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Natwar Singh quits Rajya Sabha, Congress

New Delhi, Feb 21: Former External Affairs Minister K Natwar Singh on Thursday resigned from the Rajya Sabha as well as Congress with which he was associated for over two decades.

He met Rajya Sabha chairman Hamid Ansari in the day and later sent his resignation letter.

The septuagenarian leader said he has resigned from the primary membership of Congress and a letter to this effect was sent yesterday to party President Sonia Gandhi.

Singh, once a close associate of Gandhi, turned her critic after the Iraqi oil-for-food scam broke out and he was forced to resign from the government in November 2005.

He had announced his decision to leave Congress at a BJP rally in Jaipur last week in the presence of Rajasthan Chief Minister Vasundhara Raje.

"You will come to know," was his response when asked about his course of action and whether he would be joining BJP.

Bureau Report

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Bank merger issue: Unions to strike if talks fail on Friday

Mumbai, Feb 21: Nearly a million Indian bank employees will go ahead with a two-day nationwide strike next week against proposed mergers between state-run banks if last minute talks fail on Friday, a union spokesman said.

Nine bank unions, representing 900,000 workers, are opposing merger proposals of state-run banks including the subsidiaries of leader State Bank of India, and seeking pensions for all bank staff.

They have called a strike on Monday and Tuesday next week.

"As of now, the strike is on," C H Venkatachalam, convenor of the United Forum of Bank Unions and joint secretary of the All India Bank Employees Association, said on Thursday.

A one-day strike last month of more than half a million employees had shut bank branches and thinned trade in local currency and bond markets, in which state-run banks are the biggest participants.

Next week's strike would be "more complete", Venkatachalam said, if there was no progress in Friday's meeting of the bank unions and the Indian Bank Association representing management, with the country's chief labour commissioner.

"We have conveyed our wishes to the government," he said.

"If there are some practical solutions tomorrow, then we may not go on strike. But if there is no positive outcome, there will be an even bigger strike as people are angry now, they are more anxious," Venkatachalam said.

The unions have said they would strike "indefinitely" in March if talks did not progress.

India had 82 commercial banks, including 29 foreign banks, and nearly 3,000 urban and rural cooperative banks at March 2007.

State-run Dena Bank said its operations may be affected by the strike.

"The bank is taking all necessary steps for the smooth functioning of the bank's branches and offices to deal with the strike," it said in a statement to the stock exchange.

At foreign banks such as Citibank, HSBC and Standard Chartered, the strike is expected to have only a marginal impact, a spokesman at one foreign bank said, as only some junior staff were affiliated with the unions.

Newer private banks such as ICICI Bank, Axis Bank and HDFC Bank do not have unions.

The Bombay Stock Exchange would make a decision with the National Stock Exchange on how to minimise the impact of the strike on trading, a spokesman said.

During last month's strike, the two exchanges had postponed settlement of cash and derivative trades by one trading session.

Bureau Report

dow slips -40 market bearish.due to economic data.

Fed slashes growth forecast

Washington, Feb 21: The Federal Reserve on late Wednesday slashed its 2008 US economic growth forecast by a half percentage point, citing a housing slump, tight credit and higher oil prices.

The Fed sees the world`s biggest economy growing in a range of 1.3 to 2.0 percent this year, "appreciably below its trend rate."

That marked the second downward revision of output growth for 2008 since the central bank began issuing quarterly economic updates in November. In the initial report, the central bank lowered its output estimate by a three-quarter point to a 1.8-2.5 percent range.

The Fed said the "considerably lower" forecast was due to a number of factors, "including a further intensification of the housing market correction, tighter credit conditions amid increased concerns about credit quality and ongoing turmoil in financial markets, and higher oil prices."

The central bank highlighted the uncertainty of the outlook and analysts pointed out that economic conditions were rapidly deteriorating.

"The immediate and urgent issue that the Fed has to deal with in the next three months is that the growth outlook has deteriorated even since the updated central-tendency forecasts were assembled at the end of January," said Global Insight economist Brian Bethune.

The Fed said core inflation, excluding volatile energy and food prices, was expected to rise in a range of 2.0 and 2.2 percent, up from a prior estimate of 1.7-1.9 percent.

The report coincided with crude-oil prices hitting record peaks above 101 dollars as speculators piled into a bull run driven by supply fears.

"The Fed`s main focus will remain the weakening economy and dysfunctional credit markets," said Merrill Lynch economist David Rosenberg.

"We continue to expect the Fed to keep cutting rates and still look for a 50-basis-points reduction in the funds rate on March 18."

Wednesday`s forecast was the second quarterly economic update under a new policy implemented by Fed chairman Ben Bernanke to provide more timely views of the world`s biggest economy.

The latest Fed GDP forecast was published with the minutes of the Federal Open Market Committee (FOMC)`s January 29-30 meeting, at which members trimmed a half point off the key federal funds interest rate, to 3.00 percent.

The Fed has cut 2.25 percentage points off the base rate since September amid financial market turmoil, including an emergency three-quarter-point cut on January 22.

Bernanke told a congressional hearing last week that a 168-billion-dollar economic stimulus law enacted earlier in February, which aims to boost consumer and business spending, would help lift growth later this year.

The minutes of the January FOMC meeting showed that several members noted that "the risks of a downturn in the economy were significant."

