The Reserve Bank of India has moved swiftly to “maintain the domestic macroeconomic and financial stability in the context of the global financial crisis”. First, by slashing the cash reserve ratio by 150 basis points to 6.50 per cent on Oct 11 and today, by reducing the repo rate by 100 bps to 8 per cent.

The move comes just three days ahead of half-yearly monetary policy review on Oct 24.

The Indian central bank has already taken a number of measures over the last one month to augment domestic and forex liquidity.

However, the global financial situation continues to be uncertain, and India too is experiencing the indirect impact as reflected by some signs of strain in our credit markets in recent weeks, the RBI said.

On Sunday, the South Korean government announced a rescue package for its financial system by assuring $100 billion of lenders' foreign-currency debts and providing $30 billion in US dollars to banks.

Markets are reacting positively as and when authorities announce financial relief packages, but the positive effect is always short-lived

G8 summit opens on Japan's Hokkaido island

Leaders of the Group of Eight industrialised nations Monday launched their annual summit in Japan with surging oil and food prices and climate change set to dominate the agenda. The leaders of the G8 -- Britain, Canada, France, Germany, Japan, Italy, Russia and the United States -- will be joined this year by those of some 15 other countries including China, India, Brazil, South Korea and Australia. The first session of the three-day meeting being held in the spa resort of Toyako on Japan's scenic Hokkaido island will be devoted to plans to boost aid to impoverished Africa. Eight African leaders will also be present. The so-called outreach session on Africa will include the leaders of Algeria, Ethiopia, Ghana, Nigeria, Senegal, South Africa, Tanzania and the head of the African Union. The G8 leaders will meet alone on Tuesday and will cap the summit by inviting their counterparts from Australia, Brazil, China, India, Indonesia, Mexico, South Korea and South Africa to join them for talks on tackling global warming.

Govt approves new fertiliser policy

NEW DELHI: Cabinet has approved a new fertiliser policy, the minister for chemicals and fertilisers, Ram Vilas Paswan told reporters on Thursday. "It has been approved," he said on the sidelines of a conference, but did not elaborate. India, the world's third-largest consumer of fertilisers, needs 27.3 million tonnes of urea annually but production has been stagnating at about 20 million tonnes. In December, Paswan said the government wanted to revive production from idling plants and reduce imports. On Wednesday, the oil ministry said that urea plants would be given top priority in receiving natural gas from new fields.

Stocks to watch today

Following companies are likely to hog the limelight today (June 26).The Maharashtra state government has decided to construct the Rs 60 billion Nhava-Sewri sea link project on its own, rejecting the bids placed by Mukesh Ambani-led RIL. Shares of RIL gained Rs 69.15, or 3.35%, to end at Rs 2135.35**. More...Tech Mahindra entered into a multi-million dollar deal with Telecom Fiji. Shares of the company declined Rs 9.2, or 1.22%, end at Rs 747.65**. More...National Thermal Power Corporation (NTPC) received approval from Uttar Pradesh government to set up a 4,000 megawatt power plant in Lalitpur district of the state. Shares of the company closed up Rs 1.6, or 1.03%, at Rs 157.3**. More...Hindustan National Glass & Industries reported a phenomenal rise in its standalone net profit for the fourth quarter ended March 2008. During the quarter, the profit of the company soared 7.20 times to Rs 788.70 million from Rs 109.50 million in the same quarter, last year. Shares of the company gained Rs 33.55, or 5.91%, to settle at Rs 600.95**. More...HBL Power Systems announced a phenomenal rise in its standalone net profit for the fourth quarter ended March 2008. During the quarter, the profit of the company jumped 2.06 times to Rs 225.30 million from Rs 109.40 million in the same quarter, last year. Shares of the company declined Rs 7.1, or 2.84%, to settle at Rs 243.2**. More...DCM Shriram Industries swung to profit for the fourth quarter ended March 2008, helped by improved operating margin. During the quarter, the company reported profit of Rs 59.50 million compared with a loss of Rs 93.30 million in the same quarter, last year. Shares of the company declined Rs 2.15, or 2.21%, to settle at Rs 95**.

