Power Grid FPO gets CCEA nod, merchant bankers appointed

The government has cleared a proposal for follow-on public offering (FPO) of state-run Power Grid Corporation to raise about Rs 7,500 crore.

"The 17 per cent follow-on public offer of Power Grid has been cleared. This includes 13 per cent fresh equity and 4 per cent stake sale by the government," Power Minister Jyotiraditya Scindia said after the Cabinet Committee on Economic Affairs (CCEA) meeting.

The FPO will comprise 13 per cent fresh equity by the public sector company and 4 per cent stake sale by the central government.

The government will sell 18.51 crore shares in the public sector company. The company will issue fresh 60.18 crore shares through the offer. Out of this fresh shares, about 2.4 per cent would be reserved for the employees.

At current market valuations, the FPO is likely to fetch close to Rs 7,500 crore. The company may garner close to Rs 5,700 crore while the government will get an estimated Rs 1,700 crore.

Post-FPO, the government stake in the company will come down to 57.89 per cent from current shareholding of 69.42 per cent.

According to sources, Citigroup, ICICI Securities, UBS, SBI Caps and Kotak Mahindra have been appointed as the merchant bankers for the FPO.

This would be the second follow-on offering from Power Grid, which sold a 10 per cent stake along with a similar stake divested by the government in November 2010 at an issue price of Rs 90 a share.

The company hit the capital market with its initial public offering in October 2007.

Shares of the company closed at Rs 95.10 apiece, down 1.19 per cent on the Bombay Stock Exchange.

Sensex drops over 100 points; Tech Mahindra up 4% post Q2 results

NEW DELHI: The S&P BSE Sensex slipped over 100 points in morning trade on Friday, weighed down by losses in realty, consumer durables, banks and power stocks. Tracking the muted momentum, the 50-share Nifty index was trading close to its crucial psychological support level of 6150 levels.

Tech Mahindra rallied as much as 3.78 per cent in morning trade after the IT major surprised analysts on Thursday by reporting better than anticipated revenue growth in dollar terms. Revenue came at $758 million increased by 4.7% sequentially, higher than the expectation of 2.7-3% increase.

At 09:20 a.m.; the 50-share index was at 6163, down 23 points or 0.38 per cent. It touched a high of 6,173.75 and a low of 6,139.85 in early trade today.

The S&P BSE Sensex was trading at 20,762, down 61 points or 0.3 per cent. It touched a high of 20,792.30 and a low of 20,645.64 in trade today.

The S&P BSE Midcap Index was down 1.07 per cent and BSE S&P Smallcap Index edged lower by 1.1 per cent.

Among the sectoral indices, the BSE Consumer Durable Index was down 1.03 per cent, followed by the S&P BSE Auto Index which dropped 0.68 per cent and the S&P BSE Capital Goods Index was trading 0.62 per cent.

The BSE IT index was trading 0.3 per cent higher, followed by the BSE Metal index which was up 0.29 per cent, BSE HealthCare index was trading flat with positive bias.

Tata SteelBSE 1.32 % (1.3 per cent), Wipro (0.9 per cent), Cipla (0.66 per cent), Infosys (0.47 per cent) and Sesa Goa (0.15 per cent) were among the major Sensex gainers.

Sun Pharma (1.78 per cent), ONGC (1.73 per cent), BHELBSE 0.86 % (1.34 per cent), GAIL (1.3 per cent) and Maruti SuzukiBSE -1.02 % (1.32 per cent) were among the index losers.

Asian shares slumped to a three-week low after U.S. stocks suffered their biggest fall in more than two months, weighed down by GDP data and surprise interest rate cut by the European Central Bank.

Japan's Nikkei 225 index was trading 0.9 per cent lower at 14,097.50 and Hong Kong's Hang Seng index was trading 0.4 per cent lower at 22,788.12.

South Korea's Kospi index was trading 0.3 per cent lower at 1,997. China's Shanghai index was trading 0.3 per cent lower at 2,122.

Govt criticises Goldman Sachs for forecasting Narendra Modi’s victory in 2014 elections

Zee Media Bureau

New Delhi: American multinational investment banking firm Goldman Sachs’ recent note on optimism over political change in India has irked Commerce and Industry Minister Anand Sharma.

The Commerce Minister in an interview to a business daily said that the investment banking firm should concentrate upon “doing what they claim to specialise in”.

