About 75 per cent of the respondents believed that government would use further fiscal incentives to stimulate the economy, it said.


However, the factors which continue to inhibit the economic growth rate from pacing up include poor state of the world economy and money market conditions, it added.

Iceland near to Icesave debt deal

Iceland's Prime Minister Johanna Sigurdardottir says a deal, with the UK and Netherlands, is near over savings accounts frozen when its banks failed.

She said agreement is being negotiated on the Icesave accounts of Landsbanki, which collapsed with other main Icelandic banks in October.

The deal would give Iceland seven years to reimburse the frozen savings.

The total debt owed on the accounts is estimated at about 640bn Icelandic crowns ($5.28bn: £3.2bn).

The money would be repaid at 5.5% interest, Ms Sigurdardottir said.

"This is a much more agreeable solution than we were looking at in the winter," she said.

"The interest rates are lower, we'll have longer time to pay out and last, but not least, it means the assets of Landsbanki in the UK will cover most of the debt."

Tech Mahindra makes changes in Satyam open offer

IT firm Tech Mahindra has extended the date for approaching the shareholders of Satyam Computer regarding its Rs 1,154-crore open offer for the purchase of a 20 per cent stake in the scam-hit firm, a move which comes days after market regulator SEBI cleared the open offer.

In a filing to the Bombay Stock Exchange, Satyam Computer said the last date by which letter of offer will be dispatched to the shareholders has been revised to 9th June, from the earlier scheduled date of 3rd June.



Further, the last date of withdrawal by shareholders has also been revised to 26th June, from the earlier 27th June.



"Dates for all other activities of the schedule remains unchanged," the filing added.



The Securities and Exchange Board of India (SEBI) had received the open offer for its consideration on May 6, and issued its 'observations' on May 27.



Through Venturbay Consultant, its acquisition vehicle for the Satyam Computer purchase, Tech Mahindra had announced an open offer on April 22 for buying an additional 20 per cent

from the shareholders of the IT firm.



The open offer was made pursuant to Tech Mahindra buying a 31 per cent stake in Satyam for Rs 1,756 crore through the issue of preferential shares after an auction process conducted by the government-appointed board of Satyam.

Sensex, Nifty hit 10-month highs as bourses progress rapidly

Indian bourses progressed rapidly with key indices Sensex and Nifty hitting nearly ten-month highs as investors were heartened by new UPA Government's economic agenda, unveiled by President Pratibha Patil in the week under review.

The markets achieved new highs in sustained volatility and the Sensex closed past the 15,000-psychological level for the first time since 2nd September, 2008.


Accentuated interest of investors in second-line stocks pushed up the Smallcap and Midcap indices by a whopping 7.88 per cent and 6.98 per cent, respectively, outperforming the bellwether Sensex.


In the week to 6th June, the 30-stock BSE barometer ended the week at 15,103.55, a net rise of 478.30 points, or 3.27 per cent, over the week.


Investors were virtually confident that the economic reforms will get a strong push in the first year in the light of a political stability in the country.


Addressing Parliament on 4th June, Patil disclosed that the Government would focus on revival in economy which has already showed signs of recovery with a good expansion in the manufacturing activity in May 2009.



Patil said the government will focus on reforms in financial and infrastructure sectors as also disinvestment of public sector undertakings while sticking to fiscal prudence.


India's infrastructure sector output grew 4.3 per cent in April, indicating a gradual economic recovery.


Inflation, too, remained low at 0.48 per cent for the week ended 23rd May.


The broader 50-share Nifty of the National Stock Exchange advanced by 137.95 points, or 3.10 per cent, to end the week at 4,586.90 from its previous weekend's close.


Foreign Institutional Investors, the principal market moving factor, remained consistent net buyers in equity.



Hence, the capital inflows in equity stood at USD 427 million in the initial four days of the week.


Analysts said the market is strongly bullish and may witness a pre-Budget rally.



The full Budget is likely to be presented on 3rd July by Finance Minister Pranab Mukherjee.


Sectorial indices such as the BSE Consumet Durables Index soared by about ten per cent and the BSE Capital Goods index by 8.40 per cent.


The trading volume for the week was high at Rs 1,30,005 crore on the NSE and Rs 45,288 crore on the BSE compared to Rs 1,11,845 crore and Rs 36,674 crore respectively.

Oil price rally comes to a halt

Oil prices have fallen back with investors growing more cautious as oil approaches the $70-a-barrel mark.

