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THURSDAY, 9 JULY 2015

18 pages in 1 section
www.business-standard.com
MUMBAI (CITY)
~5.00
VOLUME XIX NUMBER 235

THE MARKETS ON WEDNESDAY CCh


hg
g++

Sensex 27,687.72 483.97


Nifty 8,363.05 147.75 BRAND WORLD P7 WORLD P17

HONDA DRIVES JAZZ AGAIN; GREECE SEEKS NEW EU LOAN


Nifty Futures* 8,378.00 14.95
Dollar ~63.60 ~63.46**
Euro ~70.03 ~69.58**
Brent crude ($/bbl)
Gold (10 gm)##
56.23
~26,200.00
*(July) Premium on Nifty Spot; **Previous close; # At 6 pm IST
56.46**
~180.00 ENTRY PRICE AT ~5.31 LAKH DEAL TO AVERT COLLAPSE
+ Over previous close; ## Market rate including VAT and premium

> IN BRIEF

NYSE halted temporarily


The great fall of China
Sensex skids 500 points after Chinese indices drop 7%; India impact limited, say experts
India Inc gives
~4.5-lakh-cr forex
due to technical glitch
Trading in all securities were halted on
the New York Stock Exchange on
BS REPORTER & AGENCIES
Mumbai, 8 July
stabilisation funds earlier in the
week bore the brunt.
HOW INSULATED IS INDIA FROM CHINESE SHOCKS?
A comparison of China and India on various parameters
debt headache
“I have never seen this kind of
Rupee’sstabilityinlast12-18months
C
Wednesday following reports of technical hina’s tumbling stock mar- a slump before. I don’t think any-
GDP MARKET M-CAP TO POPULATION INDIVIDUAL
difficulties, though NYSE-listed issues
were trading on other exchanges. After the
ket showed signs of seizing
up on Wednesday, as com-
one has. Liquidity is totally deplet-
ed,” said Du Changchun, an ana- ($ trn) CAP ($ trn) GDP (%) (bn) INVESTORS (mn) madecompaniesreducehedging
halt, US stocks extended their losses, but panies scrambled to escape the lyst at Northeast Securities. ABHINEET KUMAR, NUPUR ANAND & NEELASRI BARMAN
in low volumes, with the S&P 500 hitting a rout by having their shares sus- “Originally, many wanted to Mumbai, 8 July
session low and the Dow Jones Industrial pended. And, indices plunged hold blue-chips. But sincesomany
Average and Nasdaq both falling more after the securities regulator small-caps are suspended from Indian companies’ foreign currency debt exceeded ~4.5 lakh

2.1

1.7
warned of “panic sentiment” grip- trading, theonly way to reduce risk crore in 2014-15, a large portion of which remained

24
10.0

65.0

81.0
than one per cent each. 17 >

137

135
6.5
ping investors. exposure is to sell blue-chips.” unhedged, giving fresh headache to their investors and the