Goldman is parading its ignorance about the basic facts of Indian economy; and it also exposes its eagerness to mess around with India's domestic politics,” said Sharma.

Goldman Sachs had noted expectations that the opposition Bharatiya Janata Party, led by prime minister candidate Narendra Modi, could prevail in parliamentary elections due by May 2014.

The firm had also upgraded its view on India to "marketweight", with a target for the Nifty of 6,900 points.

Goldman noted that external capital account pressures have moderated for now, and cites signs of a cyclical pick-up and structural improvements in the economy.

Rupee to stabilise in a day or two: FinMin

New Delhi: The Finance Ministry Thursday said the rupee will stabilise within a couple of days as inflows of NRI deposits and export proceeds are likely to be strong.

"Strong FCNR (B) inflows, export realisation will strengthen rupee... Rupee will stabilise in 1 or 2 days," Economic Affairs Secretary Arvind Mayaram said.

The rupee weakened to 62.58 against the US dollar in the early trade today.

Mayaram said the weakness in rupee was due to shifting part of dollar purchases by oil companies to open market.

In August, the Reserve Bank had opened a special window to help the three state-owned oil marketing companies -- IOC, HPCL and BPCL -- to meet daily foreign exchange requirements and buy dollars directly from RBI.

"Rupee weakness is due to OMC forex demand being moved to market. 30-40 percent of OMC demand has moved to market," Mayaram said.

The PSU oil companies are the biggest buyers of dollars, requiring USD 8-8.5 billion every month for the import of an average 7.5 million tonne of crude oil.

The rupee has recovered over 10 percent since August 28, when it fell to a record low of 68.85 to the dollar. The gain in rupee followed optimism that the US Federal Reserve would delay the tapering of its bond buying programme.

To attract dollars, RBI in September had opened a special concessional window for swapping foreign currency non-resident (banks) (FCNR-B) deposits and overseas foreign currency borrowings for banks. So far USD 15.2 billion has come from this window.

The window will remain open till the end of this month, and many analysts have pegged the inflows from these instruments to be in the range of USD 20-25 billion.

The plight of the rupee started after the US Fed in its May 24 meeting hinted at shutting the easy money tap- repurchase of USD 85 billion worth of T-bills every month.

This had led to a spike in US interest rates, enticing FIIs to plumb for better returns back home by exiting emerging markets.

FIIs had sold domestic debt worth more than USD 52 billion so far in 2013

US economy clocks 2.8% growth in third quarter

 
New York: The US economy grew at an annual rate of 2.8 percent in the third quarter, the government said Thursday in a report that revealed weakness in key consumer spending.

The world`s largest economy accelerated from a 2.5 percent pace in the second quarter, surprising analysts who had expected the Commerce Department`s first read on third-quarter gross domestic product would show expansion at a weaker 1.9 percent pace.

It was the strongest pace of growth in a year. But analysts forecast a weaker fourth quarter this year, after a Washington budget battle forced a 16-day government shutdown in October that shaved an estimated USD 24 billion from the economy.

Scott Hoyt of Moody`s Analytics noted that growth in the third quarter came amid widespread expectations that Congress would find a compromise in time to avoid the government shutdown.

The Commerce Department said the July-September pick-up was mainly due to a sharper decline in imports from the second quarter and accelerating rises in private inventory investment and state and local government spending.

Federal government spending, hit by "sequester" budget cuts that began in March, fell 1.7 percent following a fall of 1.6 percent in the second quarter.

Inflation heated up, led by price jumps in energy goods and services, but remained well below the two percent target of the Federal Reserve for price stability.

The price index rose 1.8 percent in the third quarter, following a 0.2 percent rise in the second. Excluding food and energy prices, the price index increased 1.5 percent, compared with a 0.8 percent rise in the prior quarter.

Growth in consumer spending, which accounts for roughly two-thirds of US activity, slowed to 1.5 percent from an increase of 1.8 percent in the second quarter

Disposable personal income rose 2.5 percent in the third quarter, down from a 3.5 percent increase in the prior quarter under pressure from rising consumer prices.

"The US economy had somewhat more pep in the previous quarter than expected amid solid gains in construction," Sal Guatieri of BMO Capital Markets said in a research note.

However, he added, weakness in consumer spending and business investment, alongside the large gains in inventories and the government shutdown, "will weigh on growth in the current quarter."