FII demand pushes up valuation

Although the macroeconomic fundamentals as well as corporate earnings are strong...

Although the macroeconomic fundamentals as well as corporate earnings are strong, large demand by FIIs, given the limited supply of domestic assets, is putting pressure on the equity valuations, the RBI said. The P/E ratio, which was 18.6 in February 2006, rose to 22.6 by end-September 2007.

This year, the benchmark BSE Sensex increased by 48.4 per cent over end-March 2007 and 74.6 per cent over end-March 2006. The rally has been fuelled by FIIs investments. Net investments by FIIs during 2007-08 up to October 19, 2007, have been of the order of $ 15.1 billion, about 163 per cent higher than that during the whole of 2005-06.

Margins under pressure

Mumbai: The RBI has asked banks to remain alert for maintaining their profits as their net interest margins have come under pressure. It said the banking sector faces the challenge of continuously raising capital from the market to sustain operations. In its report, RBI said banks would have to contain operating costs and search for non-interest sources of income to maintain profitability in future. The RBI attributed the pressure on net interest margins to increased competition, which reflects an improvement in the efficiency of the banking sector.

Govt to retain majority stake in PSU banks

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New Delhi: Finance minister P Chidambaram today ruled out lowering the Government stake in Public Sector Banks to below 51 per cent and said there was no uncontrolled inflow of foreign capital into Indian banks.

The Prime Minister’s Economic Advisory Council chairman C Rangarajan had suggested the Government may have to bring in additional capital or reduce its share to below 51 per cent to ensure rapid growth of PSU banks.

When asked whether the Government proposed to raise its stake in PSU banks to 74 per cent, Chidambaram said there was no such proposal as that would require a large amount of funds.

Govt clears decks to let Adani plant for Bangladesh link to India grid

India4 hr ago

The Centre has approved Adani Power Limited's Godda Ultra Super Critical Thermal Power Plant to connect to the Indian grid, allowing them to sell power to domestic discoms. The plant, previously supplying electricity to Bangladesh, can now cater to India's power demand for 25 years, subject to compliance with regulations and guidelines.

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