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Wednesday, December 16, 2009
Bank staff strike work to protest consolidation
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MUMBAI (Reuters) - About 400,000 bank employees went on strike on Wednesday to protest merging state-owned banks, partially affecting cash transactions and clearing operations, a bank union official said.
Employees were also protesting the ongoing move to merge State Bank of Indore with its founder State Bank of India, the country's largest bank.
"We are going ahead with strike as conciliation talks with bank management last evening failed," C.H. Venkatachalam, general secretary of All India Bank Employees Association (AIBEA) told Reuters over telephone.
"Merger of banks is in nobody's interest. We need more banks in the country," he added.
India has been urging state-owned banks to merge with each other to benefit from synergies and create fewer bigger players in the sector. The government and central bank have said that any such moves have to be voluntary on the part of banks.
Operations in branches and clearing may be partially impacted owing to the strike, B.A. Prabhakar, executive director, Bank of India.
Options like automated teller machines (ATMs) to meet immediate cash requirements will minimise the impact in clearing operations, said M.D. Mallya, chairman and managing director at state-run Bank of Baroda.
Treasury operations remained unaffected, said traders.
"Clearing activity is affected on account of this strike, it will therefore affect retail business but the overall market activity is brisk. Even money market activity is normal," said R.K. Gurumurthy, head of treasury at ING Vysya Bank.
All India Bank Officers' Association and AIBEA, earlier, served a notice to Indian Banks Association, the apex banker's body, informing its members working in state-owned, private and foreign banks would strike work on Dec. 16.
Earlier on Aug. 6 and 7, unions representing about 900,000 employees in state-owned banks went on strike for higher wages and pension, impacting cash transactions and foreign exchange trading volumes for two days.
Following several rounds of negotiations Indian Banks Association and United Forum of Bank Unions (UFBU) have reached an understanding for a 17.5 per cent wage hike for the employees in banks, IBA officials said.
(Reporting by Tamajit Pain and Swati Bhat; Editing by Ramya Venugopal)
(For more news on Reuters Money visit www.reutersmoney.in)
© Thomson Reuters 2009 All rights reserved
Rupee rises from 1-wk low on shares; Fed eyed
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By Anurag Joshi
MUMBAI (Reuters) - The rupee rose from one-week lows on Wednesday as local shares erased early losses, but was capped by dollar strength ahead of the outcome of the U.S. Federal Reserve's policy-setting meeting later in the day.
The partially convertible rupee ended at 46.655/665 per dollar, recovering from a trough of 46.80, its lowest since Dec. 9, to end stronger than Tuesday's close of 46.71/72.
The benchmark BSE index ended up 0.2 percent, after falling as much as 0.6 percent in early deals.
"Stocks recovery helped the rupee. The trigger for tomorrow will be Fed's decision," said a senior trader with a foreign bank.
Foreigners have bought $16.5 billion of Indian equities so far this year, data from Nomura showed, helping drive a 75 percent rally in the main stock index.
Analysts do not expect the U.S. Fed to change policy at its meeting, but will be looking for any change in its outlook. The Fed cut benchmark rates close to zero a year ago to combat a deepening recession.
"Traders will see whether the Fed is talking in a hawkish language. That would impact the dollar overseas and in turn the rupee and forward premiums," said Paresh Nayar, head (FX and money markets) of First Rand Bank in Mumbai.
The dollar was near a 2-½ month high versus the euro ahead of Fed's statement.
One-month offshore non-deliverable forward contracts were quoted at 46.69/79, weaker from the onshore spot rate.
In currency futures, the most traded near-month contracts on the National Stock Exchange and MCX-SX were at 46.72, stronger than Monday's 46.75.
(Editing by John Mair)
(For more news on Reuters Money visit www.reutersmoney.in)
© Thomson Reuters 2009 All rights reserved
BSE Sensex up 0.2 pct; Infosys hits record high
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By Ami Shah
MUMBAI (Reuters) - The BSE Sensex erased early losses and rose 0.2 percent on Wednesday, with export-focused outsourcers leading the way on expectation a recovering world economy will boost demand for their services.
Bellwether Infosys Technologies, which gets more than half its revenue from exports, leapt to an all-time high of 2,549 rupees, before closing up 1.5 percent at 2,544.80. The stock was the top gainer in the main index.
