Indian Refiner Shares Gain on Plan for Oil Levy on Income Tax

Indian Oil Corp., the nation’s biggest refiner, and its state-run counterparts rose in Mumbai trading after the government said it may consider charging a levy on income tax to partly recover losses from selling fuels below cost.

India will take a decision on fuel prices soon, S. Sundareshan, additional secretary in the Oil Ministry, said today. Officials of the oil and finance ministries discussed increasing prices, rationalizing duties and oil bonds.

Indian Oil gained 10.3 rupees, or 2.5 percent, to 424.35 rupees at 11:07 a.m. local time in Mumbai. Bharat Petroleum Corp. rose 8 rupees, or 2.3 percent, to 355.75 rupees and Hindustan Petroleum Corp. gained 6.5 rupees, or 2.7 percent, to 247 rupees.

India, Asia’s third-biggest economy, imports 70 percent of its oil requirement and is trying to soften the impact of surging crude oil prices. Retail fuel prices are capped in India to help curb inflation, which is running at a 3 1/2 year high.

New York oil futures have increased 24 percent in the past two months and reached a record $135.09 on May 22.

India shares up in cautious trade; Rel Comm rises

Indian shares rose on Tuesday, led by Reliance Industries and bolstered by strong regional markets, but traders were uncertain about the sustainability of the gains amid rising inflation and high oil prices.

Reliance Communications added 1.4 percent to 550.75 rupees, rebounding from a 5.1 percent fall on Monday triggered by news that it and South Africa’s MTN Group had started talks that could create a $66 billion telecoms group.

Traders said the gains reflected hopes that Reliance Communications could engineer a deal that did not excessively stretch its balance sheet.Shares in Reliance Industries, India’s top listed firm, rose 0.6 percent to 2,539.70 rupees as traders saw a buying opportunity after the stock had fallen more than 5 percent in the past three days.

At 11:27 a.m. (0557 GMT), the 30-share BSE index was up 0.33 percent, or 54.15 points, at 16,402.65, with 20 components gaining, having risen nearly 1 percent earlier.

The index is down more than 19 percent in 2008.

"There is a lack of conviction in the market," said D.D. Sharma, vice president at Anand Rathi Securities in Mumbai. "It is still not clear how the authorities will manage inflation and high crude prices."Annual inflation topped 8 percent in March for the first time in 3-½ years, revised data showed on Friday, and analysts said a possible rise in government-set retail fuel prices could push it closer to double digits.

The Indian government will soon take a decision on an oil ministry proposal to raise petrol and fuel prices, a senior official said on Tuesday without elaborating.JM Financial Services said in a technical research report that a pullback of 200 to 500 points was likely in the main index over the next few days after the recent market sell-off.

Tata Consultancy Services Ltd rose 0.4 percent to 963 rupees after India’s top software services exporter said it had signed a five-year deal worth $100 million with privately held European firm NXP Semiconductors. Larsen & Toubro was up 0.9 percent at 2,775 rupees on bargain hunting after the stock fell 8.2 percent in the last three days. India’s top engineering and construction firm is due to report results on Thursday.

In the broader market, 1,470 gainers defeated 802 losers on volume of more than 90 million shares.

The broader 50-share NSE index was up 0.69 percent at 4,908.80.

Elsewhere in the region, Karachi’s 100-share index declined 1.71 percent to 12,369.70, while Colombo’s All-share index was down 0.18 percent at 2,567.42 points.

STOCKS ON THE MOVE

* Omaxe was up 2.7 percent at 216.30 rupees after the real estate firm said it was talking to merchant bankers in India and abroad to raise at least $500 million through an equity placement.

* Sita Shree Food Products Ltd rose 4.9 percent to 44.35 rupees on news the company had won orders from Reliance Fresh for 400 metric tonnes of wheat flour and pulses, higher than a previous order for 160 metric tonnes.

MAIN TOP 3 BY VOLUME

* Ispat Industries Ltd on 5 million shares

* Reliance Natural Resources Ltd on 4 million shares

* IFCI Ltd on 3 million shares

Bush hits '08 trail; do Republicans want his help?

President George W. Bush has made it clear he is excited to get out on the campaign trail this election year to help Republicans keep the White House and retake Congress -- but do they want his help?

Republican presidential hopeful John McCain has said he wants help from Bush, who can haul in enormous campaign cash. But McCain has walked a fine line with the unpopular Bush, backing the president on the Iraq war while bucking him on how to address climate change.Bush will kick off raising money for McCain on Tuesday and Wednesday at three events in Arizona and Utah, but they will only be together at one and it will be out of the public eye. That has raised questions about whether Bush helps or hurts the Arizona senator.

