Sensex hits fresh 15-month high on second phase of reforms

Rising for the fifth straight day, the 30-share Sensex touched fresh 15-month high after the government unleashed a second wave of reforms yesterday deciding to open the pension sector to foreign investment and raising FDI cap in insurance.

The BSE benchmark index, which has gained over 488 points in the past four sessions, rose by 27.96 points, or 0.15 per cent, to 19,086.11 points. The wide-based National Stock Exchange index Nifty, edged up by 5.35 points, or 0.09 per cent, to 5,793.05.

Brokers said continued by funds and retail investors after the government yesterday decided to open the pension sector to foreign investment and raising the FDI cap in insurance to 49 per cent from 26 per cent, undeterred by opposition to its decisions on FDI in retail and threats to block these legislations.

A firm trend in Asian markets too supported buoyed the sentiment, they added. In Asian region, Japan's Nikkei was up by 0.42 per cent, while Hong Kong's Hang Seng gained 0.32 per cent in early trade today.

The US Dow Jones Industrial Average had ended 0.60 per cent higher in yesterday's trade.

Govt relaxes norms for foreign NBFCs

The government on Thursday relaxed norms for setting up subsidiaries by foreign owned non-banking financial companies (NBFCs).

NBFCs with foreign holding of more than 75 per cent and up to 100 per cent, with the minimum paid-up capital of $50 million, are now allowed to open any number of subsidiaries, an official release said.

As per the existing norms, only 100 per cent foreign- owned NBFCs, with a minimum capitalisation of $50 million are allowed to establish any number of step down subsidiaries for specific NBFC activities.

“With a minimum capitalisation of $50 million, (foreign-owned NBFCs) can set up step-down subsidiaries for specific NBFC activities, without any restriction on the number of operating subsidiaries and without bringing in additional capital,” said a notification of the Department of Industrial Policy & Promotion.

Tata Power looking to acquire coal assets in overseas

Leading private sector power producer Tata Power on Thursday said it was looking to acquire coal assets in the U.S, Colombia and African countries to meet its future requirements for raw material.

Talking to reporters on the sidelines of Clean Coal Summit organised by Confederation of India Industry (CII), Tata Power Managing Director, Anil Sardana, said in addition to the coal assets acquired by the company in Indonesia, the company was also looking at such opportunities in the U.S., Colombia and African countries. By 2020, the company was targeting import of 50 million tonne of coal.

Tata Power has an installed capacity of 6,099 MW and is also developing the 4,000 MW imported coal-fired Mundra ultra mega power project in Gujarat.

In addition to this, the company is also looking at setting up power projects in Vietnam and Myanmar. During the current financial year, Tata Power is looking at import of 10 million tonne of coal. “Till now, we have imported seven million tonnes of coal in the current fiscal,’’ he added.

In March this year, Tata Power had announced a joint venture with South Africa's Exxaro to develop generation projects in the African continent. Tata Power along with diversified group Exxaro Resources has created 50:50 joint venture entity, Cennergi (Pty) Ltd. Among others, the company is developing a geothermal power project in Indonesia as well as stakes in two coal mines there. The entity along with Norway's SN Power is working on 880 MW hydro project in Nepal.

ITC hikes Gold Flake price 6.7%

ITC has hiked the price of Gold Flake cigarettes by 6.7% in the 69 mm segment. A pack of ten cigarettes will now cost Rs48 compared with Rs45 earlier.

This is the second price hike the company, India’s largest cigarette maker, has taken this year. In April, it had taken a weighted average price hike of 12% on brands including Gold Flake Premium, Gold Flake Kings, Wills Navy Cut and Classic following the 21% on-year excise duty hike announced in the Budget.

Gold Flake is the most popular cigarette brand in the country and makes up about 35% of ITC’s total cigarette sales.

Jitin Samtani of Espirito Santo Securities believes excise duty would be increased again next year and that ITC is taking cautionary steps to pass on the cost to customers in tranches.

Analysts also believe the increase in prices will help the company expand the divide between the 64 mm and the 69 mm categories.

“With this price hike, 69 mm cigarettes, the most popular segment, will become more expensive and thus more premium. This will help in cutting down the number of consumers who could have downtraded to the smaller segment,” said Nitin Mathur, analyst at MF Global.

ITC re-entered the small cigarettes segment in June this year, prompted by the fact that tax on 64 mm cigarettes was 40% lesser.

According to Mathur, the latest move will also help in cutting down on differential pricing across states.

“The same cigarette pack costs Rs49 in Uttar Pradesh and Rajasthan. As a result, traders were bringing in packs from other states for sale. With this round of increase in price, the difference now comes to be only Rs1. As a result, there will be lesser incentive for traders to smuggle packs from neighbouring states,” he said.

Abneesh Roy of Edelweiss Securities said the price hike is also expected to aid margins and make up for poor volumes. Volume growth for the company is expected to remain flat or even slip into the negative territory.

The market, however, has given a thumbs-up to the price hike. The stock touched a lifetime high of Rs276.45 in Thursday’s trade before closing at Rs275.30.