The market may surge as Mr Raghuram Rajan after taking charge as the 23rd governor of the Reserve Bank of India (RBI) on Wednesday announced a slew of measures to benefit retail investors and revive the Indian economy. Trading of CNX Nifty futures on the Singapore stock exchange indicates that the Nifty could gain 113.50 points at the opening bell. Firmness in Asian stocks may aid gains on the domestic bourses.
New Reserve Bank of India (RBI) chief Raghuram Rajan kicked-off his term with a bang, announcing a spate of measures to support the embattled rupee and unveiling a raft of steps to liberalise financial markets and the banking sector. In an unexpectedly detailed and wide-ranging briefing, Rajan outlined plans to attract more funds from overseas by subsidising hedging costs for banks and making it easier for importers and exporters to hedge currency risk. He made clear his intention to liberalise markets, including pushing for more rupee trade settlement, introducing new financial products such as overnight interest rate swaps and removing curbs on opening new branches by Indian banks. Rajan, in his remarks, outlined the plan to attract more funds from non-resident Indians (NRIs) as part of a broader push to lure inflows. Under the plan, the central bank will offer a swap window to banks for fresh dollar deposits mobilised from non-resident Indians. India has the world's second-biggest diaspora, according to the Ministry of Overseas India Affairs, and the country has turned to overseas Indians for help in past financial crises. The central bank will also offer forex swap into rupees at a concessional rate below market levels for banks who raise dollar funds through overseas borrowings.
Among Rajan's measures, he said banks should gradually be allowed to decrease their mandatory holdings of government securities, which would free up capital for lending. He also said new bank licences should be awarded on an ongoing basis. The central bank is now in the process of awarding the first new bank licences in a decade. Rajan also proposed the issue of inflation-indexed bonds linked to the consumer price index, an indication that the central bank may soon shift its inflation benchmark from the wholesale price index. Rajan also pushed back the date of the RBI's next monetary policy review by two days to September 20. That will give the central bank more time to consider the outcome of what is expected to be a pivotal two-day meeting of the US Federal Reserve, ending on September 18.
Among corporate news, Idea Cellular turns ex-dividend today, 5 September 2013, for a final dividend of 30 paise per share for the year ended 31 March 2013.
GAIL (India) turns ex-dividend today, 5 September 2013, for a final dividend of Rs 5.60 per share for the year ended 31 March 2013.
NTPC turns ex-dividend today, 5 September 2013, for a total dividend of Rs 2 per share for the year ended 31 March 2013. This includes a special dividend of Rs 1.25 per share.
More From This Section
Power Grid Corporation of India turns ex-dividend today, 5 September 2013, for a final dividend of Rs 1.14 per share for the year ended 31 March 2013.
Tata Consultancy Services (TCS) announced after market hours on Wednesday, 4 September 2013 that it has been selected by CTM, the leading telecom service provider in Macau, for a multi-year and multi-million agreement for an IT and business transformation project, whereby TCS will deploy a new convergent rating and billing system for CTM. Currently, CTM uses different billing systems for each of its corresponding telecom service. In order to meet its needs of next-generation integrated multimedia telecom services, CTM sought to implement an converged billing system to provide a more instantaneous response to market demands, hence further strengthening its market competitiveness. CTM chose TCS as its service partner to deliver its new convergent rating and billing system.
The Pension Fund Regulatory and Development Authority Bill (PFRDA), 2011 was passed by the Lok Sabha on Wednesday with official amendments. It was earlier introduced in Lok Sabha on the 24th March, 2011 to provide for a statutory regulatory body the Pension Fund Regulatory and Development Authority (PFRDA) under the provisions of the Bill. The legislation seeks to empower PFRDA to regulate the New Pension System (NPS). Some of the key amendments incorporated in the Bill based on the recommendations of the Standing Committee on Finance are that the subscriber seeking minimum assured returns shall be allowed to opt for investing his funds in such scheme providing minimum assured returns as may be notified by the Authority. Withdrawals will be permitted from the individual pension account subject to the conditions, such as, purpose, frequency and limits, as may be specified by the regulations. The foreign investment in the pension sector at 26% or such percentage as may be approved for the Insurance Sector, whichever is higher. At least one of the pension fund managers shall be from the public sector.
