the daily economic update

June 22, 2010

Top stories

1. MARKETS RAISE TOAST TO FLEXIBLE CHINA: Indian markets joined the global equity markets in an upsurge after china pledged to let it currency appreciate. This would give a boost to global trade. However some still view it as a gimmick to avoid exchange rate reform discussions at the G20 meetings. What industries experts believe is that this move of china is only to buy some more time especially now when pressure has been building on the U.S.A. to label it as a “currency manipulator”.

2. TALENT- HIT IT COS. OPEN DOORS TO EX-EMPLOYEES: India’s top technology firms, Infosys technologies and EDS-MphasiS, are hiring back all the staff they had to let go during the economic crises.

3. JSW, REDDY DEAL HINGES ON IRON-ORE: JSW Steel, which makes 7 metric tomes of steel in Bellary –hospet, depends on third parties for ore. It now demands a stake in OMC ,which is an iron ore major promoted by BJP ministers of Karnataka , or a definite deal to supply iron ore in return for taking over Karnataka ‘s reddy brothers’ steel company.

4. PRIORITY TAG SOUGHT FOR LOANS TO SICK STATE FIRMS: the dept. of public enterprises has proposed to finance ministry to classify loans to sick state owned companies (like Hindustan Machine Tools) as priority sector lending. These companies which earlier got loans from state-owned banks at 14% will now be able to secure them at 9-10%.

5. PSU’S JITTERY ABOUT 25 FLOAT NORMS: the department of disinvestment has sought a review of the recent norms that make it mandatory for all listed firms to have at least 25% public float, arguing it could affect the disinvestment programme and impact the valuation of public sector firms. Many state owned companies had previously agreed to get listed only for the purpose of being disinvested and not because they wanted to raise funds. But now once these new norms are applied many of these state owned companies like coal India etc. will have to raise public holding to 25%. These guidelines might affect the valuations of firms as there would be a flood of PSU offers in the market.

6. Sensex surges up by 1.74% closing at 17876.55 on Monday.

7. Nifty closes at 5353.30 on Monday up by 1.72%.