"On the one hand (Republicans) want to keep their distance from the president in order to avoid being cast as a third Bush term, yet at the same time they need to tap into the fund-raising capacity of the president," said Anthony Corrado, a professor of government at Colby College in Maine.

The Reuters/Zogby poll last week found Bush’s approval rating had fallen 4 percentage points to 23 percent, a record low for pollster John Zogby. Congress fared even worse, however, falling 5 points to 11 percent.In a time-honored practice by presidents on the trail, Bush has scheduled non-campaign events on his three-day, five-state trip, which helps defray the enormous costs of hosting the presidential entourage for which candidates must pay.

Despite wrapping up the Republican nomination, McCain has lagged his Democratic rivals in raising money even though they have not finished their contest. McCain raised $18.5 million in April while New York Sen. Hillary Clinton pulled in $21 million and Illinois Sen. Barack Obama attracted $30.7 million."They probably want to do a lot of this now while there’s attention still on the Democratic race," Corrado said, saying Bush will be best used in western and southern states.

PROBLEMS MORE EXTENSIVE FOR REPUBLICANS

While the White House said there may be a Bush-McCain photo opportunity on Tuesday, Corrado said "every shot that comes out through election day where McCain is sharing a podium with the president is going to be a day when more ammunition is provided for the Democrats for the fall campaign."

In addition, Republicans are talking openly about the difficulties they face holding on to the White House and retaking control of Congress in November, noting the unpopular war in Iraq that has lasted years longer than expected.They also point to the teetering economy as well soaring gasoline and food prices. Plus, Republicans in recent months have lost three special elections for vacant seats in the House of Representatives in districts they have traditionally held.

In a sign Bush’s problems likely extend beyond the top of the ticket, the other two fund-raisers the president will attend this week for Republicans seeking seats in the House are also closed to the media."The political atmosphere facing House Republicans this November is the worst since Watergate and is far more toxic than the fall of 2006 when we lost 30 seats," Rep. Tom Davis, a Virginia Republican, said in a memo to fellow Republicans.

Democrats now hold a 236-199 advantage in the House. Republicans have seen some 28 members decide to retire or seek another office, versus seven Democrats. Senate Democrats only have to defend 12 seats versus 23 Republicans must guard.

Bush will help raise money in two key swing congressional districts on the trip: New Mexico’s open first congressional district and Kansas’ third district, where Republicans are trying again to knock out Democratic Rep. Dennis Moore."He is poisoning the well for Republican congressional candidates and for John McCain," said Larry Sabato, director of the Center for Politics at the University of Virginia. "I think McCain’s chances depend in part on whether Bush and his White House team can manage to get Bush up around 40 (percent) again," referring to the president’s approval rating.

Gold pulled higher by oil after pipeline blow-up

Gold opened higher on Tuesday as further supply disruptions in Nigeria, the world’s eighth-largest oil producer, and a weaker dollar, made the precious metal increasingly attractive.

Spot gold stood at $927.00/927.90 an ounce by 0329 GMT, having earlier risen above $930, and up from $925.20/926.60 in New York late last week.

Both Britain and the United States were closed for public holidays on Monday.

A rise in oil prices above $133 on production problems in the North Sea over the weekend and in Nigeria on Monday when rebels blew up a pipeline, drove gold higher on Tuesday.

"I am tracking oil prices for direction. And the dollar is still weakening," said Ronald Leung, director of Lee Cheong Gold Dealers in Hong Kong.

"If gold holds above $910, it could go up to $950. If it falls below $910, it could go back to the $800s," he added.

Oil bellwether NYMEX crude oil was up 97 cents at $133.16 by 0333 GMT, having climbed earlier as high as $133.46 after rebels from Nigeria’s southern Niger Delta blew up a Royal Dutch Shell oil pipeline on Monday, forcing the firm to cut production.

Spot gold rose as high as $935.30 last Thursday, its highest level in a month, on the day that oil prices rose above $135.00.

Non-commercial investors in U.S. gold futures turned bullish last week, hiking their long positions by around 20 percent in the week to May 20, data from the U.S. Commodity Futures Trading Commission showed on Friday.

Non-commercial investors, often referred to as speculators, were net long on 182,119 lots of gold on the New York Mercantile Exchange’s COMEX metals division, up from 152,938 lots a week earlier.

