Money India

ISD calls to US and UK will come down to as low as Rs. 1.25 per minute as BSNL (Bharat Sanchar Nigam Limited) is planning to introduce VoIP (Voice over Internet Protocol) through its broadband connections. Under VoIP technology voice is converted into digital information and is sent to destination through internet as compared to the standard system where voice travels through traditional networks as such. The VoIP technology is much cheaper than the traditional voice transfer technologies and hence a reduction in ISD fares is expected. BSNL will tie up with Internet Service Providers having media gateways to offer its VoIP based services. BSNL will also tie up with international operators to deliver voice traffic overseas. VoIP technology was not used earlier due to its poor sound quality and speed, but now with the easy availability and reduction in broadband costs, this technology can be used and BSNL is already having a large network of broadband connections. Also this will reduce BSNL’s dependence on Indian ILD operators like Airtel, VSNL and Reliance communications to carry its international traffic. In India Internet telephony services can be provided by the permitted Internet service providers or by a unified access service licensee. BSNL falls in the latter category and Yahoo, MSN and Net2Phone are already providing Internet telephony services. With the reduction in the cost of Broadband connections more and more telecom companies will start using VoIP technology and call rates are expected to come down further with the advancement in technology and competition.

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NIFTY has crossed the psychological level of 4000 and Sensex is hovering around 14000 mark. Bulls are in complete control of markets. The market feels that the ongoing rally is likely to continue on back of strong liquidity provided by FIIs and domestic funds. It has been learnt that quite a few FIIs have been registered with SEBI in the month of November and some domestic NFOs have generated huge funds and they are sitting on money ready to be invested and if NIFTY sustains over 4000 levels some short covering will also be seen, taking the market further up. The economic growth in the second quarter and other macro economic factors are weighing bullish on markets. The only negative factor may be rise in international crude prices. In case crude moves towards $70 mark again, it might result in weakness in global markets and might trigger the much-awaited correction. Even if there are corrections or dips, they may not be deep as a lot of money is waiting for the entry point by way of some deep corrections. As soon as the market falls, a lot of entry-level buyers will flood in to bring it back on track.

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Videocon Industries has put in a bid to acquire Hong Kong based biggest CRT (Cathode Ray Tube) manufacturer LG Philips Displays. If successful, Videocon will capture 50% of the world CRT market helping the company to strengthen its global supply chain. The target company has a capacity of 60 million units and revenue of $3 billion, whereas Videocon’s own CRT manufacturing capacity is 21 million units per year. Videocon has been very keen on acquiring globally distressed assets in order to strenthen its base in the global market. The company had recently gone after Daewoo electronics and it has acquired many small units in the home country.

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Finance Ministry is in consultation with RBI to allow Foreign Direct Investment up to the sectoral cap in the segments of financial services under the automatic route. Further the norms governing the flow of foreign money into the financial services sector will also be eased. However under the present framework, FEMA regulations do not allow foreign transactions with players like Banks. A number of proposals for Foreign Direct Investment in Private Banks are already put on hold including the proposal of IFC to buy stake in Federal Bank. In order to streamline the foreign investment in financial services sector, the Government might have to amend FEMA accordingly to bring it in consonance with the proposed policy and guidelines for financial services sector.

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Commodity futures are witnessing a move towards paperless trading. Demat accounts in NSDL and CDSL have touched a high of 10000 numbers. Both the depositories have almost doubled their demat accounts in the past one year. The average daily turnover of commodity trading has reached Rs. 10000 crores. In Ncdex it is mandatory to open a demat account for trading whereas in Mcx, opening of demat accounts is optional. There are certain commodities like pepper where deliveries are compulsory. Indian investors are being pulled towards commodity trading, it is still novice in India, but slowly and steadily trading in commodities is gaining momentum. Number of traders and investors are increasing with every passing day. However, not much data and research is available on commodities and not many commodities are listed for trading, but with the passage of time brokerages and other research analysts are compiling data for research and tracking their price movements.

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Nokia and Doordarshan have agreed to launch a pilot project of mobile TV in India. Nokia will provide the technology and DD will provide the content. The technology used will be based on Nokia’s open standard based DVB-H solution. The technology allows the mobile users to watch their desired TV programmes on their mobile sets. The technology will provide high picture quality with low battery consumption. Nokia is already providing mobile TV technology on the DVBH platform in Vietnam, Italy and Finland is running pilot projects in many other countries. Initially Nokia N92 model will support the proposed service and later on the service will be extended to other Nokia models. The technology, if successful, will bring a revolution in the telecom industry. The technology will bring TVs in the pockets of consumers and industries like media and entertainment and telecom are expected to be the major beneficiaries. Nokia is already market leader in selling mobile phones in India and this technology will give it a major lead over its competitors. Doordarshan, with a large viewers base in India is also expected to benefit for being the first mover. Once the pilot project is successful, other TV channels will also be available on the mobile.

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The Government has given in to the demands of Left to keep the pension funds from the uncertainties of Stock Markets. The pension funds are likely to be kept invested in fixed interest instruments. It is also proposed that only LIC, SBI and UTI should be allowed to handle the hard earned money of the public. The left is also demanding that the pension payable should not be less than the 50 percent of the last salary drawn by the pensioner and in case it is less than the said 50 percent, Government should contribute to the deficiency. The second demand of the left is still under consideration and therefore the pension bill is still pending before the cabinet. Earlier there were expectations that the pension funds will be invested in the stock markets aggressively like most international pension funds and some private pension funds will also be allowed to play in the market. This would have provided a lot of liquidity into the stock market and perhaps the returns of pension funds would have surged, but it seems that it is unlikely in the present situation. Also, the UTIs and the LICs do not have a very sound track record of doing justice to the investors’ money, the Government has its own compulsions and it remains to be seen as to what shapes out in the end.

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Sugar Mills, mostly in Maharashtra and south, have not been able to sell their sugar stocks of their last year produce. This has pushed the sugar prices downwards. As per the data of Central Excise department as on 30th September 2006 Maharashtra was holding 18 lakh tonnes, Karnataka 5.17 lakh tonnes, Tamil Nadu 6 lakh tonnes and Gujrat was holding 1.7 Lakh tonnes. The total sugar production in India was 192.62 lakh tonnes last year and as on 30th September 2006 it was holding 39.65 lakh tonnes of sugar. North Indian states like Uttar Pradesh, Haryana, Punjab and Bihar are holding relatively lesser stocks. Further more, the Government has imposed a ban on export of sugar, leading to the surging of stocks. The ban is likely to be lifted in wake of the demand from sugar companies and increasing stocks of sugar. The sugar companies are witnessing high margin pressures as the prices of sugar are coming down. Almost all sugar company stocks like Balrampur Chini, Dhampur Sugar, Bajaj Hindustan, Mawana Sugar, Uttam sugar, etc. are under performing. They are hovering around their yearly lows. Lifting of ban on Indian sugar export will impact Thailand, a major sugar exporter of Asia as Indian sugar prices pose stiff competition to Thai exporters and the major buyer Indonesia is expected to unveil its year 2007 import quotas till the end of December 2006.

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