Orissa HC to hear Vedanta plea on Feb 2

STAFF WRITER 18:32 HRS IST

Cuttack, Jan 10 (PTI) The Orissa High Court today fixed February 2 for hearing a petition filed by Vedanta Alumina Limited (VAL) challenging the Centre's decision to reject its Stage-II bauxite mining in Niyamgiri Hills for Lanjigarh refinery.

Although, the matter came up for hearing before the division bench of Chief Justice V Gopala Gowda and Justice Harjinder Singh Bhalla, it adjourned the case to next month after hearing it partly.

The bench is likely to go for a joint hearing after tagging all matters on the issue. Besides, the VAL, the Orissa government too have filed separate petitions on the case while several PILs, including one by Lanjigarh Anchalika Vikash Parishad were also filed in the HC seeking to quash the October 22, 2010 notice of Union Ministry of Environment and Forest (MoEF).

LCA to be an advanced version of MiG 21, says IAF chief

STAFF WRITER 18:27 HRS IST

Bangalore, Jan 10 (PTI) IAF Chief Air Chief Marshal P V Naik today said the indigenously manufactured Light Combat Aircraft (LCA) would be an advanced version of the MiG 21 fighters, which have been the mainstay of the force and are on their way to be phased out in the near future.

"Considering the technologies involved, it (LCA Mk II) will be a MiG 21 + + aircraft and it will render yeoman service to the IAF," he said when asked about his assessment of the aircraft.

The IAF chief was talking to reporters on the sidelines of a function to grant Initial Operational Clearance (IOC) to the LCA here.

The Russian-origin MiG 21s started being inducted into the IAF in the 1960s and despite their old technology, continue to be in operation till date and are expected to be phased out by the IAF in the near future.

India returning to high growth path; inflation a concern: FM

KOLKATA: Finance Minister Pranab Mukherjee today said that India is reverting to pre-crisis growth level of 9 per cent although high inflation and surge in capital flows continue to remain matters of concern.

Pointing out that economy recorded a growth rate of 8.9 per cent during the first half of the current fiscal, he said, it "takes us back on the high growth path that the economy was traversing on in the years prior to the crisis. The concern on inflation remains".

Mukherjee was speaking at the 2nd International Finance Conference at IIM here.

India was growing at over nine per cent before the global financial crisis hit the world and pulled down country's growth rate to 6.7 per cent in 2008-09. The growth rate, however, improved to 7.4 per cent in 2009-10.

Hoping that the world economy would improve during 2011, Mukherjee said, "India's growth momentum, to some extent, is affected by developments in the western world. A faster recovery in the west is in the interest of all.

"In Europe, there are some concerns, with Ireland seeking help from the European Union and the International Monetary Fund (IMF). A few other countries in the European Union may also be facing sovereign debt problems", he added.

As regards rising prices and spurt in capital flows, the Minister said, "major emerging market economies are experiencing robust growth, though surge in capital inflows and inflation, including from the hardening of global commodity price, is a source of worry."

According to experts, besides demand-supply mismatch, spurt in flow of overseas capital too is stoking inflation.

As per recent data, portfolio investment during 2010 more than doubled to USD 39 billion from USD 18 billion a year ago.

Although India has moved on to the high economic expansion path, advanced countries including the US and EU nations continue to grapple with sluggish growth.

The country, according to some estimates, may record a growth of 9 per cent in the current fiscal itself.

The IMF has projected a growth rate of 8.8 per cent during 2010-11, up from 7.4 per cent a year ago.

Price rise, however, has continued to be a sore point with food inflation jumping to the year high level of 18.32 percent for the week ended December 25.

The government had taken host of steps to tame rising prices. These include anti-hording operations and permitting duty-free import of essential food items.

ET

India is behind curve on inflation

LONDON: India is behind the curve on inflation. It's not just that weekly food inflation has hit 18 per cent; the current account deficit is also uncomfortably high. The authorities need to get a grip, even if that means sacrificing 9 per cent GDP growth in the coming year. Structural reforms, not loose policy, are the only sure way to sustain rapid growth.

An immediate cause of the inflation spike was a sharp rise in the price of onions, an important element of the Indian diet. As the next crop comes through in a couple of months, the headline rate will drop dramatically. But there are increasing signs that inflation is starting to become entrenched more generally -- and that this, in turn, is a result of India's economy growing faster than it can sustain.