Further adding to bullion’s attractiveness as an alternate currency, the U.S. dollar remained close to one-month lows against a basket of currencies on Tuesday as investors expect economic data and speeches by Federal Reserve officials to provide a clearer picture of the deteriorating economy.

Gold is often seen as an alternative currency when the dollar weakens.

The dollar index was within sight of one-month lows of 71.823 struck last week, as it stood at 71.930 on Tuesday morning.

Gold futures for June delivery on the COMEX division of the New York Mercantile Exchange rose $2.00 to $927.80 an ounce.

Benchmark April gold on the Tokyo Commodity Exchange was up 2 yen at $3,107 yen per gram by the end of the morning session, having settled unchanged on Monday.

Spot platinum rose to $2,176.00/2,196.00 an ounce from $2,156.50/2,176.50 late in New York on Friday.

The most active Tokyo platinum futures contract for April was up another 12 yen per gram at 7,055 yen by the end of the TOCOM morning session, having settled 40 yen higher on Monday.

Silver was largely steady from last week at $18.23/18.29 an ounce, against last Friday’s $18.26 high, which was its highest level since April 18.

Spot palladium was largely steady at $449/$457 an ounce.

Monsoon to arrive in 3-4 days - officials

India’s June-September monsoon rains, vital for the farm economy and overall growth, are expected to reach Kerala in the next 3-4 days, weather officials said in a statement on Monday.

With the strengthening of westerly winds, the southwest monsoon has advanced into more southern and central parts of the Bay of Bengal, the statement said."Thus conditions are becoming favourable for onset of monsoon over Kerala during the next 3-4 days," the statement said.

The Indian Meteorological Department this month said the annual monsoon rains were forecast to reach southern India slightly earlier than normal on May 29.

Officials have forecast rains in 2008 at 99 percent of the long-term average.

Analysts say an early monsoon would help crops like rice, soybean and groundnut, which are sown in June and July, and could help India improve its food security amid global shortages.Fast rising food prices have been a major driver of inflation in recent weeks, pushing the wholesale price rate to its highest in 3-1/2 years above 8 percent, and causing a major headache for the Congress Party-led government facing a string of elections.

Ambani may transfer Rel Comm stake to MTN - paper

A proposed deal between South Africa’s MTN Group and Reliance Communications may result in a transfer of Chairman Anil Ambani’s two-thirds stake in the Indian firm to MTN, the Economic Times said on Tuesday, citing sources.

That would trigger an open offer from MTN for another 20 percent of Reliance Communications, as Indian law mandates such an offer to shareholders after an acquisition of more than 15 percent of a company.

MTN would become a holding company of India’s No. 2 mobile operator, and Ambani would in return get around a third in the South African firm, and keep an indirect holding of nearly 20 percent in Reliance Communications, the paper said, citing sources.

The transaction would be a share-swap deal, the paper said, with the offer to minority shareholders in cash.

"In effect, the Anil Dhirubhai Ambani Group will become the largest shareholder of the combined entity, likely to be christened MTN Reliance," the paper said, citing unidentified sources.

A spokesman for Reliance Communications declined comment.

MTN and Reliance Communications on Monday said they were in exclusive talks aimed at a potential combination of their businesses, that could create a $66 billion telecoms giant.

S.Africa's MTN now talks to Reliance

South Africa’s MTN Group has started talks with Indian mobile operator Reliance Communications that could create a $66 billion emerging markets telecoms group.Indian number two Reliance quickly stepped into the void after bigger rival Bharti Airtel pulled out of talks with MTN at the weekend aimed at taking control of sub-Saharan Africa’s biggest mobile operator.

A combination of MTN, valued at $38 billion at Friday’s close, and Reliance, valued at $28 billion, would create a top ten global industry player to rival Japan’s NTT DoCoMo Inc in market value. In terms of subscribers, a merged group would slot in just below Deutsche Telekom -- as the seventh biggest in the world..

A source with knowledge of the negotiations said Reliance would not be looking for the same structure as Bharti in the deal. Media and analysts had speculated that Bharti was eyeing a 51 percent stake in MTN and Bharti said it had pulled out of talks after the South African firm suggested it become an MTN subsidiary.

Shares in Reliance fell as investors worried about the costs of a deal while MTN stock fell as much as 7.6 percent. Investors were expecting a healthy premium from a Bharti buyout.MTN is seeking new markets outside Africa and the Middle East and will likely push to retain its brand and culture.