Beside above, the Bill would make the Pension Fund Regulatory and Development Authority a statutory authority. Presently, it has non-statutory status. The NPS is based on the principle that 'you save while you earn' especially for retirement and is mainly for those who have a regular income. This Bill would also provide subscribers a wide choice to invest their funds including for assured returns by opting for Government Bonds etc. as well as in other funds depending on their capacity to take risk. The NPS has been made mandatory for all the central Government employees (except armed forces) entering service with effect from 1 January 2004. Twenty six states have already notified NPS for their employees. NPS has been launched for all citizens of the country including un-orgnised sector workers, on voluntary basis, with effect from 1st May, 2009. Further, to encourage the people from the un-organised sector to voluntarily save for their retirement, the Government has launched the co-contributory pension scheme titled Swavalamban Scheme in the Budget of 2010-11. As on 14 August, 2013, the number of subscribers under NPS is 52.83 lakh with a corpus of Rs 34965 crore. In order to effectively invest and manage huge funds belonging to a large number of subscribers and to ensure the integrity of NPS, creation of a statutory PFRDA with well defined powers, duties and responsibilities is considered absolutely necessary and would benefit all NPS subscribers.
The PFRDA Bill authorizes the PFRDA to establish a Pension Advisory Committee by notification under Clause 44 of the PFRDA Bill, 2011. The object of the Pension Advisory Committee shall be to advise the Authority on matters relating to the making of the regulations under the PFRDA Act. Market based returns and wide coverage based on several investment options in the pension sector will build up the confidence in the subscribers, whereas withdrawals for limited purposes from Tier-I pension account will be an incentive for them to join NPS.
Key benchmark indices surged and the rupee rose against the dollar on Wednesday, 4 September 2013 after it became clear that the two missiles that landed in the Mediterranean region on Tuesday, 3 September 2013, weren't part of a US led military strike in Syria, as investors had feared. The S&P BSE Sensex jumped 332.89 points or 1.83% to 18,567.55 on that day, its highest closing level since 2 September 2013.
Foreign institutional investors (FIIs) bought shares worth a net Rs 172.53 crore on Wednesday, 4 September 2013, as per provisional data from the stock exchanges.
Asian stocks rose for a sixth day and emerging-market currencies strengthened as central banks from Japan to Europe review monetary policy. Key benchmark indices in Indonesia, Hong Kong, Japan, South Korea, Singapore and Taiwan rose by 0.46% to 0.94%. China's Shanghai Composite fell 0.49%.
The central banks in Japan, the UK and euro zone review their interest rate policies today.
US stocks jumped on Wednesday after surging US auto sales pointed to robustness in the manufacturing sector. The report showed consumer spending and manufacturing has risen in most of the 12 regions in the US and said job creation was steady or improving.
The influential US nonfarm payroll report for August 2013 is due for release tomorrow, 6 September 2013. The employment numbers will be keenly watched given the implications for the timing of the Federal Reserve's plan to begin slowing the pace of its monetary stimulus.
Investors across the globe are eyeing the next policy meeting of the Federal Open Market Committee (FOMC) scheduled this month, with their focus squarely on the timing of tapering of Federal Reserve's bond purchases. The FOMC holds a two-day policy meeting on 17-18 September 2013 to decide on interest rates in the United States. The US central bank currently buys $85 billion a month in US debt and mortgage-backed securities in a bid to hold interest rates low and encourage economic growth. Federal Reserve Chairman Ben Bernanke has on several occasions stressed that the tapering process is dependent on an improvement in data. Fed's bond-buying program has kept global markets flush with liquidity in recent years.
Meanwhile, a summit of leaders from the Group of 20 major economies begins in St. Petersburg today, 5 September 2013.
On Wednesday, President Obama reiterated the need for a global response on Syria as a US Senate panel approved a resolution authorising US military intervention.
Powered by Capital Market - Live News