90
The turn in sentiment affected About 30 per cent has been Reserve Bank of India (RBI). The rupee has been hovering
global markets, including India. knocked off the value of Chinese China India around 63-64 a dollar.
China tops list of migrating HNIs TheBSEbenchmarkSensexclosed shares since mid-June, and the Retail ownership (% of overall m-cap) 80 21 According to an
About61,000high-networthindividuals
movedoutofIndiainthepast14years,
with a decline of 483.97 points, or
1.72 per cent from its previous
fear for some global investors that
China’s market turmoil will desta- FII investment Up to $125 bn* No overall limit.**
India Ratings study of
corporate balance sheet,
BEYOND THE
largelytotheUnitedArabEmirates,United
KingdomandUnitedStates.Indiaranksnext
close, to end at 27,687.72. At one
point, it had fallen as much as 535
bilise the real economy is now a
biggerriskthanthecrisisinGreece.
Equity (one-year return, %) 70 8.2 available for the 500
largest listed borrowers
HEDGE?
No. of IPOs (Amt raised YTD) 141 ($21.5 bn) 5 ($0.2 bn) Debtof top 500 largest listed
onlytoChina,whichsaw91,000millionaire points. The National Stock All 12 of BSE’s sectoral indices in 2013-14, aggregate borrowers (~lakh cr)
migrationsbetween2000and2014, Exchange’s Nifty closed at ended in the red on Wednesday. Equity issuance (Amt raised YTD) 1,172 ($267.5 bn) 86 ($14.1 bn) debt increased to ~28.7
accordingtoareportbyNewWorldWealth,a 8,363.05. The metal index, which fell 3.89 Most valuable company (m-cap in $ bn) PETROCHINA (342) TCS (81) lakh crore, of which Total debt Forex Debt
Johannesburg-basedconsultancy. 18 > Foreign institutional investors per cent on concerns of a Chinese Index P/E 16.0 23.0 about ~4.5 lakh crore
were net-sellers to the tune of slowdown, was the worst hit. The was dollar-denominat- 25.0 28.7
Financials’ weight (%) 42.0 20.4
~354.32 crore, while domestic insti- banking index was down 1.69 per ed debt, compared with
High Court relief for Uber in Delhi tutions were net-sellers of ~346.71 cent on fresh worries over asset Defensive weight (%) 15.0 24.7 ~4.2 lakh crore in the
The Delhi High Court on Wednesday set aside crore worth of stocks, showed pro- quality. Overall, nearly two stocks year-ago period.
a Delhi government order by which Uber’s visional exchange data. declined for every advance on the China India “In the past 12 to 18
application for licence to ply in the national Beijing unveiled yet another BSE. A total of 942 stocks rose, months, the rupee’s
capital was rejected. 8> battery of measures to arrest the while 1,812 ended in the red. stability has made
4.2 4.5
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>> sell-off, and the People’s Bank of Turn to Page 5 > some of the corporate
China said it would step up sup- houses assume that the
PM meets Chinese President Xi OPINION, P11
port to enlisted brokerages to prop Indian currency will 2012-13 2013-14
Prime Minister Narendra Modi on Wednesday up shares.
> EDIT: China’s meltdown remain stable. So they Source: India Ratings
conveyed India’s strong concerns to The CSI300 index of the largest COMPANIES, P2 have reduced hedging,
President Xi Jinping on China blocking its listed companies in Shanghai and > Internet, tech, infra, realty in at the cost of caution,”
move at the UN for action against Pakistan Shenzhen, fell 6.8 per cent from its India may gain said Deep N Mukherjee, senior director at India Ratings &
over Mumbai attack mastermind previous close, while the Shanghai THE SMART INVESTOR, P12 Research. Mukherjee said the debt figure went up further in
Zaki-ur-Rehman Lakhvi’s release. 8> Composite Index dropped 5.9 per 2014-15, but he declined to give an estimate.
cent. With nearly half the market
> China stocks hit 4-month low
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>> “The risk is that the rupee might touch 65 a dollar during
on a trading halt and another
> Will China turmoil, Greek debt crisis the course of this year. There are global risks that include the
More power supply to Bangladesh roundofmargincalls forcinglever- trip global equity markets?
Note: Defensive includes consumer staples, IT and healthcare; Financial includes real estate; P/E and sector
US Federal Reserve’s outlook on tightening, how the situa-
> Metal stocks crack
India will begin to supply up to 500 Mw aged investors to dump whatever weights for BSE 200 and Shanghai Shenzen 300 indices; * permitted under QFII programme. Less than half tion pans out in the euro zone and whether China’s growth
additional power to Bangladesh as soon as shares could find buyers, the blue- of that has been utilised; ** Cap on investment in individual companies. Total FII holding in India is about slows down further,” said Anindya Banerjee, currency ana-
COMMODITIES, P16 $300 billion; YTD: Calendar year to date Source: Bloomberg
the work on the Saarc grid is completed, chips that had been supported by > Base metal, crude bear the brunt Complied by Samie Modak & Krishna Kant Illustration: Ajay Mohanty; Graphics: Vikash Sharma lyst, Kotak Securities. Turn to Page 5 >
Power System Operation Corporation
Executive Director V K Agrawal has said. 4>