"Whatever the shape of the company moving forward, there is little doubt that the retention of the MTN brand and culture would be two of the most important aspects executive management and shareholders should ensure," Frost & Sullivan analyst Lindsey Mc Donald said.

Reliance Communications and MTN said earlier that the two groups had entered into exclusive talks about potentially combining their businesses. A 45-day exclusivity period will be in force, during which neither can talk to any other entity.

Reliance Communications Chairman Anil Ambani, one of India’s richest men, said a deal with MTN could "provide investors, customers and the people of both companies a global platform for exponential growth".

LACKS FINANCIAL MUSCLE

MTN had 68.2 million subscribers as of March, compared with Reliance Communications’ 48 million.

"Reliance Communications is smaller than MTN, and lacks the financial muscle for a takeover, but it is not going to want to be a subsidiary, either," said Ravi Dodhia, a telecoms analyst at KR Choksey Securities.He said the two firms were instead likely to create a new company, with MTN taking a 51 percent stake.

But Rajay Ambekar, a telecoms analyst and fund manager at Cadiz African Harvest in Cape Town said MTN Chief Executive Phuthuma Nhleko and his executives were aggressively looking for growth and sector consolidation opportunities."If MTN is looking to remain listed on the Johannesburg Stock Exchange and remain a South African company and be the aggressor in this deals, having this sort of exclusivity says to everyone else: ’You guys don’t approach us, don’t bother, we are not looking to be acquired’," Ambekar said.

Harit Shah at India’s Angel Broking, said Reliance and MTN might swap shares, as the foreign holding in Reliance Communications was considerably lower than in Bharti Airtel, a factor that was seen as a possible roadblock for Bharti’s attempted deal.

Foreign ownership of Indian telecom firms is capped at 74 percent, and Bharti is 30.5 percent owned by Singapore Telecommunications.

Shares in Reliance Communications, fell as much as 5.7 percent to their lowest since May 12 while in Johannesburg, shares in MTN fell as much as 7.6 percent to 145.11 rand, their lowest since April 30.

"The market is disappointed that MTN has called off its talks with Bharti Airtel," said Garth Mackenzie, a trader at BOE Stockbrokers in Johannesburg.

"The market was anticipating a buyout from Bharti of MTN of a controlling stake. Naturally, Bharti would have to pay a premium to the share price, if shareholders were going to give up their shares," he said.

Analysts had speculated that Bharti Airtel was engineering a merger that would value MTN at up to $50 billion.

Shares in Bharti rose as much as 4.2 percent to 872 rupees, their highest since May 6, when they slumped more than 5 percent on news that Bharti was in talks with MTN.

Reliance Communications bought Ugandan Anupam Global Soft Ltd in February, saying it would launch mobile services in Uganda by the end of 2008 and spend up to $500 million over five years to build a telecom network there.

Last year, it lost the $11 billion race for majority control of India’s third-largest mobile provider to Vodafone Plc, but has made several smaller overseas acquisitions, including a UK-based WiMax operator of 4G services.

India’s wireless market grew 25-fold between 2002-07, ringing up record profits for telecom firms, but that growth is expected to slow as the percentage of the population with a mobile phone tops 40 percent by 2010 from 22 percent now.

In contrast, MTN is present in some of the world’s most lucrative markets, such as Nigeria, Cameroon, Ghana, Zambia and Uganda, and has said it is keen to pursue more expansion opportunities in emerging markets.

Reliance is being advised by Lazard while MTN is advised by Merrill Lynch.

India to join 'economic miracle' group

India is all set to join the 13-member group of ’miracle economies’ that have recorded higher growth in a short span of time, says a UK-based think tank.

In addition to India, Vietnam will also be joining the club of these fast-growing economies, which among others include Japan, Singapore and South Korea, the Commission on Growth and Development said.

The other members of the miracle economies include Botswana, Brazil, China, Hong Kong (China), Indonesia, Malaysia, Malta, Oman, Taiwan (China) and Thailand, the Commission, which is sponsored by World Bank and governments of Australia, the Netherlands and the UK, said.

Indian growth story has characteristics as the miracle economies, the report said.

The miracle economies, it added, shared common characteristics as they are all engaged with the global Economy, had high rates of saving and investment, and credible and capable governments.The Commission, which is headed by Nobel laureate Michael Spence, has Planning Commission deputy chairman Montek Singh Ahluwalia as one of the members. It said India’s multi-party democracy has grown remarkably due to a pragmatic and impartial growth strategy and also the role of government has shifted from dismantling the excesses of the license raj to putting in more endeavours for improving the public infrastructure.

