Business News Update

MAY 14TH 2012: STANDARD CHARTERED PREDICTS DEPRECIATION OF RUPEE VERSUS DOLLAR

Standard Chartered is of the view that the rupee is facing choppy trading in the near-term. It expects another 2-3 per cent weakening of the rupee from the current levels amid global uncertainty.

The bank has also lowered its medium-term rating on the rupee to 'neutral' from 'overweight' as continued policy inertia lowers the possibility of sustained inflows.

The bank has recommended that dollar based investors in Indian assets should maintain high short-term foreign exchange hedge ratios. It is of the opinion that importers should keep high foreign exchange hedge ratios in the rupee for the short-term. The bank expects exporters to remain sidelined until a record high of around 54.30 is tested. 

MAY 11TH 2012: INDUSTRIAL PRODUCTION DIPS BY 3.5% IN MARCH

Industrial production declined by 3.5 per cent in March mainly on account of contraction in manufacturing and mining output.

Growth in the factory output, as measured by the Index of Industrial Production, was higher at 9.4 per cent in March last year.

The industrial production has been dismal at 2.8 per cent in 2011-12 as compared to 8.2 per cent in previous fiscal.

MAY 10TH 2012: RELIANCE BUYS STAKE IN HDFC, ICICI BANK AND AXIS BANK

Awaiting regulatory approvals for its foray into financial services sector, Mukesh Ambani-led Reliance Industries has acquired shares in giants like HDFC, ICICI Bank and Axis Bank as part of long-term 'investments'.

These financial investments, estimated to be worth over Rs 1,200 crore (Rs 12 billion), include purchase of shares of six banks - three each from the public and private sectors -and one housing finance major, HDFC.

The banks whose shares Reliance Industries Ltd (RIL) has acquired also include HDFC Bank, SBI, Punjab National Bank and Canara Bank and these have been classified among 'long-term investments' of the country's biggest private sector company in its annual report for the year 2011-12.

MAY 9TH 2012: HCL GROUP TO FORAY INTO INSURANCE SECTOR

 DLF Pramerica Life, seeking an Indian partner for its operation, is in talks with HCL Group to sell a majority stake. 

Earlier regulations prevented Indian promoters of insurance companies from divesting stake before completing 10 years in the business.

 With the finance ministry deciding to waive that requirement late last year, HCL Group is now set to buy 51 per cent stake in DLF Pramerica Life Insurance Company.

The deal size is expected to be around Rs 500 crore. KPMG has been appointed as the adviser for the transaction.

MAY 8TH 2012 VODAFONE-LIKE DEALS WILL BE TAXED, MAINTAINS PRANAB

Finance Minister Pranab Mukherjee has acknowledged that Vodafone-like deals, in which underlying assets were in India would be taxable if investments came from non-double taxation avoidance agreement, low tax countries.

He asserted India couldn't be treated as a tax haven, like the Cayman Islands, British Virgin Islands or Isle of Man, just for the sake of foreign direct investment.

He asserted Parliament has the right to make amendments to laws, following Supreme Court judgments.

MAY 7TH 2012: RBI HAS LITTLE ROOM TO CUT INTEREST RATES

Despite growth and inflation balance shifting favourably, the Reserve Bank of India foresees inflationary pressures in the medium and long term.

In the present economic environment, there is little room for lowering interest rates, said RBI deputy governor Subir Gokarn.

"The central bank has started the process of reducing interest rates from last month.

"However, if you look at our inflation projections, in relation to what we consider as long-term or medium-term objective, there are inflation pressures.

"That, in a sense, limits the room that we have to reduce rates," Gokarn said on the sidelines of Ficci's national executive council meeting held in Hyderabad 

For the first time in three years, RBI had slashed the short-term lending rate by 0.5 per cent to eight per cent in April 2012.