GMR buys 50% in power utility InterGen for $1b

Leading infrastructure player GMR Infrastructure on Wednesday acquired a 50% equity stake in the US-based power utility InterGen for $1.1 billion. The deal makes the Bangalore-based company the country’s largest independent power producer and qualifies it to bid for building ultra mega power projects (UMPP). The buy will also help GMR bid for privatisation of airports in India and abroad, especially as the co-owner of InterGen, Ontario Teachers’ Pension Plan, has a strong presence in airport operations worldwide. It is also a part owner of Birmingham Airport. At present, GMR manages the Delhi and Hyderabad airports. “It (the buyout of InterGen) has been one of the most competitive acquisitions and will give us access to developed power markets, superior power trading and hedging systems,” said executive vice-president Madhu Terdal, the key person behind the acquisition. On Wednesday, ET had reported that the infrastructure major was close to buying a 50% equity stake in InterGen through an international competitive bidding process. Mr Terdal said there were four players in the race. Investment banking firm NM Rothschild & Sons advised GMR, while Lehman Brothers advised InterGen. The acquisition, through a special purpose vehicle, would be funded by a bridge loan with a two-year tenure, after which GMR would go for a long-term loan, including an equity component. “We are still working on that,” Mr Terdal said. Contrary to earlier cross-border deals from India, the InterGen deal was clinched in just four months. The Tata Steel-Corus negotiations, for instance, lasted for almost a year. According to GMR, the $1.1-billion deal pegs the per mega-watt cost at $3,60,000, which is half the cost to set up a similar facility. GMR bought the 50% stake from AIG Highstar Capital, with the remaining half being held by the Ontario Teachers’ Pension Fund. The acquisition will add InterGen’s 13,000 megawatt capacity to GMR’s and will help the company meet the minimum 1,000 megawatts requirement to bid for UMPPs. The deal would boost GMR’s plans to bid for airports in India and abroad. “We are interested in bidding for all international airport projects when they come up for sale,” said group president YM Shivamurthy. GMR has expressed interest in bidding for the Prague airport and is also looking at key airports in South Africa. Ontario has also said it wants to buy into airports in China and India and is also eyeing French regional airports. On InterGen’s power plants, Mr Terdal said 85% of the fuel used at its 12 plants was gas, while the remaining was coal. “This eliminates the risk associated with coal,” he said. Also, since 50% of the gas used is through tolling, where the electricity buyer supplies gas and gets power in return, InterGen is not affected by fluctuations in gas prices. GMR Infrastructure scrip surged 3.1% to close at Rs 99.15 on BSE on Wednesday on a day when the broader index gained 0.8%.

Equities seen higher on positive global cues

Equities are likely to edge higher on Thursday tracking advances in global markets after the US Federal Reserve eased investor concerns about an aggressive interest rate hike. Short covering is also expected with the June series derivative contracts' expiry today. The Federal Reserve held its key interest rate steady at 2 per cent and reduced expectations for a rate hike at its next meeting. Stocks were buoyed by Fed comments downplaying the potential for a deeper US economic slowdown, but uncertainty about inflation kept gains in check. The US central bank signalled on Wednesday it was in no hurry to raise rates any time soon, supporting government bond prices that had been sold off sharply on expectations central banks around the world would tackle price pressures aggressively.

Buy NIIT Technologies for target Rs 183: PINC

PINC Research has initiated ‘buy’ on NIIT Technologies for a price target of Rs 183. NIIT has been able to build up a strong position in the insurance and travel/transportation verticals, which has enabled it to secure steady business despite being up against the Tier-1 Indian and MNC vendors. Low exposure to large size banking and financial services clients is expected to be positive for the company considering the current scenario unfolding in the global financial services market, says PINC. Sluggish growth and margins at room solutions in 2007-08, insurance underwriting solution provider that NIIT acquired in May’06 depressed overall profitability and earnings in 2007-08. However, with multiple pilots being run for its latest offering, the future offers greater stability and growth in this business. NIIT’s stocks has under performed over the past 12 months and PINC believes that current valuations factor in the near terms concerns viz. future outlook for room solutions and the impact of slower economic growth on pricing and client spend. Net cash/share of Rs22 makes valuations extremely attractive vis-a-vis growth rates in addition to a dividend yield of 5.2 per cent, which can provide downside support to the stock price. At the market price of Rs 126, NIIT is currently trading at a P/E of 4.8x and EV/EBIDT of 3.5x its 2008-09 estimates. PINC believes that current valuations are discounting the near term concerns which NIIT is facing, namely growth rates at room and the impact of global economic slowdown on revenues. Therefore, with a conservative earnings outlook and stable free cash flow generation, PINC believes there is room for valuations to improve alongwith downside protection in the form of a dividend yield currently at 5.2 per cent.