SpiceJet tanks 7% on auditors’ networth concern remarks

Active selling in shares of SpiceJet dragged the stock in morning trade on Monday as auditors of SpiceJet have, yet again, raised red flags over the company’s net worth. Shares of the low-budget carrier tanked around 6.6 percent on the BSE.

Auditors in their annual report released over the weekend, say that the airline’s accumulating losses have fully eroded its networth. Earlier in FY12, the management had made efforts to pay-off its liabilities when auditors had pointed out the same issue.

In this fiscal, the auditors said that the operating losses have been materially affected due to factors like higher maintenance charges, fuel costs etc.

The airline’s going concern now depends on its ability to establish consistent profitable operations and raise adequate finance to meet its short and long-term debt obligations, the auditors say.

However, SpiceJet stated that the losses have reduced drastically in FY13. The net losses reduced to Rs 192 crore versus Rs 605 crore in FY12. It added that the losses are 50 percent higher than the networth now and it does not have any real liabilities on the books.

Promoters of the airline are also ready to infuse funds through debentures or loans as their equity limit has been exhausted when they hiked their stake by about five percent last fiscal.

At 10:20 hrs, the stock was quoting at Rs 19.65, down Rs 0.80, or 3.91 percent on the BSE.

ING Vysya Bank up 17% as ING seeks buyer for stake sale

Shares of ING Vysya Bank rallied 17.5 percent in early trade Monday on a media report that ING Groep NV is looking to sell its 43 percent stake in the bank. However, the stock came off its day’s high on profit booking.

ING Groep NV may exit the domestic banking business comprising retail, corporate and treasury, to focus on corporate banking, a media report said quoting unnamed sources, the media report said quoting unnamed sources.. The biggest Dutch financial-services company ING Groep NV has been selling assets across the Asian region and some in Europe itself to repay the Dutch government for bailing it out from the 2008 credit crisis.

ING Mauritius Holdings holds 33.85 percent stake and ING Mauritius Investments has 9.69 percent shareholding in the bank as of July 3, 2013. Fund houses hold 16.78 percent stake in the bank.

Meanwhile, the bank had reported strong growtn in its June quarter earnings with the net profit rising 34.6 percent year-on-year to Rs 175.12 crore and revenues surging 15.7 percent to Rs 1553.08 crore.

In the medium-term perspective, Ajay Bodke of Prabhudas Lilladher said he continued to remain very positive on ING Vysya. “I do not think the news of ING group selling out will have any impact on the bank,” he added.

“The main problem which is essentially the ballooning of non-performing assets and restructured assets is not a big issue so far as ING Vysya is concerned. Their asset quality is pristine, credit growth continues to remain quite strong, net interest margins (NIMs) continue to remain healthy and the valuations also are attractive,” Bodke reasoned.

At 09:58 hours IST, the stock rallied 4.76 percent to Rs 534.20 on the Bombay Stock Exchange.

Glenmark, GSK Consumer, UBL gain on derivatives inclusion

Shares in Glenmark Pharmaceuticals , GlaxoSmithKline Consumer Healthcare and United Breweries Ltd gain after their inclusion in National Stock Exchange’s derivatives market, dealers say.

Futures and options contracts on the companies’ shares would be available from October 3 onwards, NSE said in a circular on Friday.

“The market lot of the above mentioned securities shall be informed to members on October 1, 2013 through a separate circular,” NSE added.

Glenmark is up 1.1 percent, GSK Consumer is up 3 percent while United Breweries gains 2 percent. The Sensex falls 1 percent

Rupee weaker; still headed for best month in a year

The rupee fell on Monday, tailing global risk-off sentiment on a potential shutdown of the US government, but was still on course for its best month in a year.

The rupee was at 62.93/95 to the dollar versus its Friday close at 62.51/52.

Dealers will await the June-quarter current account and balance of payments data, due at 5 pm, with economists expecting the gap to widen from the March quarter.

Soft domestic demand hits China Sept final HSBC PMI

China’s factory sector grew only slightly in September as domestic demand faltered, a private survey showed, an unexpectedly weak outcome that suggests a firm rebound in Asia’s economic powerhouse still remains elusive.

The final HSBC Purchasing Managers’ Index (PMI) edged up to 50.2 from August’s 50.1, figures on Monday showed.

Although a five-month high and showing the sector was growing, the survey was disappointing for investors as it was well below last week’s flash reading of 51.2, with domestic orders weaker than preliminary estimates suggested.

New export orders picked up the slack, climbing to 50.7 from 47.2 in August to be above the 50-point mark separating expansion from contraction. After seasonal adjustments, however, the expansion was slight, HSBC said.

The Australian dollar, a proxy for growth in the world’s second-largest economy, fell a quarter of a cent on the disappointment that activity was not as strong as hoped.

“The final reading was weaker than the flash and it showed that activity has weakened in the last 10 days,” said Tao Wang, an economist at UBS in Hong Kong, adding a rebuilding of stocks by firms that had led the economic pick-up was slowing.

