Govt may increase Gov.

t may increase

FII limit on Gov.t Govt FII limit on Debt..1 Debt.

.1

Issue 14

Oct17 Oc t 23

2011

Reliance suspend its Reliance to to suspend its oil operations .... ... oil operations ............ 2 2

Chawla atappointedyear Chawla appointed the Rupee 2-1/2

new...3. new Chairman...3 low CCI CCI Chairman

..3

Finance, like time, devours its own children.

Honore de Balzac

Weekly pulse

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

FII LIMIT ON GOVT BONDS MAY INCREASE

The government may consider raising the limit for foreign institutional investors (FIIs) in government debt,. After the last auction the FII inflow in government securities stood at 42388 crore, which is just short of 43650 crores(10 billion) available to them. This measure to boost capital inflows is high on the governments agenda keeping in mind the slagging global financial inflows. However any such decision will happen only in the next budget, after the finance ministry has analysed the impact of any reduction of the securities transactions tax. The cap on FII limit was last raised in September 2010 by $5 billion. When foreign investment limit in corporate bonds was increased by $5 billion this year, it was mandatory to invest the enhanced limit in infrastructure bonds. Currently, FIIs can invest $20 billion in corporate bonds.

SAHARA ASKED TO RETURN 24000CR TO INVESTORS

The SEBI appellate tribunal ruled that Sahara Group would have to repay over 24,000 crore it had collected in the form of optionally convertible debentures. Sahara started collecting money under optionally convertible debentures in the names of Sahara India Real Estate and Sahara Housing Investment Corporation around 2005. It was after complaints from the investors that SEBI stepped in and directed the companies to pay back over 24000 crore to over two crore investors with a 15% interest. Sahara challenged the order stating both the companies were unlisted so it was under the Ministry of Corporate Affairs and not SEBI. However, the tribunal ruled that the company had flouted the cap of 50 investors for a private issue and hence it was under SEBI's jurisdiction . Investor forums pointed how the company misled authorities by claiming all the investors were employees or beneficiaries of the group, and hence the issue was a private issue.

RELIANCE TO SUSPEND OIL DRILLING AND GAS EXPLORATION

Reliance industries, Indias largest private oil explorer is re-evaluating its exploration and production strategy along with its new partner BP. Reliance and BP will jointly assess reliances entire exploration and production portfolio and present the government with a new plan for the same. This development is in light of the fact that there has been a decline in the gas output from D6, the reservoir operated by reliance, causing reliance shares to fall nearly 27% this year. In September, reliance was producing 44 million standard cubic metres per day (mscmd) from its exploration field which is very well below the 60 mscmd it produced in 2010. It is a win-win situation for both the companies with Reliance gaining access to BPs deepwater drilling experience and BP gaining access to new hydrocarbon resources and markets.

GOVT MAY OFFER 26000 CRORE BAILOUT TO AIR INDIA

Currently Air India owes 48000 crore in loans and payments to vendors and has accumulated losses of around 20000 crores. However help is on its way, with the government of India likely to offer a 26000 crore bailout package for the ailing national carrier. This bailout will be a mix of debt transfer and equity infusion. The group of officers (GoF) from the finance ministry in charge of AIs financial restructuring plan is most likely to recommend this bailout to the government in its next meeting. However these recommendations would be accompanied by a series of stringent conditions for cost control, increasing revenues, yields and so on. This bailout would be a big boost for AI and aid in its revival. If this bailout is given clearance it would be the biggest ever help given by the government to a public sector undertaking.

MICROSOFT

SPAINNS SPAI

O NOTCHES. DOWN TWO GATING DOWN TW RATIN S CREDIT DIT R CRE

Moodys investors service cut Spains bond rating to A1 from Aa2. They are the third of the major agencies to act in recent weeks and taking it a notch below the ratings of Standard & Poors and Fitch. This cut came with Greeks beginning their biggest strike in years against the governments austerity drive and with France announcing that it could lose its triple A rating. Markets, however are counting down to a summit of EU leaders on 23rd October, with hopes that the summit will agree to new steps to reduce Greeces debt and strengthen the capital of banks.

 breaches 50/$, at 2-1/2 year low

The Indian rupee dipped below the 50 mark on 21st October, a 30-month low as uncertainty about the Eurozone continued. The rupee was dragged down by strong dollar demand from importers and global risk aversion. The currency has declined 10.8% this year, making it the worst performance among Asias 10 mosttraded currencies. The overall sentiment towards rupee is expected to remain weak. Bankers expect rupee to pierce the all time low of 52 .20 to dollar in the next few weeks, if European crisis worsens and RBI remains hawkish.

WEEKLY MARKET STATUS

SENSEX NIFTY DOW JONES 16785.64* 5049.95 11808.79

-297.05** (-1.738%) -82.35 (-1.605%) +164.3 (+1.411%) -476.07 (-2.573%) +22.29 (+0.407%) +0.96*** (+1.956%) +1.33*** (+1.963%) -509 (-1.917%) +0.25 (+0.286%)

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

18025.72 5488.65 50.03 69.05 26041

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

87.53

*CLOSING SPOT PRICES AS ON LAST FRIDAY i.e. 21/10/2011 **RISE/FALL OVER WHOLE WEEK; FROM 15 Oct to 21 Oct ***NEGATIVE SIGN INDICATE STRENGTHENING OF RUPEE AGAINST $/EURO

LAST WEEKS ANSWERS:

We didnt receive a correct solution of the last crossword. BUCK UP GUYS !!

ACROSS 1. Refers to stabilising the prices of stocks, currency, commodities or gold through intervention by the Government or its agencies. 4. A company, member of the stock exchange which cannot meet its financial obligations.

DOWN 2. Bonds that carry low ratings but correspondingly higher yields.

3. A situation when supply of credit, in relation to its demand, falls considerably.

5. Assets that cannot be traded because they are mortgaged in favor of 6. Law firms and investment bankers employed by a target company to some class of creditors. fend off unfriendly takeover bids.