Rosneft signs deal to take


>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>

FMCG firms high on ad spends BACK PAGE, P18


Despiteconsumptionblues,fast-moving
Tax-free bonds worth ~40k cr to hit the street
a 49% stake in
consumergoodscompanieshaveraisedtheir
expenditureonadvertisementby10percent. 2 > Tax-free bonds worth ~40,000 crore are set to hit the market this financial year as the
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>> government has allowed seven entities to raise funds through this route. Experts say
these bonds will attract investors, though it is agreed that the returns would be
Cash flow dries up for infra firms BS REPORTER the parties plan to increase the total lower than what it was offered in the financial year 2013-14. The amount allocated
GlobalbankUBShasflaggedthefalling Mumbai, 8 July DEAL DETAILS quantity of retail sites to 5,000 within to various entities include tax-free bonds of NHAI for ~24,000 crore, IRFC for ~6,000
financialmetricsoftheJaypee,Essar,GMR,GVK, 49% The stake the next two years.
crore, HUDCO for ~5,000 crore, IREDA for ~2,000 crore and Power Finance Corporation, Rural
LancoandAbhijeetbusinessgroupsandsaid Russian oil major Rosneft has signed a Rosneft is likely to Before the announcement of the
bankshadincreasedtheirexposuretothem preliminary agreement with the Essar agreement, the Essar Oil stock was
Electrification Corporation Limited and NTPC have been allocated ~1,000 crore each.
despiteadeteriorationintheircashflow. 2> group, controlled by the Ruias, to buy
buy in Essar Oil's trading 3.74 per cent higher than its
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>> a 49 per cent stake in Essar Oil’s Vadinar refinery previous BSE close, at ~188.6 a share.
Vadinar refinery and supply 100 mil- 100 mt Amount of crude oil At Wednesday’s closing price, Essar
Vyapam: MP HC defers hearing lion tonnes of oil to the latter for the Rosneft will likely supply to Oil’s market capitalisation stands at
TheMadhyaPradeshHighCourtonWednesday next 10 years. Essar over 10 years ~27,337 crore.
deferredhearingonapleabytheShivrajSingh Refining accounts for over 95 per Sources had earlier told Business
ChouhangovernmentforaCentralBureauof centofEssarOil’soverallbusiness.The 45 mtpa Amount of oil Standard that the deal would fetch
InvestigationprobeintotheVyapamscam,as deal is subject to regulatory approvals. Rosneft and Essar plan to Essar Oil over ~10,500 crore, which
theSupremeCourtisscheduledtohearsimilar According to the deal contours, extract from the refinery by might help the company reduce its
petitionsonThursday. 18 > Rosneft will supply five million tonnes 2020 debt burden. As of June this year, it
ofcrudeoiltoEssarOilin2015.Rosneft hadadebtof~17,000croreonitsbooks.
~27,337 cr Essar Oil’s market
ECONOMY, P4 and Essar Oil had last December To complete its debt-dollarisation
signed a preliminary contract for sup-
cap by Wednesday’s closing programme, the company is in the
Govt plugs into reforms, ply of 10 million tonnes of oil a year for ~10,500 cr The amount that process of availing of long-term export
10 years. Commenting on the signing the deal is likely to fetch Essar advance facility of $1.6 billion, backed
power trips on logistics of the agreement, Rosneft Chairman
~17,000 cr Total debt on
by export performance bank guaran-
The data for the eight core Igor Sechin said: “The performance of tee/standby letter of credit, to repay
infra industries for May show the terms of the signed documents the books of Essar Oil as of the high-cost rupee loans.
many sectors reported will have a substantial impact on the last month Last April, Essar Oil had received
good growth. In the third scale of economic cooperation the Reserve Bank’s approval to raise
of a five-part series, between Russia and India. The goods boost refinery output from 20 million externalcommercialborrowingstothe
trade between the two countries will tonnes a year to 45 million tonnes by extent of $2.27 billion, to replace its
Business Standard looks at
grow by more than 50 per cent.” 2020. The deal also includes a retail rupee debt with low-cost dollar loans.
the reasons for this turnaround Rosneft and Essar also plan to chainof1,600stationslocatedinIndia; Turn to Page 5 >
and whether it is sustainable.

Microsoft to cut 7,800 jobs, take


$7.6-billion Nokia writedown
Layoffs to be in the phone business; some India impact likely
BS REPORTER Meanwhile, speculation was aging director for India and
New Delhi, 8 July rife about the announcement’s South Asia, IDC India.
impact on the company’s India Mehtaaddedanotherreason
American technology giant operations. Though the extent for rationalising the workforce
Microsoft on Wednesday of job cuts in the country is not could be the fact that Nokia had
announced around 7,800 job known, Nokia had huge opera- been consistently losing market
cuts as part of a reorganisation tions in India, which was one of share, putting cost pressure on
of the phone-hardware busi- the largest markets for the the business. “Nokia’s head-
ness it acquired through the phonemaker.Expertssaidthere count in India — mostly sales,
buyout of Nokia last year. These could be some implication on support and marketing staff —
layoffs will be in addition to the the India team, since there was is definitely not tiny,” he added.
18,000 announced in 2014. an overlap between the Nokia In an email to employees,
Microsoft also said it would business and Microsoft’s exist- Microsoft global chief executive
write down $7.6 billion on its ing phone business. Nadella said: “I am committed
Nokia handset unit, wiping out Microsoft India did not to our first-party devices,
nearly all of the business’ value. offer an immediate comment Since becoming Microsoft CEO last year, Satya Nadella has including phones. However, we
The $7.6-billion impair- on the issue. been acquiring mobile and cloud software makers, and need to focus our phone efforts
ment charge the company will Some company insiders, cutting units not central to his strategy in the near term while driving
take on account of the reor- however, said that the Nokia reinvention. We are moving
ganisation will be related to team had moved to the extent of damage was difficult on hardware. It has already from a strategy to grow a stand-
assets associated with the Microsoft India office early this to predict at this stage. exited the feature phone busi- alone phone business to a strat-
acquisition of Nokia, and a week. The impact on the com- “Under Satya (Nadella), ness and will also exit from egy to grow and create a vibrant
restructuring charge of pany’s India operations, like Microsoft is moving towards a low-end phone market soon. Windows ecosystem that
approximately $750 million to last time, was expected to be comprehensive mobility strat- So, they will need fewer peo- includes our first-party device
$850 million. negligible. Others said the egy, rather than just focusing ple,” said Jaideep Mehta, man- family.” Turn to Page 5 >

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