India has been a hub of world-class engineers and scientists for decades and is supplying to global demand for software services. This has helped the country in fulfilling its economic growth need, the think-tank said. Pointing out that India’s civil servant performance has shown an exemplary improvement based on business quality standards formulated by the International Organisation for Standardisation, the Commission said it has significantly contributed to effective governance. It observed that all the miracle economies grew remarkably by importing ideas, technology, and knowhow from the rest of the world and exploiting global demand.

"The inflow of knowledge dramatically increased the Economy’s productive potential; the global market provided the demand necessary to fulfil it. To put it very simply, they imported what the rest of the world knew, and exported what it wanted," the Commission said in its report. All these economies were future-oriented and relied on a functioning market system and decentralised decision-making, promoting entrepreneurial spirit, it added.

Also, the report said, mobility of resources like labour and capital was a prominent feature of all the 13 high-growth economies.

Supreme Court stays SEBI IPO refund

In a major setback to more than 10,000 investors, the Supreme Court on Monday stayed market regulator SEBI’s order asking SVPCL Ltd, a Hyderabad-based stationery manufacturing company, to refund the application money with interest to all the investors who had applied for its IPO in October 2007.

A bench headed by Justice C K Thakker while staying SEBI’s order also issued notice to it and Merchant Bankers UTI Securities Ltd. The issue size of the initial public offer (IPO) was Rs 34 crore.

SEBI in its letter dated May 21 had stated that due to dismissal of the appeal by Securities Appellate Tribunal (SAT) and deemed refusal by National Stock Exchange, SVPCL’s public issue had become void by virtue of Section 73(1A) of the Companies Act, 1956.

"In terms of provision of the Companies Act and disclosure made by you (SVPCL) in the offer document, you are liable to refund the all application money along with the applicable rate of interest and to confirm compliance of the same by May 31, 2008," the market regulator had stated.

Challenging the SAT judgement that dismissed its plea for a direction to BSE to list its equity shares, SVPCL stated that BSE and NSE vide their letters dated May 18, 2007 and June 18, 2007, respectively, had given in principle approval for listing of shares in its Draft Red Herring Prospectus.

Besides, SEBI had also issued acknowledgment letters after asking it to make certain modifications, it said.

According to SVPCL counsel AM Singhvi, the primary ground on which the request for listing by BSE had been turned down was that UTI Securities, the lead manager responsible for post issue compliances, had expressed its inability to give an undertaking as required by BSE under Section 73 of the Companies Act, 1956, it added.

According to Singhvi, NSE could not grant the requisite permission within the stipulated period of 10 weeks as SEBI’s restraint order had made it impossible to proceed further towards listing of shares till the complaint filed by one Srinivas Pandit against the IPO was addressed. SAT failed to appreciate that the fate of SVPCL’s listing on NSE was contingent upon listing of shares of BSE, it said.

The Andhra Pradesh High Court had issued an interim order asking BSE and NSE to allow only the listing but not the trading of the shares at the exchanges. The company also claimed that it had given investors, through a notice on December 3, the option of pulling out of the issue and only small percentage of investors had withdrawn their applications.

The Tribunal while dismissing its plea had stated that the validity of the allotment was dependent on securing the requisite permission of each stock exchange whose permission had been sought. If permission is not granted by the stock exchange before the expiry of 10 weeks from the date of closing of the subscription lists, and upon the expiry of that date, any allotment of shares made by the company becomes void, SAT said, adding "the period of 10 weeks is sacrosanct and cannot be extended for any reason whatsoever nor can any period be excluded therefrom."

As the company had mentioned the names of NSE and BSE in its prospectus when it offered shares to the public for subscription, it was, therefore, necessary that both these exchanges should have granted permission for the listing of the shares within 10 weeks from the closing of the subscription lists which expired on January 4, 2008, it added.

India's Tendulkar Pays $8.2 Million for Bungalow,

Indian cricketer Sachin Tendulkar paid 350 million rupees ($8.2 million) for a Mumbai bungalow, the Mumbai Mirror reported, citing people it didn’t identify.

Tendulkar, who first played for India in 1989 at the age of 16 years and holds the world record for centuries in test cricket, acquired the villa in the north-central suburb of Bandra from Satra Group, the newspaper reported, citing Vijay Satra, a director with Satra Properties India Ltd.

The cricketer plans to demolish the two-storey, 9,000- square-foot dwelling and replace the 80-year-old villa with a new building, the newspaper reported, citing an unidentified person.

