Economic Times - 14th October

Submitted by:
Inderbir Singh Matharu
Itika Sharma
Indresh Tiwari
(Group8 Section E)

SENSEX
20760.70 72.82
NIFTY
6253.95 20.05
INR-USD
44.44 -0.18
GOLD (Rs/10g.)
19890.00 235.00

Investors pull out Rs 12.8k cr from equity mutual funds
Investors of equity mutual funds (MFs) are laughing all the way to the bank. With the markets trading close to their all-time highs, investors have pulled out a record Rs 12,804 crore from equity MF schemes in September, which is about 50% more than the previous high hit in October 2007.
Equity MF redemptions surged 63.7% month-onmonth in September, pushing fund houses to sell stocks to meet the huge spurt in exits. Fund houses net sold stocks worth Rs 7,236 crore to meet redemptions in September, the highest in 2010, Sebi data shows.
“The markets have run up quite sharply. So, investors are pulling out money from equities and allocating it to monthly income plans, liquid funds and bank deposits,” he said. Investors are also channelling the money into IPOs for short-term gains, say industry officials.

FII interest in coal India IPO to disturb forex market
Even as foreign portfolio investors are lining up cash to subscribe to the $3.4-billion Coal India initial public offering (IPO), bankers are expecting some volatility in the forex market, because of huge dollar inflows. At least 50% of the issue is reserved for qualified institutional buyers (QIBs), and foreign investors are expected to bid for a sizeable chunk of that quota.
Overseas investors have net-bought over $22 billion of shares in 2010 so far, and most brokers expect the momentum to sustain for the rest of this calendar. The rupee closed at 44.51 to the dollar on Wednesday, and has gained over 4% in the past one month alone.
“The forex market is on tenterhooks in anticipation of lumpy flows in wake of significant investments coming in for Coal India,” says Hemant Mishr, MD and head global markets at Standard Chartered Bank. He expects the rupee to hit 43.50 in a knee-jerk reaction on the day the money comes into system.

Microsoft deepens Facebook ties in google battle
Microsoft Corp deepened its ties with social networking company Facebook on Wednesday, bolstering its fledgling Bing search engine in an effort to catch up with Google Inc Microsoft said it would integrate content from Facebook, the world's leading social network with over half a billion members, to refine search results starting on Wednesday, including profiles of Facebook users and Web pages they have endorsed by clicking on "like" buttons.
The world's largest software company has stepped up its efforts within its money-losing online services division, seeking to challenge the dominance of Google, the world's largest search engine.
"The thing that makes Microsoft a great partner for us is that they really are the underdog here," Facebook Chief Executive Officer Mark Zuckerberg told reporters at Microsoft's Silicon Valley offices. "Because of that they in a structural position where they're incentivized to go all out and innovate."

Mahindra Satyam Bags contract from Commonwealth of Kebtucky
Leading IT services provider, Mahindra Satyam , today said that it has signed a contract with the Commonwealth of Kentucky, USA, for design and delivery of a document management system for the child support system.
The system would enable child support staff to electronically store, view and send information such as applications, court orders and insurance documentation received from case participants, courts and other agencies, a press release issued here stated.
"These improvements make it easier for non-custodial and custodial parents to get their questions answered and ultimately increase access to more resources in the care of their children." Kentucky Cabinet for Health and Family Services' Secretary, Jamie Miller, said.

Reserve Buffer Helped RBI manage crisis better than its foreign peers
RBI has managed the financial crisis much better than its advanced market counterparts. While RBI used the buffers of cash reserves of banks and unwinding of some bonds to infuse liquidity in the system, other central banks created money by extending credit facilities to the various segments of the market or purchase commercial paper (CP), resulting in sharp expansion of their balance sheet.
A research by the Reserve Bank of India staff has noted that assets of the US Fedral Reserve Board and the Bank of England more than doubled in a matter of weeks, while that of the European Central Bank (ECB) grew by more than 30% as a result of expansionary policy to deal with the crisis.

Rising current account trade gap worry FM
Union finance minister Pranab Mukherjee on Tuesday expressed concern over the rising current account and trade deficits and suggested a wider export market besides Europe and North America to correct the imbalances.
“I have apprehensions because the current account deficit has increased-...Trade imbalances have increased because exports have not grown in absolute terms compared to imports. So, we have to find diverse markets,” he said after inaugurating a financial hub in New Town, Rajarhat, which will be the second such facility after Mumbai’s Bandra Kurla Complex.

Govt Rules out any re-writing of recently-legislated neuclear liability law
THE Centre has ruled out any re-writing of the recently-legislated nuclear liability law for addressing concerns raised by the US administrati on and suppliers of nuclear reactors.
“The question of amendments is not on the cards. We have explained to them (the US) the circumstances in which we had to go through the bill and we have to work within the parameters of the legislation,” external affairs minister S M Krishna said at a meeting with editors here.
The minister, however, said that there could be discussions on some elements of the bill during president Barack Obama’s visit to New Delhi. “But the law won’t be amended. Don’t draw any conclusion that we’re trying to fix the bill outside the legislation,” Mr Krishna said.

Google’s spending worry for Wall Street
Wall Street wants Google’s new products and initiatives to start paying off, as its accelerating spending spree nibbles away at margins and alarms investors.
The Internet giant’s free-spending, from more than 20 acquisitions this year alone to internal projects such as self-driven cars and big bets in wind energy, has weighed on the company’s stock, which has underperformed the market this year.
Headcount, capital expenditures and operating expenses will be key issues for investors when Google reports third-quarter results on Thursday, particularly after a rare profit shortfall in the second quarter wiped 7% off its shares in a single day.