RBI may not cut interest rates: FM

Finance Minister P Chidambaram indicated today that Reserve Bank of India (RBI) may not cut interest rates to boost industrial production because of high inflation.

"As long as there is a threat of inflation, you have to trust RBI to use policy rates to contain inflation and dampen inflationary expectations," Finance Minister P Chidambaram said at an India Today Conclave in response to a query whether there will be rate cuts to give a fillip to sagging industrial growth.

Chidambaram, however, said determination of interest rates is under the domain of the RBI.

He attributed high inflation to rising prices of food and commodity prices in the world saying India is not entirely insulated from the global trends.

Citing examples, he said global crude oil price surged to $110 per barrel yesterday from $37 per barrel when the UPA government came to power. Similarly, global prices of palm oil that India imports rose to $1,270 per metric tonne from $471 per metric tonne.

"We have recognised that there is a slowdown, thanks to the US impending recession. We have applied tax book economic approach to boost consumer demand by putting more money in the hands of tax payers, cutting excise and customs duties and enlarging public expenditure," Chidambaram said

Indian bourses touch six-month low

Turbulence in the US market pushed the Sensex barometer of the Bombay Stock Exchange (BSE) to a six-month low this week. The sub-prime mortgage crisis has resulted in the drying of liquidity around the world. The spillover effect was clear across all markets in Asia.

Developments on the domestic front acted as a catalyst to already dampened market sentiments. A surge in inflation rate coupled with lower-than-expected industrial production data made matters worse.

The 30-share BSE Sensex lost 215 point or 1.35 percent to end the week at 15,760.52. The broader S&P Nifty shed 25.8 points or 0.54 percent to 4,745.80 in the week.

The BSE Mid-Cap lost 220.94 points or 3.25 percent to 6,583.45 and the BSE Small-Cap index slipped 329.68 points or 3.92 percent, 8,079.50.

According to the data available with market regulator Securities and Exchange Board of India (SEBI), the Indian equities market attracted foreign institutional investor (FII) investment to the tune of $676.50 million over the week.

The two indices, the Sensex and the Nifty, saw divergent trends on Monday, with the Nifty posting gains helped by a spurt in non-Sensex constituents such as Reliance Petroleum and Cairn India.

The Sensex was down 51.80 points or 0.32 percent at 15,923.72. The Nifty was up 28.80 points or 0.60 percent at 4,800.40.

On Tuesday, the Sensex gained 199.43 points or 1.25 percent, at 16,123.15. The broader based S&P CNX Nifty advanced 65.50 points or 1.36 percent at 4,865.90.

On March 12, the market erased almost its entire gains - in contrast to the strong start after disappointing industrial production figures for January 2008 hit the market in early afternoon trade. The US Federal Reserve’s move to inject up to $200 billion of liquidity into strained credit markets triggered rally across Asian and European markets.

The Sensex was up marginally by 4.83 points or 0.03 percent at 16,127.98. Nifty rose 6.10 points or 0.13 percent at 4,872.

A major setback was witnessed on the bourses Thursday, as share prices fell almost across the board. Markets across the globe dropped.

The Sensex slumped 770.63 points or 4.78 percent at 15,357.35. The Sensex hit a low of 15,228.99 in late trade, its lowest level since early September 2007. The Nifty was down 242.40 points or 5.10 percent at 4,623.60.

Buying in battered pivotals triggered solid rally on the bourses in late trade, with market closing near the highest point of the day on Friday. However, the market breadth, indicating the overall health of the market, remained negative.

The Sensex surged 403.17 points or 2.63 percent to 15,760.52, while the Nifty advanced 122.20 points or 2.64 percent to 4,745.80.

India’s largest private sector bank by assets ICICI Bank slipped 1.63 percent to Rs.878.20.

India’s largest private sector firm by market capitalization and oil refiner Reliance Industries (RIL) rose 3.24 percent to Rs.2,321.70. Its unit Reliance Retail has signed a joint venture with Pearle Europe for the launch of a chain of optical stores in India.

