Rupee gains
Mumbai: The rupee moved up against the dollar opening at 40.36/37 to touch an intra-day low of 40.42. Thereafter it gradually moved up to end at 40.35/37, against the previous close at 40.42. Market participants expect the rupee to be range bound this week. In forwards, the six-month premium closed at 1.77 per cent (1.99) and the 12-month ended at 1.86 per cent (1.93).

Bonds: Bond prices rose by about 18 paise and the yields fell by two basis points backed by comfortable liquidity in the system.

G-secs: The 7.49 per cent 10-year-2017 paper opened at Rs97 (7.94 per cent YTM) and closed at Rs97.18 (7.91 per cent YTM) on Monday against the previous clos e of Rs 96.99 (7.93 per cent YTM). The 8.33 per cent 2036 paper opened at Rs99.50 (8.37 per cent YTM) and closed at Rs99.45 (8.38 per cent YTM).

Call rates: Inter-bank call rates closed at 0.4-0.5 per cent on Monday against the previous close of 0.35-0.5 per cent.

Reverse repo: The RBI did not receive any bids through the repo window. In the first one-day reverse repo auction, the RBI received 43 bids for Rs56,555 crore while it accepted Rs1,995 crore. In the second one-day reverse repo auction, the central bank received 40 bids worth Rs41,945 crore while it accepted bids to the tune of Rs1,005 crore. There were no repo bids in the first and second one-day auctions.

CBLO: The CBLO market saw 239 trades aggregating Rs26,093.5 crore in the 0.03-5 per cent range.
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Indian Bank sees slight fall in margins
New Delhi: Indian Bank expects marginal dip in its net interest margin during the current fiscal on account of the uncertainty in interest rate environment and some slowdown in credit growth rate, a top official of the bank has said.

Indian Bank has paid dividend of Rs103.16 crore to the Centre towards 30 per cent equity dividend for fiscal 2006-07. The bank has also paid a preference dividend of Rs32 crore to the Central Government towards the preference share capital of Rs400 crore held by the government.

The bank officials said expected net advances growth was expected to be around 25 per cent this fiscal, which is lower than 29.23 per cent recorded in 2006-07. However, deposits are likely to grow by 20 per cent this fiscal as against 15 per cent recorded last year.
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Indian economy to grow at 9 pc, inflation at 4 pc
The Indian economy would grow at 9 pc while inflation will be contained at 4 pc according to the forecast by the Prime Minister's Economic Advisory Council, headed by former Reserve Bank governor C Rangarajan.

The panel said to make this possible the economy's managers will have to make some tough choices like curbing the inflow of external debt, allowing the rupee to appreciate further and removing "administrative and procedural impediments" to acquisitions abroad. The panel has made some oblique criticism of the present accounting practice in public finance which understates the combined fiscal deficit of the Centre and the states by around 2 pc of the gross domestic product (GDP).

The RBI has pegged the FY08 growth at 8-8.5 pc and said it sees the external environment as still being benign and expects sustained investment to keep growth booming. The need to curb capital inflows comes from the mismatch between the current account deficit, which is seen at $17.4 billion and surpluses on the capital account (nearly $58 billion).

The council is not in favour of disrupting foreign equity investments. The panel suggested three instruments to face the strong capital flow: allowing the rupee to appreciate, sterilising capital inflows in excess of what can be absorbed into reserves without pushing money supply growth above 17.5 pc and instituting a policy of encouraging capital outflow and discouraging external borrowing for rupee expenditure.

The report has put farm growth at 2.5 pc; industrial output at 10.6 pc; and services at 10.4 pc. It expected inflation to remain close to 4 pc.
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PNB insurance foray may be stalled
Mumbai: Punjab National Bank's (PNB) proposed foray into life insurance with the UK-based Principal Financial Group, UK Paints (India) and Vijaya Bank has come up against a block, as some of the partners want to withdraw from the venture.

Berger Paints, which was to own 32 per cent in the new venture - 'Principal PNB Life Insurance Compan - is considering withdrawing from the venture, while Vijaya Bank, with a 12 per cent stake, is als considering its options. Principal Financial holds the remaining 26 per cent stake, the maximum that a foreign partner can hold.

PNB holds a 30 per cent stake in the joint venture and is planning to review the venture.
In May, the Insurance Regulatory and Development Authority (Irda) declined to clear the R1 application of Principal PNB Life insurance and had sought clarifications. The clearance is basically an in-principle approval by the Irda to the proposed terms of an insurance company.

According to sources, the Irda had raised concerns on the participation of UK Paints in the venture.
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