"With no signs of stabilization in the housing sector and with financial conditions not yet stabilized, the committee agreed that downside risks to growth would remain even after this action" to cut 50 basis points from the fed rate, the FOMC minutes said.

Deutsche Bank economists Joseph LaVorgna and Carl Riccadonna believe that message "suggests the Fed remains predisposed to cut rates again, and we believe the Fed is more inclined to do more rather than less, thus supporting a 50-basis-point cut as opposed to a 25 bp cut," they wrote in a client note.

"And if the economy slips into recession, the funds rate is likely to go down to 2.0 percent, if not a bit less."

But some FOMC members, according to the minutes, noted that when growth prospects improve, a "rapid reversal" of easing rate actions might be needed.

Bureau Report

usamarket: slips -112 nasdaq -12.20. deep in red.sorry..........

UAE likely to face energy shortfall by 2012

Dubai, Feb 21: The UAE is likely to face energy shortage as the power generating capacity of existing facilities in the region is inadequate and investments of at least USD 155 billion will be required over the next decade to meet soaring demands.

Water and power shortages of about 35 percent are expected in Kuwait, Qatar and Saudi Arabia by 2010 while the UAE and Bahrain will face similar problems by 2012 and 2013 respectively, according to research by UAE-based infrastructure specialists, Septech Emirates.

"Energy consumption is on the increase not only in the region but across the world," said Ashruf Kamel, vice president of corporate development at Septech emirates in a statement.

"Infact, global net electricity consumption is expected to increase by a whopping 42 percent by 2015 and an additional 1600 GW of power generating capacity is required to meet mounting demand," Kamel said.

With the growing population and mega scale industrial and real estate developments, demand for power is estimated to rise considerably.

"Financial institutions, private equity houses, investment banks and government investment authorities are now addressing the current and forecasted growth in the economy and how this increase will affect basic utilities like water, power and transportation," he said.

According to the report, in mid-2007, the total electricity production in the UAE was estimated at 19,220 mw compared to 9600 mw in 2001. And, according to industry estimates, this capacity is set to increase to 26,000 mw by 2010.

Bureau Report

all markets in deep red. not good for our opening.

Sensex seen lower on foreign selling worries

MUMBAI (Reuters) - Indian shares are expected to fall on Friday on worries that foreign funds could sell some of their equity holdings after U.S. and Asian stock markets fell on heightened fears of a U.S. recession.

Stocks in the U.S. fell after data showed that Mid-Atlantic factory production had slumped to its lowest level since February 2001, suggesting more rapid economic deterioration than expected.

At 0321 GMT, Tokyo and Seoul were both down nearly 2 percent while Sydney had fallen 1.3 percent.

"We will open lower today with the index down between 250-300 points," said V.K. Sharma, head of research at Anagram Stock Broking Ltd.

"The market will give up all of its yesterday's gains, plus there is no other local trigger to take the market up," he said.

The benchmark BSE 30-share index closed 0.66 percent up on Thursday at 17,734.68 points. It is more than 16 percent below a life high of 21,206.77 points hit on Jan. 10.

The broader 50-share NSE index ended up 0.72 percent at 5,191.80.

The Nifty February futures rose 1.13 percent to 5,182.10 points, narrowing the discount to the spot to 9.7 points.

India's annual inflation rate is expected to have risen 4.11 percent on Feb. 9, slightly higher than 4.07 percent a week earlier. The data is due around noon.

Foreign funds have been net sellers of more than $3 billion of shares this year, a sharp turnaround from 2007 when their net buying of more than $17 billion of shares helped power the market to record highs.

Friday February 22, 11:08 AM Rupee eases on concerns about equity outflows
MUMBAI (Reuters) - The rupee eased on Friday on concerns that overseas investors would withdraw funds from a falling stock market, though the prospect of further interest rate cuts by the U.S. Federal Reserve offered some support.

At 9:50 a.m., the partially convertible rupee was at 39.95/96 per dollar, softening a touch from the previous finish of 39.93/94.

"The equity markets are the key, because it's driving the flow of funds," said the chief dealer with a foreign bank.

India's benchmark share index fell more than 1 percent in early deals, with concerns about record oil prices and a U.S. economic slowdown keeping investor sentiment cautious.

Foreign buying of local equities was a key driver of the rupee's 12.3 percent rise in 2007.

Fresh evidence that the U.S. economy was in recession sent Asian stocks lower, with Tokyo shedding almost 2 percent as investors took shelter in the relative safety of government debt.

The dollar hovered near two-week lows versus the euro on Friday after data showed the weakest regional factory activity since the last U.S. recession in 2001 boosted expectations for a large Federal Reserve interest rate cut.

The Federal Reserve said this week it had lowered its economic growth forecast. The Fed cut its lending rate by 1.25 percentage points in January in an effort to prevent a recession.

Friday February 22, 10:41 AM HDFC to raise 5 bln rupees via bonds - source

MUMBAI (Reuters) - India's top mortgage lender, Housing Development Finance Corp, plans to raise as much as 5 billion rupees by selling 5-year senior bonds next week, a person with knowledge of the matter said on Friday.

The core issue size is 3 billion rupees and has a greenshoe option for 2 billion rupees, the source said.

The bonds will carry a coupon of 9.50 percent payable annually, and the issue is rated "AAA" by Crisil and Icra, the source said. The issue will open on Feb. 27 and Barclays was the lead manager of the deal, the source said.