Sensex closes 704 points down, biggest drop in over 2 yrs

Indian shares fell 4.13 per cent on Thursday; the sharpest single-day drop in two years, mirroring global markets after the US Federal Reserve gave a grim outlook for the US economy. 

The benchmark 30-share Sensex index closed down 704.0 points at 16,361.15 at the BSE

 its second straight day of losses. 

Investors sold heavily after European markets opened sharply down and the sentiment remained downbeat with US futures trends indicating a further fall later on Thursday. 

The rupee also fell to a new two-year-low of 49.01 rupees to the dollar -- a level last seen in September 2009 -- as demand for the safe-haven greenback rose. 

The fall in the rupee will fuel India's inflationary woes, making imported goods such as foreign crude oil, on which the country is reliant, more costly. 

India's annual inflation is currently near double digits, the highest amongst most leading global economies. 


The Reserve Bank of India raised rates for the 12th time in 18 months last week to combat inflation, despite signs of slowing growth. 

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Govt set to pick new LIC chairman

The government is set to appoint a full-time chairman of the Life Insurance Corporation of India within 10 days, a top finance ministry official said.

“It will take place very shortly… could be a week or 10 days,” financial services secretary D.K. Mittal said. He blamed the delay on the long selection process.

The LIC has been without a full-time chairman since May after the then chairman T.S. Vijayan’s five-year term ended.

As an interim arrangement, additional secretary in the finance ministry, Rakesh Singh, was appointed as the chairman. Subsequently, D.K. Mehrotra, the incumbent managing director was asked to officiate as the chairman of the country’s largest financial institution.

A selection panel, headed by economic affairs secretary R. Gopalan, had invited four candidates in June, but a decision could not be taken, as two of the contenders did not have central vigilance clearance.

On the names being discussed, Mittal said, “That’s for the selection committee to decide. What I am saying is that this process is on and very shortly you will get a final (decision).”

According to earlier reports, the shortlisted candidates — all from within the LIC — include current acting chairman D.K. Mehrotra, managing director Thomas Mathew and three executive directors — A.K. Sahoo, T.T. Mathew and K.B. Saha.

Several questions have been raised about the government’s inability to find a full-time leadership for the LIC, which has assets of over Rs 10 trillion, especially at a time it faces competition from private players since the opening up of the sector a decade ago.

SBI home loan

The State Bank of India today extended its 25 basis point concessional home loan scheme until December after facing stiff competition from its rivals offering dual interest home loan products.

Under the scheme, the SBI offers a 25 basis point discount on interest rates on its card rate across the tenor of a floating loan

BSNL feeling the heat for stuff

State-run Bharat Sanchar Nigam Ltd is working on a revised plan to reduce its workforce as salary payments have affected its revenues. The PSU telecom firm’s net loss of Rs 5,997 crore during 2010-11 can be attributed to hefty payments made towards salaries and the purchase of 3G and BWA (broadband wireless access) spectrum, company officials said. BSNL had suffered a loss of Rs 1,823 crore in 2009-10 for the first time since its inception in 2000.  Around 47 per cent of BSNL’s revenue go towards staff salary.

The company is working on plans such as voluntary retirement scheme (VRS) to reduce the headcount.

The department of telecom (DoT) had rejected BSNL’s proposal to trim its workforce by 21,000 as the number was too low considering the financial burden. The DoT had suggested that the company should reduce its workforce by about 1,00,000, as proposed by the Sam Pitroda panel set up by Prime Minister Manmohan Singh to improve the financial health of the firm. The PSU, with an employee base of about 2,80,000, has been struggling to survive in the industry because of high employee cost, declining revenues and low tariffs. The VRS scheme may require the company to make a one-time payment of about Rs 2,000-3,000 crore, while the DoT will shoulder the remaining financial burden.