The Mint Report for 11 August 2010

The Mint Report for 11 August 2010

A fresh paper from the RBI has raised the hopes of some financial companies. On Wednesday the central bank released a so-called discussion paper that says it plans to issue licenses to set up new banks. The paper says the RBI will issue a limited number of licenses. It adds that to qualify, companies should not be involved in real estate investments. The RBI is now inviting comments on its suggestions including issues like minimum capital requirements and caps on the shareholdings of promoters and foreign companies.

Stocks of some financial companies that are looking to become banks soared after the release of the RBI paper. Religare Enterprises shares surged 3.67% on the BSE to 430.35. And Reliance Capital saw its stocks shoot up 2.08% to 744.50.

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Bharti Airtel reported a fall in first quarter profits. The company saw a 32% decline in net profit to Rs1,682 crore. Revenues, on the other hand, increased seventeen percent to Rs12,231 crore. Bharti’s profit numbers have been hit by a tariff war between Indian phone companies that has cut into margins. The average revenue per user, which is used to calculate profitability, fell 23% to Rs215. Bharti’s performance was also hurt by foreign exchange losses of $2.2 billion caused by currency fluctuations.

Bharti Airtel stock lost ground on news of the quarterly numbers. On the BSE its shares fell 1.42% to 319.70.

The government says it will resolve environmental concerns about the controversial POSCO steel project in Orissa. On Wednesday, steel minister Virbhadra Singh said problems raised by the environment ministry would be addressed and dealt with soon. Korea-based POSCO is planning to build a $12 billion steel plant in Orissa. But last week the environment ministry ordered work to be stopped while it investigated possible violations of the forest rights act. Locals, including forest dwellers have been protesting against the project now for more than three years.

While some local stocks gained on Wednesday, weak global equities dragged down Indian markets overall. On Wednesday the Sensex shed 150 points to end at 18,070. And the Nifty fell 40 to end at 5,421.