Market cues: Asian markets flat, tight liquidity condition and more
Moody's warned February 16 that it might downgrade Morgan Stanley by as much as three notches following a reassessment of large financial institutions.
Asian markets were off to a lacklustre start on Tuesday. Investors remain wary of the impact of high oil prices on growth. Oil prices touched a ten-month high on Monday. Overnight, in US, it was a tentative session for markets. Stocks abruptly turned mixed in the final seconds of trading Monday with the Dow failing to close above the psychologically-important 13,000 level.
Trade strike
Banking, insurance and transport are likely to be affected today with all major unions calling a countrywide strike to protest the "anti-labour" policies of the government. They are also protesting against rising prices and disinvestment of public sector units. Unions leaders have rejected last-minute appeals to desist from the strike. They said that all 11 major trade unions including Congress-affiliated INTUC, Shiv Sena-backed Bharatiya Kamgar Sena and UPA ally Indian Union Muslim League's trade-wing STU would join hands to make the strike a success.
CRR cut?
Bank borrowings from the RBI liquidity adjustment factor or LAF window hit Rs 1.79 lakh cr on Monday. That is the highest since almost October of 2009. Commercial paper rates also rose sharply and overnight call money market rates closed at 9%. Liquidity which has been extremely tight for the last two months now, tightened further as banks sought to gather enough cash ahead of the reserve reporting cycle. Liquidity may tighten further with advance tax payments coming due. The RBI has so far maintained that it will manage liquidity through open market operations but has not ruled out another cash reserve ratio cut if needed.
Tata Steel bond sale
Tata steel is planning to raise up to Rs.3000cr by selling bonds. The company may issue 10-year, unsecured, low-coupon bonds. It is seeking a shareholder nod to raise its borrowing limit by 25 per cent to Rs 50,000 crore. The company plans to part-finance expansion activities. Tata Steel debt is already 114 per cent of its equity.
Unitech Telenor
Unitech has filed a fresh petition to prevent Norway’s Telenor from assuming full control in the joint venture. The petition was filed on Monday to with the Company Law Board or CLB to enforce rights under articles of Uninor, Unitech said in a statement. Telenor has already moved CLB on 24 February. Telenor said this was to prevent wrongful obstruction by Unitech to secure its investments.
Fuel price hik
Petrol and possibly diesel prices are likely to be hiked by Rs 2-4 per litre, once Assembly Elections in five states, including Uttar Pradesh, are completed this week. State-owned oil companies are losing around Rs 4 per litre on petrol, industry officials said. Oil firms had last revised petrol prices on December 1 after which rates have not been changed because of Assembly Elections.
BP seeks high gas prices
BP, which partners Reliance Industries in the Krishna-Godavari gas fields off the east cost of India, has made a strong pitch for import parity pricing of natural gas produced from the KG-D6 blocks, against its current price of $4.2 per mmBtu or British Thermal Unit. BP, which last year bought a 30% stake in 23 oil and gas blocks of RIL, now wants gas from the KG-D6 field to be priced on a par with LNG imported from Qatar on a long-tem basis, which is around $12.67 per mmBtu.