Bharti Airtel, the country’s top listed cellular services provider by market share, rose 0.22 percent to Rs.752.95.

Rural Electrification Corporation (REC) debuted on the stock exchanged on March 12. It debuted at Rs.125 on BSE, a premium of 19.04 percent over the IPO price.

India can become major IT force: Infosys Chief

India is enjoying its moment in world's attention and should use the trend to the best of its capability to become a major IT force in the global IT industry, Infosys CEO Kris Gopalakrishnan said on Saturday.

Kerala, which had a quiet beginning in the IT field, has become one of the most sought-after IT destinations in the country, he said delivering an address on `IT Vision 2020' at the valedictory function of Kerala IT.Com 2008 at Technopark here.

Indian IT industry worked on a few advantages like costs, demography, IT viable ecosystem and quick adoption to latest technology. The country could use these advantages for a few more years to change the dynamics of the industry.

"It is imperative that India takes the right steps to use this period to plan and get ready for real action," he said.

He wanted radical changes for development of IT industry in the country by building integrated townships to improve and provide comfortable lifestyle, better planning of cities to do away with cluster.

The number of graduates and their quality should be increased by grooming them to become global employees. Quality and quantity of research should be improved, he said.

Asking to reduce dependency in foreign companies, he said investments should be heavily made in domestic IT industry and promote homegrown successful companies like IBS, SunTec, Nest and US Technology and build an environment suitable for entrepreneurship.

Kerala Law and Parliamentary Affairs Minister M Vijayakumar said the state government planned to make Thiruvananthapuram as the IT corridor of Kerala.

Blank papers give BSE anthrax fright

The 'deadly' courier arrived from Indore on Friday in four plain envelopes

No more do hoax calls really rattle the Bombay Stock Exchange (BSE); they have become almost a regular feature. But the nation’s financial nerve centre was shaken to the core by four innocuous looking envelopes it received on Friday.

Seeing that they contained blank pages, the BSE authorities went into a tizzy, fearing the worst - a biological or chemical threat, such as the anthrax.

The BSE staff notified police immediately, and the latter, taking no chances, sent all four envelopes for forensic testing.

“It could be any kind of biological or chemical threat. We instantly sent the envelopes to the forensic laboratory in Kalina,” said deputy commissioner of police Brijesh Singh. Sources said that the cops also feared that it could be an anthrax attack.

All four letters were sent from an address in Indore. The BSE address was scripted on all the envelopes in an almost illegible handwriting, said police. “We are trying to track down the sender,” said Singh.

The forensic lab is expected to give its report in a few days.

All four letters landed at the BSE within a couple of hours of each other. Before informing the police, security personnel at the stock exchange had opened the letters.

“We are taking this matter very seriously. We are also trying to collect the fingerprints on the envelopes and letters to see if it can help us in investigations,” Singh said. When DNA contacted BSE officials, they refused to comment.

The BSE has always been a preferred target of terrorist outfits. Recently, a terror suspect arrested by Uttar Pradesh Police, confessed during interrogation that he and his associates had gone to survey vital installations and found BSE to be one of the softest targets

The security at the BSE has been breached only once: during the 1993 serial bomb blasts in Mumbai. A powerful bomb kept in the boot of a car, parked inside the BSE, had gone off, killing 84 people and injuring 218.

Number of FIIs operating on markets increases to 1,303

The number of foreign institutional investors FIIs operating in the Indian stock markets have increased to 1,303 from 1,100 in six months, Finance Minister P Chidambaram told the Lok Sabha on Friday.

The Minister said that over the last six months ending February, while the number of SEBI-registered FIIs increased from 1,100 to 1,303, the number of sub-accounChidambaram further said that SEBI in October 2007 took several steps to streamline participation of FIIs on stock markets.

In order to streamline the FII investment, the SEBI board in October last imposed various restrictions on the Participatory Notes and laid down deadlines for reducing outstanding positions.

The SEBI had barred FIIs and their sub-accounts from issuing and renewing Offshore Derivative Instruments (ODIs) with underlying as derivatives with immediate effect. The FIIs were also told to wind up their existing position over 18 months.