Markets: Eerie calm

Markets: Eerie calm

it is not clear when market sentiment can change; as in the past, it can be quite sudden.
At a turn and yet not

At a turn and yet not

RBI could be tempted to cut policy rate to support growth at its bi-monthly review.

Govt to delay large stake sales, ETF launch as Indian rupee dips

Jul 10 2013, 15:39 IST
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SummaryCentre to take up big-ticket sell-offs like IOC, NHPC only in late 2013

Concerned over choppy market condition and the fast depreciating rupee, the government may choose to push back launch of the much-awaited exchange traded fund (ETF) of Central public sector enterprises (CPSEs) and key stake sale issues.

“In the current situation, investors are wary and any major disinvestment issue will not see much interest,” said a senior official, adding that the government will, at present, largely concentrate on selling stake in those public sector units that have to comply with the minimum public float norms

The domestic currency had touched a record low of 61.21 on Monday.

“At present, issues such as Neyveli Lignite Corporation, State Trading Corporation and ITDC are the main priority as the public float in these firms is less than 10 per cent,” the official said, adding that big-ticket stake sales, such as those in Indian Oil Corporation may be taken forward only later in the year.

Apart from the IOC stake sale that could raise close to Rs 4,300 crore, other major issues for 2013-14 include 11.36 per cent disinvestment in NHPC worth an estimated Rs 2,300 crore.

The government is also yet to decide on a 10 per cent stake sale in Coal India Ltd (CIL).

Significantly, the launch of the ETF of listed PSUs could also be delayed. “Right now, it is a wait-and-watch situation. Modalities of the fund need to be finalised and also the question arises why to introduce such a big scheme if the market conditions are not right,” the official said.

Earlier, disinvestment secretary Ravi Mathur had said the CPSE-ETF would be launched by October this year. The fund, which will comprise of shares of listed public sector firms is expected to act as an additional mechanism for disinvestment to help meet the targeted Rs 40,000 crore from stake sale proceeds.

The Cabinet Committee on Economic Affairs (CCEA) had in May this year approved the proposal to set up the fund. Under the proposal, the fund would comprise of two to three per cent of shares of listed public sector units.

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