Opening Bell 27 December | Lull in the markets

Opening Bell 27 December | Lull in the markets

Mumbai: Politics will once again take centre-stage this week as Anna Hazare, the Gandhian activist, begins his three-day fast in Mumbai to protest against the government’s version of the Lokpal bill, reports the Wall Street Journal. The government wants the Central Bureau of Investigation to remain under its control, but Hazare and his team want the CBI to be under the purview of the ombudsman. However, whether this will be the endgame in their months long battle to fight corruption is yet to be seen.

Back in India, the telecom ministry said that it has accepted TRAI’s (Telecom Regulatory Authority of India) proposals on mergers and acquisitions, reports Reuters. TRAI had proposed that companies should be allowed to merge if their combined subscriber or revenue market share does not exceed 60%. Currently, two companies can merge only if their combined market share does not exceed 40%. The telecom ministry also added that it has not ruled out levying a one-time fee on operators holding spectrum beyond 6.2 mega hertz and also favours an auction-based pricing for spectrum allocations.

G.R. Gopinath is reworking the Deccan Cargo business model by cutting staff, reducing franchisees, returning big planes and operating only on domestic routes while other freighter companies are facing turbulent weather. Additionally, Reliance Industries which has more than a 26% stake is not interested in increasing its investment in Deccan Cargo and Express Logistics which is promoted by Gopinath who is looking for an investor to expand and revitalize the business.

Tata Motors is changing the starter motor of around 100,000 Nanos, following safety measures that were implemented in 2010 after some cars caught fire. The company is replacing it with a thermal lining which is fitted in the 2012 edition of the car for better performance. India’s third largest car maker by revenues recalled almost 70,000 Nanos last year for additional safety features after fire broke out in some cars.

Bharati Shipyard will be in focus after it said that its board has approved a proposal to restructure loans worth 2,854 crore out of its total outstanding debt of 3,250 crore due to slowdown and high cost of capital, reports the Economic Times. Last week the company had said that it wanted to restructure about $1.5 billion of loans, including borrowings for the two take overs.

TPG Capital, a private equity investor, will dilute its stake in Shriram Transport Finance Company over the next six to nine months in a 3000-crore deal, that is 5 times the amount of 550-600 invested five years ago, reports Business Standard. The exit from TPG will be via merger of Shriram Holdings Madras Private Limited with the parent company whereby TPG will reduce stake from 49% to 20%.

Lastly, the Indian economy may be headed back to 1991 crisis when it was nearly bankrupt and on the verge of defaulting on its sovereign debt, reports India Real Time by Wall Street Journal. Ironically, it was Manmohan Singh, then finance minister who proposed reforms to help India get out of the financial mess. In recent years, the deficit has ballooned to 1991-like levels, around 3% of GDP. The fiscal deficit for the year-ended March 2012 is expected to come in at 5.5% or 6% of GDP, edging closer to the 8% seen in 1991-92.