Look at the current account deficit, which widened sharply in the September quarter, and which Goldman Sachs estimates will hit 4.3 per cent of GDP in the year ending March 2012. Overall wholesale price inflation in November was 7.5 per cent. Some economists also think India may be in the early stages of a wage/price spiral.

Apologists point out that it is only natural that wages should rise in such a rapidly growing economy; and that as Indian diets get richer, the prices of items like milk and meat will rise. It is certainly healthy for the country to experience big shifts in relative prices. But that doesn't mean it should be happy with sharp increases in average prices -- especially since global inflation is also on the rise, and India will be badly hit by high crude oil prices.

The Reserve Bank of India, the country's central bank, has tightened monetary policy following the dramatic loosening in the wake of the global financial crisis. The government has also reined in fiscal policy. But with the repo rate at 6.25 per cent, real interest rates are negative; and the general budget deficit, which includes the states as well as central government, is expected to end the current financial year at a fairly high 7.5 per cent of GDP.

Both the central bank and the government will probably apply further light touches to the brakes when the quarterly monetary policy review and the budget are announced this month. But there doesn't seem to be much urgency to get ahead of the curve. This is largely because the government has become addicted to the country's near-9 per cent growth rate. Indeed, some influential voices now argue that a medium-term inflation rate of 6-7 per cent would be a reasonable trade-off if that is what is needed to sustain fast growth.

Such thinking is misconceived. There is no medium-term trade-off between growth and inflation. If a country is growing at above its productive potential, as Milton Friedman rightly argued, inflation will accelerate: the 4-5 per cent inflation policymakers previously thought reasonable will become 6-7 per cent inflation and then 7 per cent plus, which is where inflation has been stuck for over a year. If inflationary psychology gets entrenched, it will be expensive to uproot. International investors, on whom the country relies to finance its current account deficit, could also take fright if they perceive the authorities have a cavalier attitude.

India may well be able to sustain 9 per cent GDP growth over the next decade, but only if it presses ahead more vigorously with supply side reforms -- to combat corruption, free up labour markets, boost infrastructure investment and the like. In the meantime, it would do better to settle for lower growth. It would also be advisable to strengthen the independence of the RBI, which is susceptible to interference by politicians, and set a formal inflation target. Otherwise, there will always be a temptation to play politics with inflation.

India's wholesale food inflation rose to 18.3 per cent for the week ending Dec. 25. The previous week it was 14.4 per cent. The increase was driven in part by a sharp rise in onion prices.

Overall wholesale price inflation was 7.5 per cent in November, down from 8.5 per cent in October. The Reserve Bank of India is currently forecasting that inflation will drop to 5.5 per cent by end March.

The RBI's third-quarter review of monetary policy, which is expected by many analysts to include an increase in interest rates, is due on Jan. 25.

ET

Sensex ends 467 points lower; realty, banks down

MUMBAI: Indian markets extended losses for fifth consecutive day as profit taking by investment houses and concerns of interest rate hike by Reserve Bank of India spooked sentiments.

Investors have been jittery following 18% year-on-year surge in food prices for the week ending December 25, 2010 resulting in the index for primary articles once again crossing 20 per cent. According to analysts, the RBI is likely to hike rates by month end to curb inflation.

“Factoring in primary and fuel articles rising by an average of 16.5% and 11.2% during December, we expect the WPI data due this week to come in at 8.4% vs.7.5% last month.

Going forward, while the base effect could help, the rise in primary products as well as commodity prices poses upside risk to our Mar 11 estimate of inflation decelerating to 6.5%. We expect the RBI to hike rates on Jan 25,” said Rohini Malkani, Econom IST , Citi India.

Market opened on a weak note and slipped below crucial support levels as the session progressed. Analysts have been advising caution traders to take long positions and wait for the market to stabilise. For, those who have gone short, they are suggesting to cover shorts as a bounce back is expected in coming sessions.

Bombay Stock Exchange’s Sensex ended at 19224.12, down 467.69 points or 2.38 per cent. The 30-share index touched a high of 19720.43 and low of 19158.43 in today’s trade.

National Stock Exchange’s Nifty ended at 5762.85, down 141.75 points or 2.40 per cent. The broader index touched a high of 5907.25 and low of 5740.95 intraday.

If we follow the technical tool "Channels" then also the pattern of the market has confirmed that the market is in falling wave and may fall beyond 5690/18954 (previous low) if it fails to support at 5800 levels.

