SEBI REVISES BIDDING NORMS FOR FIIS IN INFRA BONDS ……………....……..

1

Issue 11

Sep 26 –Oc t 2

2011

 K INGFISHER ABOUT TO EXIT LOW FARE SEGMENT

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 ONGC GIVES CONSENT FOR CAIRN-VEDANTA DEAL………………...……..3

“AN ECONOMIST IS AN EXPERT WHO WILL KNOW TOMORROW WHY THE THINGS HE PREDICTED YESTERDAY DIDN’T HAPPEN TODAY.”

Weekly

Website: www.finx.in Email: finx@sscbsdu.ac.in

pulse

—L aurence J. Peter

SEBI revises bidding norms for FIIs in infra bonds
Securities and Exchange Board of India (SEBI) has revised its norms for foreign institutional investors (FII) in the infrastructure debt bonds and has lowered the minimum bidding and allocation amounts for such investors. As per the revised guidelines, the government has allowed FIIs to invest up to $5 billion in infrastructure bonds with reduction of lock-in period to one year from earlier three years. These revised norms are likely to attract a higher number of FIIs into the infrastructure bond segment unlike the last time when there was cold response from FIIs to such bonds.

BHEL files papers for FPO with SEBI
Bharat Heavy Electricals (BHEL) has filed initial papers with market regulator the Securities and Exchange Board of India (SEBI) for the follow-on public offer (FPO) that will see the government offloading its 5% stake in the company. Its sale is expected to fetch over ` 4,000 crore. A price discount of 5% would be given for retail investors, as part of efforts to encourage greater public ownership.

Gold edges up, but in worst month since July 2010
Gold jumped more than 1% after Germany's approval for expanding the euro zone bailout fund offered temporary relief to investors, but the it is heading for its worst monthly decline in three years. Investors have stayed away from the market due to the recent volatility in gold prices, adversely impacting volumes and turnover. Also, investors have been buying dollars, preferring to sit on cash, rather than investing in gold.

SEBI questions USE on trade concentration
The United Stock Exchange has come under the regulatory scanner for alleged concentration of trades by a single member. The effectiveness of exchange’s surveillance and risk management is questioned as they failed to take note that Jaypee Capital, a shareholder in USE, accounted for nearly 80% volume on USE which is considered to be a breach of FUTP(Fraudulent and Unfair Trade Practices) as one cannot be a broker with trading rights.

Banks turn against RBI on prepayment reforms on loans
The Indian Banks’ association (IBA) on behalf of all banks argues against RBI on the issue ―Banks must not recover prepayment charges in floating rate loans‖, which are 2-4% of the loan outstanding. They say prepayment by a customer would lead to maturity mismatches, impacting banks liquidity as when prepayment happens, there is a time gap before banks can redeploy the funds.

Kingfisher about to exit low fare segment
Vijay Mallya intends to withdraw Kingfisher Red low fare unit, which it got by acquiring Deccan Aviation during mid-2007, to take care of the debts of India's second largest airline(in terms of passengers carried). Kingfisher has run up a debt of ` 6,000 crore, accumulated losses of ` 5,000 crore and pays out an interest of ` 1,300 crore —more than its market capitalization of ` 1,232 crore. He wants to run a full service airline and claims that there are "enough" passengers for the same.

Shale Gas fuels GAIL’s US market entry
GAIL India has become the first government owned Energy Company to get a foothold in the US market. It has entered into a deal with Carrizo Oil and Gas Inc for acquiring 20% stake in Eagle Ford shale acreage. It will pay $95 million to Houston –based Carrizo most of it in cash and rest for developing the area in the Eagle Ford deposits in Texas. GAIL proposes to invest $ 205 million over the next five years through its subsidiary GAIL Global (USA) Inc. The joint venture is expected to drill an additional 139 wells in acreage.

Merchant bankers to disclose past performance
From Nov 1, 2011 merchant bankers will have to disclose the performance of their past issues in all draft documents. It’s an attempt to make investors better informed and would disclose data for all issues managed in the last three years. It would include the issue price, share performance on the day of listing, the price movement on the 10th, 20th and 30th day to enable comparison with the movement of the benchmark index and the summary statement.

ONGC gives consent for CairnVedanta deal
ONGC has given a go ahead to Cairn India for the proposed multibillion dollar share sale to Vedanta Resources. ONGC has given the ―no -objection‖ certificate and has cleared all pending regulatory hurdles. Cairn and Vedanta have executed a formal agreement with ONGC agreeing to royalty and cess conditions i.e. cost recovery of royalty of ONGC and withdrawal of the arbitration petition in international courts against payment of at least 15%.

WEEKLY MARKET STATUS
SENSEX NIFTY DOW JONES

16453.76* 4943.25 10913.38 17592.41 5128.48 48.97 65.86 25989 79.2

+291.7 (+1.80%) +75.5 (+1.55%) +141.9 (+1.32%) -76.42 (-0.43%) +61.67 (+1.22%) -0.7 (-1.67%)*** -1.12 (-1.67%) -1319 (-4.83%) -0.76 (-0.95%)

HANG SENG FTSE

FinX comes with yet another edition of crossword. First 3 correct entries will get their name featured on the Facebook page and the next Weekly Pulse.

BRAIN SCRATCHER

US$ EURO GOLD MCX (spot price) WTI CRUDE OIL ($/BARREL)

*CLOSING SPOT PRICES AS ON LAST FRIDAY i.e. 30/09/2011 **RISE/FALL OVER WHOLE WEEK; FROM 23 Sep to 30 Sep ***NEGATIVE SIGN INDICATE STRENGTHENING OF RUPEE AGAINST $/EURO

LAST WEEK’S ANSWERS: The Winner for last week is: Adish Jain & Narotam Garg

ACROSS

DOWN

4. Management style where manager interacts with employees only to criticize their work or when a problem arises. (7) 5. The idea that a country should be self-sufficient and not take part in international trade. (7)

1. Author of book One Minute Manager. (3,9) 2. The sum of a country’s inflation and unemployment rates. (6,5)

6. “Wall Street is the only place that people ride to in a Rolls Royce 3. The transition point between economic recession to get advice from those who take the subway.” -quote by which and recovery. (6) famous personality?? (6,7)

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