On Tuesday, the government releases its official PMI, which is weighted more towards bigger and state-owned companies and generally paints a rosier picture than the private survey, which focuses more on smaller and private sector firms.

The softer-than-expected final HSBC PMI reading was in line with investor bets that China’s economy is stabilising, even if the revival is feeble and perhaps short-lived. Indeed, parts of the PMI poll suggested the economy is not out of the woods.

Factories cut jobs for the sixth consecutive month in September. And although output and new orders grew in September, HSBC noted the expansion was fractional after seasonal adjustments. In fact, it said some firms reported a contraction in output, citing unstable economic conditions.

Qu Hongbin, a HSBC economist, said action taken by Beijing to shore up growth was helping to lift the economy.

“Growth is bottoming out on Beijing’s mini-stimulus,” Qu said, noting however that growth in domestic demand was unchanged from August.

Beijing’s support and firmer growth in the United States, China’s second-biggest export market, have put a floor beneath China’s economy, which has slowed in 12 of the last 14 quarters.

To reinvigorate growth, the government has fast-forwarded infrastructure investment, lowered taxes for small companies, and sustained spending in public housing.

But analysts warn the mild pick-up could fizzle if Beijing enacts planned reforms that include curbing state investment.

On Sunday, China opened a free trade zone in Shanghai in what has been hailed as potentially the boldest reform in decades.

Brokers may boycott trading on MCX: NSEL Investors Forum

. Brokers may boycott trading on the Multi Commodity Exchange ( MCX ) for a day as a protest against the government authorities’ “failure” to resolve the National Spot Exchange Ltd (NSEL) payment crisis.

“We will shortly decide the date for boycotting the trade on the Multi Commodity Exchange (MCX) for a day towards protest against government authorities’ failure to resolve the National Spot Exchange Ltd (NSEL) payment crisis involving Rs 5,500 crore,” NSEL Investors Forum President Sharad Kumar Saraf told reporters here today.

The brokers are also considering to boycott the trading for a day on all the exchanges, Saraf said.

Reacting to Finance Miniser P Chidambaram’s remark that NSEL was an unregulated entity and violated norms from day one, Saraf said: “We have not done any speculation and disappointed by the slow progress of the government’s role in resolving the matter.”

The Mayaram panel report has suggested that CBI, FMC and MCA will take appropriate action. They have listed out the irregularities. These authorities are looking into the matter and take action, Chidambaram said on Thursday.

A panel headed by economic affairs secretary Arvind Mayaram had been tasked to look into alleged irregularities in the functioning of NSEL, which is grappling with a Rs 5,500- crore payment crisis.

“The battle for recovering Rs 5,500 crore will be a long one and we need to have patience. The NSEL Investor’s Forum will be converted into NSEL Investor’s Society to get it registered to fight the legal cases,” he said.

The forum has also requested its members and brokers to contribute money required to fight legal cases against 24 defaulters and NSEL promoters, he added.

The forum has already filed a complaint with Economic Offence Wing (EOW) and filed a writ in the Bombay High Court today seeking time-bound investigation process.

Gold maintains buoyancy on rising demand, silver surges

Gold today extended rally at the domestic bullion market on the back of heavy buying from stockists and retail

customers amid robust investment offtake. Silver also surged owing to sustained speculative demand as well as industrial support.

Standard gold of 99.5 percent purity climbed by Rs 200 to finish at Rs 30,465 per 10 gm from Friday’s closing level of Rs 30,265.

Pure gold of 99.9 percent purity rose by Rs 195 to close at Rs 30,610 per 10 gm from Rs 30,415.

Silver ready (.999 fineness) jumped Rs 430 to conclude at Rs 50,730 per kg as compared to Rs 50,300 previously. Globally, the yellow metal rebounded sharply on safe haven demand as US budget concerns amid ongoing uncertainty over Fed tapering its stimulus measures weighed heavily on investor sentiment.

December gold shot up USD 15.10 to settle at USD 1,339.20 an ounce at the Comex division of the NYMEX late yesterday and silver December contract gained by USD 21.83 an ounce.

Fundamentals strong; growth to improve in second half: PM

Asserting that the fundamentals of the Indian economy are strong, Prime Minister Manmohan Singh has said GDP will improve in the second half of fiscal 2013-14 and that the government is commitment to get back to a sustainable growth rate of 8-9 percent.

Addressing investors here, Singh said the government will contain the fiscal deficit at 4.8 percent of GDP and work towards achieving the medium-term objective of reducing the current account deficit (CAD) to 2.5 percent of GDP.

“The results of our efforts will be visible in the second half of the year. We expect stronger growth in 2013-14 than in 2012-13. The second half of the year should see a distinct turnaround, partly because of the good monsoon and partly because of the steps we have taken,” he said.