Any sharper pull back will be an opportunity to reduce weak investments, trading long positions and to create select short (sell) position in the market. Buying "out of money" Put options with a medium term view should be the strategy if markets retraces (upward) to the current fall,” said Shrikant Chouhan, .

BSE Midcap Index was down 2.34 per cent and BSE Smallcap Index moved 2.83 per cent lower.

Amongst the sectoral indices, BSE Realty Index plunged 3.55 per cent, BSE Capital Goods Index fell 3.52 per cent and BSE Bankex declined 3 per cent.

HDFC Bank (-5%), BHEL (-4.76%), Hindalco Industries (-4.44%), HDFC (-4.44%), and Jaiprakash Associates (-4.18%) were amongst the losers.

Infosys Technologies (0.90%) and Bharti Airtel (0.04%) were the only gainers.

Meanwhile, iGate has acquired nearly 63 per cent stake in Patni Computer Systems for $1. 22 billion. iGate will buy 45.6 per cent of the shares of the three founders of Patni -- Narendra Patni, Gajendra Patni and Ashok Patni-- along with the 17.4 per cent stake of private equity firm General Atlantic, iGate CEO Phaneesh Murthy.

Market breadth was negative on the BSE with 2233 declines against 648 advances.

The European market continued to drift lower and the Wall Street is likely to follow suit. At 5 pm IST, Dow Jones futures was down 0.42 per cent, S&P 500 declined 0.59 per cent and Nasdaq moved 0.41 per cent lower.

ET

Sensex hits 6-week low, falls 468pts

MUMBAI: Stock markets fell for the fifth straight session today, with the BSE benchmark Sensex losing nearly 468 points to close at 6-week low on continued selling by edgy investors, ahead of third quarter corporate results and weak global cues.

The key index has plummeted by a whopping 1,337 points or 6.5 per cent in five straight sessions.
The Bombay Stock Exchange index Sensex trimmed its early gains, and tanked by 467.69 points or 2.38 per cent to close at 19,224.12 — the level last seen on November 26, 2010.

Intra-day, it had fallen 533 points as investors continued to be bogged down by fears of interest rate hike coupled with negative show of global peers.

Similarly, the National Stock Exchange's wide-based Nifty also extended losses with a fall of 141.75 points or 2.40 per cent to finish the day at 5,762.85.

Market observers called the bearish mood in the street 'expected', as the retail investors and FIIs are pulling out money in view of fears that the Reserve Bank of India will increase interest rates to curb surging inflation and have become cautious ahead of third quarter numbers.

"Street is facing panic selling by jittery investors as they are nervous that the increased cost due to rising inflation might result in lower profits for the corporates in the third quarter. Besides, weakness in the overseas markets is also dampening the sentiment back home," CNI Research CMD Kishore P Ostwal said.

Selling pressure continued in the interest-rate sensitive banking, realty and auto shares.

Banking stocks declined on concerns that higher deposits rates may impact net interest margins of banks, thereby hurting profitability. Top lenders HDFC Bank and ICICI Bank fell by 5 per cent and 3.22 per cent.

All the 13 sectoral indices ended the day in a negative terrain, with realty and capital goods sectors the worst hit. Realty index saw a dip of 94.66 points to close at 2,570.94, while capital goods index plummeted by 516.35 points to settle at 14,165.33.

Heavy-weight capital goods giant Larsen & Toubro slumped by 3.53 per cent while realty majors JP Associates and DLF saw a dip of 4.18 per cent and 3.33 per cent respectively.

Of the 30-Sensex counters, only IT bellwether Infosys Technologies and the telecom major Bharti Airtel defied the fall in the broader market, with a gain of 0.90 per cent and 0.04 per cent.

"Infosys Technologies is attracting fresh buying as the investors are expecting smart third quarter numbers from the company," said an expert.

A plunge of 3.18 per cent in the country's most valued firm Reliance Industries weighed heavily on the tumbling street.

Global cues were negative with Asian markets sliding on disappointing US job data and rising pressure on Portugal from Germany, France and other euro zone countries to seek financial help to prevent the debt crisis from spreading across the region.

European markets were also trading subdued in the afternoon trade.

Read more: Sensex hits 6-week low, falls 468pts - The Times of India http://timesofindia.indiatimes.com/business/india-business/Sensex-hits-6-week-low-falls-468pts/articleshow/7253415.cms#ixzz1AdXrKJix