RBI steps in…raises CRR to 8%

In a bid to control inflation, RBI raised CRR to 8% from 7.50%. This would be done in two stages, first 25bps to be raised effective from April 26 and second would be effective from May 10.

In a statement, the Reserve Bank of India said, “On a review of current liquidity situation, it is considered desirable to increase the cash reserve ratio (CRR) of the scheduled commercial banks, regional rural banks (RRBs), scheduled state co-operative banks and scheduled primary (urban) co-operative banks by 50 basis points to 8.0 per cent in two stages, effective from specified fortnights: First 25bps to be raised effective from April 26 and second would be effective from May 10. “It may be recalled that in the Third Quarter Review of the Annual Statement of the Monetary Policy for the year 2007-08, the stance of monetary policy was set out. The review had stated that over the period ahead, liquidity management will continue to assume priority in the conduct of monetary policy. It was further stated that the liquidity conditions are being shaped by several underlying factors and their developments have implications for liquidity management going forward and warrant appropriate and timely action, “ according to the statement. “The liquidity adjustment facility (LAF) had been in an injection mode persistently during the second half of March 2008. Subsequently, there was a large turnaround and, an average amount of Rs.40,088 crore was absorbed through the LAF during April 3-17, 2008 as against average daily injection of liquidity of Rs. 27,385 crore during March 17-31, 2008, according to the statement. Year-on-year WPI inflation, which was 3.83 per cent on January 12, 2008, i.e., at the time of the announcement of Third Quarter Review, increased to 7.41 per cent on March 29, 2008 and remained at 7.14 per cent as on April 5, 2008 and its overall impact on inflation expectations requires to be monitored and moderated.

Select stocks sizzle, indices fizzle

Select stocks sizzle, indices fizzle

The BSE benchmark Sensex ended 90 points higher to close at 16,244 and the Nifty index ended 7 points higher to 4,887.

Volatile markets ended with modest gains as the early rally fizzled out on back of selling pressure in the Capital Good, Power and PSU stocks. However, a lot of Mid-Cap and Small-Cap stocks were in action. Stocks like Gujarat Alkali, Orchid Chemical, Ceat, Bombay Dyeing and Aptech were among the major attraction for the day.

It was the IT stocks that saved the day for the bulls as for the second straight session they led from the front. The BSE IT index was up 3.73%. Infosys, Wipro, Satyam and HCL Tech were among the noticeable gainers.

Finally, the BSE benchmark Sensex ended 90 points higher to close at 16,244 and the Nifty index ended 7 points higher to 4,887.

Overall about 1,866 stocks advanced; 813 stocks declined while 75 stocks remained unchanged. Among the 50-Nifty 25 stocks ended in red and 36 stocks ended in green.

Tata Motors-Fiat JV to invest Rs23.41bn in Pune

Both players will invest Rs6.5bn each and the balance will come from debt. Fiat India plans to launch Grande Punto and Linea from the Ranjangaon plant

Fiat India Automobiles Pvt. Ltd., a 50:50 joint venture between Fiat Group Automobiles SpA and Tata Motors, has announced plans for expanding production capacity and backward integration at its Ranjangaon facility near Pune.

Fiat India yesterday signed a Memorandum of Understanding (MoU) with the Maharashtra Government for an additional investment of Rs23.4bn. With this investment, the company is taking the overall investment in Pune to Rs40.2bn.
Both players would invest Rs6.5bn each and the balance would come from debt, Fiat India CEO Rajeev Kapoor said.

Fiat India plans to launch two cars - Grande Punto and Linea - in the B and C segments, respectively from the Ranjangaon plant later this year.

By 2012, the capacity of the plant would be expanded to two lakh cars, three lakh diesel engines, and three lakh spare parts and accessories per annum. At present, the plant has a capacity to produce one lakh cars and two lakh engines.

Apart from the Grand Punto and Linea, the Ranjangaon facility would also make Fiat's 1.3 litre multijet diesel engines and 1.2 & 1.4 litre fire gasoline engines. The facility would also produce Tata Motors passenger cars.

At present, Fiat makes Palio Stile 1.1 and 1.6 models at Ranjangaon.

The Ranjangaon facility employs about 850 people and the capacity expansion is expected to create another 1,000 direct jobs. The overall employment potential of the plant, at its maximum capacity, has been pegged at 4,000 direct and indirect jobs.