Business This Week

After almost six weeks of ending in the green, the benchmark indices took a breather to register a marginally lower close on Friday. The 50 share S&P CNX Nifty ended 0.3 percent lower at 8538.3 points while the 30 share BSE Sensex ended lower by 0.4 percent at 28458.1 points. The CNX Midcap index and the BSE Small Cap index, however, ended on positive notes with a growth of 2 percent and 1.8 percent, respectively. The markets opened on Monday with no great momentum and after registering three sessions of negative closings, rallied back on Thursday only to mellow down on Friday.

Technology stocks showed a pronounced downslide ahead of the release of US jobs data with Tata Consultancy Services going down about 2.2 percent. Wipro went down about 2.3 percent while Infosys ended some 1.5 percent lower. JSPL, DLF, and ITC were the top Nifty gainers rising between 7.8 percent and 8.7 percent. Fund flows from foreign institutional investors were offset by the bulk sale of shares domestic institutional investors.

RBI keeps rates unchanged

The RBI conformed with expectations and left credit rates unchanged on its policy review session on December 2. India Inc. demand for a slash in rates were weighed against the possibility of hampering the downslide of inflation and the RBI chief Raghuram Rajan postponed hopes of a rate cut to the next review.

Gold ended the week at 26357 and silver at 36699. Experts seem to indicate that gold and silver are likely to fall further with decrease in investor interest and global demands.

SAIL OFS to fetch INR 1715 crore

The Government of India initiated an INR 58,000 crore rupee disinvestment programme with a 5 percent sale of its stake in SAIL. On Friday the Government reduced its 80 percent stake in the steel manufacturer to about 75 percent by putting up 206.5 million shares for sale in the equity market. The shares were available by auction to both retail and institutional investors. The floor price for the offer was INR 83 per share – lower than the closing price of Thursday.

The offer for sale (OFS) promised to offer retail investors a discount of 5 percent on the issue price. Retail investors could bid for a maximum of INR 2 lakh worth shares. About 25 percent of the shares on sale were reserved for insurance companies and mutual funds. By the end of Friday – the only day the offer was up for bidding – the offer was oversubscribed both at the NSE and the BSE.

The SAIL OFS is believed to be a good measure by which the Government seeks to judge the appetite of the retail investor for upcoming disinvestment offers in PSUs including Coal India, ONGC, and NHPC. Apart from these, the Government also intends to raise funds by selling of a part of its stake in MOIL Ltd, Rashtriya Ispat Nigam, Rural Electrification Corporation Ltd (REC), Hindustan Aeronautics, Power Finance Corporation Ltd (PFC).

SBI to sell USD 300 million bonds

India’s largest lender, the State Bank of India, has announced its intent to raise about USD 300 million from the issue of bonds in the global markets. The bank said that this amount included USD 100 million that had already been raised by the sale of 10-year bonds. A further USD 200 million would be sourced by selling bonds with shorter maturity periods of three years and five years. The funds that would be gained from the sale of these bonds would be spent towards general corporate expenditures, said SBI officials.

The SBI’s notice to the BSE said that the bonds with 10-year maturity term were fixed with a yield of 4.04 percent and the price had been determined using the reverse enquiry method. Since these are meant for sale in the international markets they will be issued by the London branch of the SBI. The bank will be listing these bonds on the SIX Swiss Exchange. Standard & Poor’s are expected to rate the SBI bonds BBB with moderate risk – the lowest investment rating. These SBI bonds will bear 3.95 percent interest rate per annum. The interest payout will be biyearly.

Protests registered against GOFS

Google’s online shopping festival (GOSF) will showcase products serviced by over 300 retailers and service providers across various categories. The event, spread over three days, is a mega online shopping bonanza, scheduled to start on December 10. The GOFS is viewed as a major threat by offline retailers and a formal protest has been lodged with Finance Minister Arun Jaitley by the Confederation of All India Traders (CAIT). The GOSF comes at an off-season period when business in offline markets is already likely to be low. The Government of India has already been receiving complaints from various retail giants about lack of policy and pricing regulations in the e-commerce industry. India’s e-commerce megastore, Flipkart, has decided to skip the event.

Sahara sells realty assets to raise funds

In its attempt to raise funds required for the release of Subrata Roy, the Sahara group has finalized the sale of a large tract of land owned by it in Gurgaon near Delhi. The land has been sold for INR 1211 crore to M3M India Limited. M3M India is believed to have acquired the 185 acre property in Chauma village, Gurgaon, Haryana, for ‘mixed-used development’. The payment will be made to Sahara over six months in installments.

Apart from this land the courts have cleared Sahara for sale of other properties in Jodhpur, Pune, and Mumbai. Sahara is also believed to have finalized the deals for sale of the Mumbai (Vasai) land at INR 1111 crore and Jodhpur land for about INR 140 crore.

Sahara chief Subrata Roy is lodged in Tihar jail since March for a case involving non-refund of money worth INR 25,000 crore to investors. Sahara has been asked to pay INR 10,000 crore by the court in order to obtain bail. At least half of this amount must be in cash, stipulated the court, while the rest may be in bank guarantee.