The Indian economy grew at a four-year low of 4.4 percent in the April-June quarter. In 2012-13, it clocked a decade low level of growth at 5 percent.

“It is a fact that our growth rate has slowed down. We grew at an average of about 8 percent for a decade. Last year, our growth rate dipped to 5 percent. To some extent, this reflects the slowdown in the global economy and in all emerging markets,” Singh said.

The government, he said, is committed to getting India back to a sustainable growth path of 8-9 percent.

“The fundamentals of the Indian economy remain strong…Our forex reserves stand at over USD 270 billion and are more than sufficient to meet India’s external financing requirements,” Singh said

Separate industry and banks when giving new bank licences’

Out of the 12 new banks set up after the 1993 and 2001 guidelines, four were promoted by financial institutions, one each by conversion of a cooperative bank and NBFC into commercial banks, five by individual banking professionals and the remaining one by a media house.

Of the banks promoted by individuals in 1993, only one has survived with muted growth, one was compulsorily merged with a nationalized bank and two merged with private banks. It is on this backdrop that the Standing Committee of Parliament headed by BJP leader and former Finance Minister Yashwant Sinha today adopted a report on the new bank license guidelines issued by the RBI earlier this year, reports CNBC-TV18′s Siddharth Zarabi.

Observing that new bank licenses would not guarantee banking sector growth and financial inclusion, the Standing Committee today adopted a 49 page report on the guidelines.

The Committee has recommended that industry and banking be kept separate, as it is not sure whether the safeguards put in place by the RBI including the fit and proper criteria, and group exposure norms would be effective enough to prevent banks promoted by industrial houses from cozying up to their industrial owners.

It has termed the existing fit and proper criteria as subjective, ambiguous and open ended, leaving the doors open for arbitrariness and favouritism. It wants more precise, coherent and objective yardsticks to assess the credentials of the applicants in a uniform manner.

Highlighting the need for sustainability, the committee suggested that the minimum capital requirement for setting up a new bank be doubled to Rs 1000 crore.

The Standing Committee, which has Congress leader Rahul Gandhi as a member, expressed surprise over the absence of lending norms being prescribed in the guidelines; particularly with regard to lending to entities associated with promoters or even lending within the proposed non-operating financial holding company. It wants the pitfalls of misappropriation of banking resources to be avoided.

Finally, the Committee expects the RBI to respond promptly to those applications which are rejected, without leaving any room for speculation or conjecture. It also wants the RBI to allow rejected applicants the opportunity to seek a review.

It is now up to the RBI, which had deposed before the Committee in this regard, to give any weight to the recommendations.

Rahul Gandhi missing from the Standing Committee meet

Incidentally, Rahul Gandhi did not attend today’s meeting of the Standing Committee, and committee members say he has been a “rare” visitor ever since he chose to join the panel earlier this year. The Standing Committee on Finance has vetted several crucial UPA legislations including the Bill for the Unique Identity Authority or the “Aadhar” Bill, which it sent back to the government for reconsideration. It is the lack of a law in this regard, that led to a situation earlier this week when the Supreme Court said Aadhar does not have any statutory backing.

The Committee is also reviewing the Constitutional Amendment Bill for the Goods and Service Tax and a final report in this regard is expected shortly. Here too, the final report would seek major changes to the GST model. The evident lack of interest in this kind of law making by the Congress scion and Prime Ministerial hopeful has been a cause of embarrassment for the other Congress MP’s on this panel.

Is Satyam-style takeover of NSEL possible?

The Arvind Mayaram Panel is contemplating a government takeover of National Spot Exchange Limited (NSEL), similar to what was done in the Satyam scandal, reports CNBC-TV18′s Aakansha Sethi.

The panel has given various options for different investigatng agencies and has asked the Ministry of Corporate Affairs (MCA) to examine if the government’s takeover could be a possible route.

While the Central Bureau of Investigation (CBI) is likely to look for Indian Penal Code (IPC) violations, the IT Department will follow up with income evasions, and the Forward Markets Commission (FMC) will investigate if the exchange violated the Forward Contracts Regulation Act (FCRA).

For violations of the FCRA, Financial Technologies promoted-NSEL was given an exemption by the then Food Minister Sharad Pawar. The only action that can perhaps be taken is to ascertain whether NSEL promoters are fit-and-proper.

Sources in the government have said that they are unlikely to be fit and proper and hence that could have an implication on the 26 percent stake that they hold in Multi Commodity Exchange of India ( MCX ). However, prosecution under FCRA will be limited and hence, the government is examining whether the promoter and those who are guilty can be prosecuted

. As far as criminal proceedings are concerned, the Economic Offences Wing (EOW) has not registered a case as yet and till the EOW does not register a case and criminality is not established the Enforcement Directorate (ED) cannot register a case and examine the possibilities of money laundering.

Hence, until criminality is proved, there is really no tangible action that will be taken i.e,  examining if the government can take over the NSEL board and can proceed the Satyam way