Fed lowers US rates by quarter point
Washington—The Federal Reserve on Wednesday cut US interest rates a quarter-percentage point. Though a lower reduction than the five previous cuts this year, it indicated it was ready to do more to boost a sagging economy. This reduction brought the federal funds rate, a benchmark for short-term rates throughout the economy, to 3.75 per cent, its lowest level in more than seven years. The central bank also chopped the discount rate — charged on direct Fed loans to commercial banks — by a quarter point to 3.25 per cent.
Though stocks fell immediately as the market had hoped for a steeper cut they recovered soon afterwards.
There was no explanation in the statement issued after a two-day meeting of the policy-setting Federal Open Market Commi-ttee for why Fed opted for a smaller cut rather than the half-point reduction some economists were speculating.
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FIs, mutual funds come to UTI’s rescue
Mumbai—Indications are that Life Insurance Corporation (LIC), General Insurance Corporation (GIC), SBI Mutual Fund and other financial institutions have come to the rescue of the cash-strapped Unit Trust of India (UTI) by buying into those stocks where the mutual fund behemoth has large exposures.
An important pointer is the unexpected jump in trading volumes in shares of Wipro, Satyam Computer, Digital Equipments, Global Telesystems and Himachal Futuristic, among others as these are the companies where UTI is known to have had large exposures.
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Sebi holds Modi Rubber open offer valid
Mumbai—The securities and Exchange Board of India (sebi) has said that the open offer made by the promoters of Modi Rubber was still valid refuting FIs stand that the open offer by promoters in Modi Rubber was `null and void.’
Financial institutions had earlier alleged that the offer was `null and void’ since the offer opened on June 4 instead of May 16.
The V K Modi and B K Modi groups had made their first public announcement of the open offer on March 31, 2001 according to which the offer was scheduled to open on May 16 and close on June 14.
Instead of this the offer opened on June 4.
Sebi says that the promoters have agreed to pay interest at 15 per cent on Rs 80 for the delayed period, which works out to Rs 1.45 per share, by way of compensation for the loss suffered by investors due to the delay. Thus there is no case against them.
The Securities and Exchange Board of India’s clarification comes as a shot in the arm for the Modis.
This resulted in the offer price being revised to Rs 81.50. Since then, the offer price has been re-revised to Rs 90 per Rs 10 share on Friday.
The Modi Rubber scrip closed at Rs 68.15 on Tuesday, lower than Monday’s close of Rs 70.65. The open offer closes on July 3.
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Sebi restructures derivatives panel
Mumbai--Sebi has taken away the powers of all the elected members on the governing council of the derivatives segment of the Bombay Stock Exchange (BSE).
This comes even as derivatives trading is set to commence from July 2.
A new committee to be headed by the Sebi representative Nagendra Parakh, will replace the old panel. It will consist only of public representatives and the officials of the BSE.
This finally brings the entire functioning of the BSE under Sebi control, wherein the broker-members do not have any say in the day-to-day operations of the exchange.
The broking community is disturbed by Sebi’s latest move. Said one of BSE’s former directors: "It is because of the failure of Sebi that volumes at the derivatives segment of the exchange is not picking up. Sebi was created not to look after the management of the stock exchanges, but to regulate them and it should stick to the responsibilities it has been assigned. The developmental aspect of the stock exchanges should be left to the brokers."
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SAIL places Rs 185 crore NCD issue privately
Mumbai--Steel Authority of India Ltd (SAIL) has privately placed Rs 185 crore of non-convertible debentures (NCDs) today. The bonds are guaranteed by the Central government and is rated LAAA(SO) by Icra.
The issue has three options. The first is a 7-year bond with a 5-year put and call options and a coupon of 10.10 per cent.
The second option is a 7-year bond with a coupon of 10.50 per cent, while the last is a 10-year bond with a 11 per cent coupon. Coupons on all options are payable annually.

The lead arrangers of the issue are AK Capital Services Ltd, Allianz Securities Ltd, Centrum Finance Ltd, Darashaw and Company Ltd, JM Morgan Stanley Ltd, R R Financial Consultants Ltd, SBI Capital Markets Ltd and Strategic Capital Corporation Private Ltd.
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