A senior Infosys official told Reuters on Tuesday the company expects revenue growth in the fiscal year starting in April to be better than 2009/10 as a recovery in the global economy spurs investments by its clients.
Smaller rival Wipro ended up nearly 2 percent at 671.90 rupees after hitting 674.90, its highest level since 2000. Leader Tata Consultancy rose 1.8 percent to 713.45.
"IT stocks are gaining on hope the global economy is recovering," said Daljeet Kohli, head of private client group research at Emkay Global Financial.
The 30-share BSE index closed up 0.21 percent, or 35.61 points, at 16,912.77 after falling 0.6 percent in early deals. Fourteen of its components advanced.
The benchmark is up more than 75 percent so far in 2009, on track to post its best gains since 1991, fuelled by strong foreign portfolio investment.
"People will be looking for growth assets and I don't think there are too many interesting opportunities like India," said Rakesh Rawal, head of private wealth management at Anand Rathi Financial Services.
"There is ample liquidity here in India as well as globally."
Top mobile operator Bharti Airtel closed 2.8 percent higher at 325.75 rupees, after the Bangladeshi telecom regulator said the company may be looking to buy Warid Telecom.
However, banks extended losses on fears the central bank may tighten policy sooner than expected given concerns about rising inflation.
The Reserve Bank of India might tighten monetary policy in December as inflation could rise to near 7 percent in March, the prime minister's economic adviser, C. Rangarajan, was quoted as saying in a report.
Top lender State Bank of India fell 1.3 percent, while ICICI Bank and HDFC Bank shed 0.3 percent and 0.4 percent respectively.
Tata Steel climbed 2.1 percent to 557.55 rupees after its European unit Corus said it had got 350 million euro contract to supply rail tracks to French operator SNCF.
In the broader market, losers almost equalled the number gainers on low volume of 313 million shares.
The 50-share NSE index closed 0.2 percent higher at 5,042.05.
STOCKS THAT MOVED
* Largest consumer goods maker Hindustan Unilever dropped 0.7 percent to 264.05 rupees, after the company said it would pay royalty of 1 percent of net sales on some brands to its parent Unilever.
* Orchid Chemicals rose as much as 8.5 percent to 239.40 rupees, its highest since September 2008, but then tumbled to close down 10.4 percent at 197.85. On Tuesday, U.S.-based Hospira said it would buy the Indian drug maker's generic
injectable drug business.
* Drug maker Ipca Laboratories climbed 2.7 percent to 999.15 rupees. The company said its anti-malarial combination drug, artemether and lumefantrine, had been pre-qualified by the World Health Organization.
MAIN TOP 3 BY VOLUME
* Suzlon Energy on 11.1 million shares
* IFCI on 11.1 million shares
* Orchid Chemicals on 9.5 million shares
(For more news on Reuters Money visit www.reutersmoney.in)
© Thomson Reuters 2009 All rights reserved
PM adviser: RBI may tighten in Dec - report
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NEW DELHI (Reuters) - The Reserve Bank of India may tighten monetary policy in December as inflation could rise to near 7 percent in March, the prime minister's economic adviser, C. Rangarajan, was quoted as saying by www.expressindia.com, citing a newsagency agency report.
"By the end of December, they can review the situation and take action... it could come by end of December depending how the prices have behaved in December," Rangarajan was quoted as saying.
"By the end of March 2010, it (inflation) could be close to seven per cent," he said.
"Usually there is a seasonal decline... but certainly it appears that inflation by end of March will be higher than what has been projected earlier by the RBI," Rangarajan was quoted as saying.
Economists expect the central bank to take measures to tighten liquidity, such as increasing banks' reserve requirements, before raising interest rates.
Annual wholesale price inflation jumped to 4.78 percent in November from 1.34 per cent in October, exceeding forecasts and adding to expectations the RBI would look to exit its loose monetary policy stance sooner rather than later.
(Reporting by Manoj Kumar; Editing by John Mair)
© Thomson Reuters 2009 All rights reserved
Export growth sustainable in coming months - minister
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NEW DELHI (Reuters) - India's export growth is sustainable in the coming months, Trade Minister Anand Sharma told reporters on Wednesday.
On Tuesday, Trade Secretary Rahul Khullar said November exports rose an annual 18.3 percent to $13.2 billion, the first rise after 13 straight months of decline.