US light, sweet crude oil was down 86 cents at $67.69 a barrel, while Brent crude fell 61 cents to $67.56.

US President Barack Obama has begun a tour of the Middle East, where he will raise the issue of volatile oil prices with Saudi Arabia's King Abdullah.

He is also expected to reassure Saudi that demand for oil will not dry up. Earlier, oil prices had reached $68.64.

"The Saudis want to be assured that there will be a future for oil consumption. They want security of demand," said Simon Wardell, senior oil analyst at Global Insight.

"Obama for his part will be persuading them to continue investing in new production, which is not likely to have too much impact on spot prices in the near term, but will come five or 10 years down the road."

Weaker dollar

The price of oil had initially risen in early trading on Wednesday.

The weakening dollar had pushed up oil prices, which tend to rise when the US currency falls.

In recent weeks, the dollar has declined against a range of currencies, hitting a seven-month low against sterling on Wednesday.

"The continuing softening of the dollar will go on adding strength to oil and equities," said Peter McGuire of Commodity Warrants Australia.

"I think $70 is possible by the end of the week and $74 to $75 by the end of the month."

Oil had briefly touched $69 a barrel on Tuesday, a new seven-month high, before closing at $68.55.

Although the oil price has more than doubled since January, when it was trading at $32.70 a barrel, it is still well below the record $147 a barrel seen in July last year.

Rs 150 cr spent to buy speed boats by Maharashtra Govt

In the aftermath of 26/11 terror attacks, Maharashtra government has set aside Rs 150 crore to buy 28 hi-tech speed boats for patrolling the sea.

The first boat, equipped with bullet-proof jackets and sophisticated communication systems, was provided to the Thane (rural) police and was tested at the Versova creek on Ghodbunder Road in neighbouring Thane on Monday.


Thane Superintendent of police said, "We are expecting to get one more such boat and it would be used for coastal patrolling. Coastal belts like Utan and Pali fall under our jurisdiction."


The government has made a proposal for acquiring 28 such boats after the November 26 terror attacks, carried out by a group of ten terrorists who entered the city via the sea.


The boats, manufactured by Goa Shipyard Ltd, have a 550 horsepower capacity and will be equipped with bullet-proof jackets along with weapons.



The boats will have ultra-modern navigation tools and Global Positioning System (GPS) for constant communication with the police control room, Pandey said.

India need not import LWR after 2050: Kakodkar

India need not import light water reactors (LWRs) after 2050 as it would by then have a matured fast breeder technology and be ready to use Thorium technology, said Atomic Energy Commission chairman Anil Kakodkar.

Indian nuclear community should not have any confusion regarding this as there are talks going around about using Thorium even before the fast breeder technology is matured, Kakodkar said, delivering Tata Institute of Fundamental Research Foundation day lecture.

Although country has large amount of Thorium and would be a priority for long time in the future, India has to follow the well thought out plan of three-stage programme of Homi J Bhabha as Thorium does not provide fast growth.

India needs fast growth and such growth can be sustained by fast breeder reactors (FBRs) with a multiplier effect.

"If you deploy thorium out of turn (before stage II maturity), which does not support growth out of turn, then you will not get large generating capacity," he said, talking on 'Developing Nuclear Technology for our energy independence: the grand challenge', in Mumbai on Monday.

Sensex down 182 pts in early trade

The Bombay Stock Exchange benchmark Sensex opened 182 points down on Thursday, tracking a weak global trend, on profit-selling by funds at prevailing higher levels after the recent hefty gains.

The 30-share barometer, which touched the 15,000 mark in intra-day trade yesterday after nine months, fell 181.86 points to 14,689.04 in the first five minutes of the day's trade.



The wide-based National Stock Exchange index Nifty was also down 54.35 points at 4,476.35.



Marketmen said selling pressure picked up on the domestic bourses, in line with a weak trend in the global markets, with investors locking in cash after a strong rally.

Rupee weakens by 17 paise against USD

The Indian rupee depreciated by 17paise to 47.24 against the dollar in early trade on Thursday as banks bought the currency (dollar) on behalf of importers and after the USD stabilised against a basket of currencies in Asian markets.

At the Interbank Foreign Exchange (Forex) market, the local unit, which had ended six paise costlier at 47.07/08 on Wednesday, fell further to quote at 47.24.



Besides the greenback strengthening against other Asian currencies, expectations of a weak opening in the equity markets, in tandem with other Asian bourses, affected the rupee sentiment, forex dealers said.



The Asian markets are trading low by 1.5 per cent in early trade on Thursday.