(Reporting by Matthias Williams; Editing by Malini Menon)
© Thomson Reuters 2009 All rights reserved
Bharti eyes Bangladesh deal after MTN failures
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By Ruma Paul and Pratish Narayanan
DHAKA/MUMBAI (Reuters) - Leading Indian telecom Bharti Airtel plans to buy Bangladesh's Warid Telecom for a reported $900 million from Abu Dhabi Group, indicating a shift in focus to smaller targets after its planned $24 billion merger with South Africa's MTN failed.
Bharti will buy a 70 percent stake in Warid, Bangladesh's fourth-biggest telecom company, while Abu Dhabi Group will retain the rest, an official with the selling firm said.
"We expect to seal the deal by mid January 2010," Abu Dhabi Group Chief Commercial Officer Ali Tahir told Reuters. He declined to give the sale price.
UAE-based Abu Dhabi Group, a consortium of investors that includes members of the royal family of Abu Dhabi, sought approval from Bangladesh's telecoms regulator for the sale on Sunday, according to the regulator's chairman, Zia Ahmed.
The deal is set against a backdrop of this week's announcement that oil-rich Abu Dhabi will provide $10 billion to Dubai in order to help its neighbour meet its debt obligations.
Bharti's expansion would give the Indian phone leader access to Bangladesh's rapidly growing mobile sector at a time when it is locked in an intense price war in India with rivals Reliance Communications and Vodafone Essar.
For the Abu Dhabi Group, the deal will enable it to focus on other telecoms markets where it can have a bigger market share, Tahir said.
Bharti said on Wednesday it was evaluating international opportunities, but declined to comment on plans to buy Warid.
Bharti initially plans an investment of $300 million, Bangladesh's Ahmed said. He said a written proposal by Abu Dhabi Group did not pin a full value on the deal.
Bangladesh's Daily Star newspaper had reported the final deal could be worth $900 million, citing Warid officials.
Shares in Bharti closed up 2.8 percent in a Mumbai market that was up only 0.2 percent.
"The dynamics of the Bangladesh market are similar to those in India, where Bharti has proven itself," said Phani Sekhar, fund manager at Angel Broking, which holds Bharti shares.
SMALLER STRATEGY
Bharti, which has more than 100 million subscribers in India, is looking to replicate its staggering growth at home in other emerging markets, where scale is vital, many customers are poor and rural, and penetration rates are low but rising fast.
Indian mobile operators are locked in an intense tariff war that has raised concerns about profitability. The price war is aimed at grabbing new users as new firms enter the market.
Bangladesh's mobile sector has grown rapidly, with subscriber numbers reaching more than 51 million at the end of October from 200,000 in 2001, helped by low penetration levels, competitive tariffs and steady economic growth.
Analysts predict the number of subscribers could top 70 million by 2011, nearly half the country's population of 150 million.
The news comes two-and-a-half months after talks between Bharti and MTN Group to create the world's third-largest mobile operator collapsed for the second time in just over a year on South Africa's reluctance to allow a flagship corporate to lose its national character.
"You cannot wait for two years, three years for a big deal to get completed while opportunities for smaller deals go by," Sekhar said.
Warid Telecom also operates in Pakistan, Uganda and the Congo. Singapore Telecommunications bought a 30 percent stake in Warid's Pakistan business for $758 million in 2007 from the Abu Dhabi Group. Warid's operations in Pakistan, India's neighbour and political rival, are not part of the Bharti deal.
"Warid needs investment for expansion in order to survive in this highly competitive market," said Fazlul Haque, a former member of the governing body of state-owned Bangladesh Telecommunications Co Ltd.
At the end of October, Warid had 2.79 million subscribers -- far fewer than Grameenphone, majority owned by Norway's Telenor. Egyptian Orascom Telecom's Banglalink and Telekom Malaysia's Aktel also operate in the country. Warid Bangladesh began operations in 2007.
Abu Dhabi Group's Tahir said his firm was focused on markets where it can be a leader. "In this (Bangladesh) and emerging markets, you will see lots of consolidation as price competition is heating up," he said.
"We want to be a big player, number one rather than number two in the markets we operate," he said, adding that the group is selectively looking at markets in the former Soviet Union.
(Additional reporting by Stanley Carvalho in Abu Dhabi, C.J. Kuncheria in New Delhi; Editing by Ranjit Gangadharan, Lincoln Feast and Eric Auchard)
© Thomson Reuters 2009 All rights reserved
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