Property prices in Bandra have more than doubled over the past three years, according to Knight Frank LLP.

The neighborhood is likely to get a new bridge by January across a strip of sea to Worli in central Mumbai to reduce traffic congestion.

TCS signs $100 mn deal with a European firm

Tata Consultancy Services Ltd said on Monday it had signed a five-year deal worth $100 million with NXP Semiconductors, a privately held European company.

No other details were immediately available.

Shares in the TCS, India’s top software exporter, ended 2.7 percent higher at 958.80 rupees on Monday in a Mumbai market that lost 1.8 percent.

Price of IPL semi-finals tickets to cost fans dear

Tickets for the Indian Premier League semi-final matches, to be held at the Wankhede Stadium in Mumbai on May 30 and 31, are going to cost the cricket fans dear with the rates fixed between Rs 1000 and Rs 12000 for most stands barring the popular East Lower.

The costliest ticket for the matches is the one which gains the fan entry into the Garware club house, the upper tier to the left of the players’ dressing rooms, and is priced at a whopping Rs 12,000, according to information provided by Mumbai Cricket Association sources today.

This is double the amount the fans paid for the league stage of the competition.

Similarly the cost of the MCA Guest Stand ticket has also been doubled to Rs 6,000 while the fans occupying the Sachin Tendulkar stand on the northwestern part of the stadium would have to cough up Rs 2000, four times what they had paid for the earlier ties held at this venue, while the North central stand ticket has been priced at Rs 4000.

The Sunil Gavaskar stand tickets, the upper tier of the East Stand with corporate boxes, would cost Rs 5000 each while tickets for the Vijay Merchant Stand (upper and lower) have been priced at Rs 10000 and Rs 1000 respectively, the sources said.

"We have maintained the price for the East lower stand at Rs 250 and they have all been sold out," the sources said, a surprise considering the fact that the host team - Mumbai Indians - had not yet qualified for the knock-out stage of the Twenty20 League.

Govt seen toning down fuel price hike

The government is expected to significantly tone down an oil ministry proposal to raise fuel prices by 15-20 percent due to an electoral setback for the ruling party and inflation fears, officials and analysts say.

Last week, ministry officials proposed to raise petrol prices by 10 rupees, or 22 percent, and diesel prices by 5 rupees, or 15.8 percent, as crude prices soared to record highs, hammering state oil firms.

State-run refining and fuel marketing Companies import most of their oil but have to sell fuels at heavily discounted rates set by the government.

Analysts say fuel prices may now be raised only 5-10 percent and the government may soften the impact on oil retailing firms by issuing more bonds and cutting customs duty on imported crude, which accounts for 70 percent of domestic consumption.

On Friday, Oil Minister Murli Deora said a decision on fuel prices was expected within a week, but a top government official told reporters on Monday that the government may take longer, partly because the prime minister was not well.

"There is no political consensus on price increase. Ministries are ready but politicians are not," the official, who did not want to be identified, told reporters.

The ruling federal coalition led by the Congress Party suffered a big setback on Sunday as the country’s main opposition party, the Hindu-nationalist Bharatiya Janata Party, won the election in Karnataka, extending a winning streak ahead of a national vote next year.

"Given the political resistance of such a move, the hike, if any, is likely to be much lower than what the oil ministry is seeking," said Sonal Varma, an economist at Lehman Brothers in Mumbai.

Saugata Bhattacharya, economist at Axis Bank, said the government may raise fuel prices by 3-5 percent. "Given the state of cash flows of oil Companies, there will be a rise, but the quantum will be tempered," Bhattacharya said.

Analysts say crude prices, which rose above $133 a barrel on Monday due to lingering supply concerns from key producer Nigeria and a partial shut-in at North Sea oilfields, may rise further.

"We don’t know where prices are headed because the hurricane season is now coming. Any increase will have an impact on the Economy when inflation is rising," said V. Raghuraman, principal energy adviser at the Confederation of Indian Industries.

A. Prasanna, an economist at ICICI Securities Primary Dealership, said the price rise may not be substantial.

"We may see some stop-gap solution, including a nominal price hike," Prasanna said.

Fast rising prices of foods and metals have pushed wholesale price inflation to its highest in 3-1/2 years, topping 8 percent in mid March, and posing a major headache for the government.

Increasing fuel prices, a move being strongly resisted by the administration’s communist allies, would risk further alienating already unhappy voters.

India may reduce some duties on fuel to partly offset an increase in retail prices, the Economic Times reported, citing people it did not identify.

Oil Minister Murli Deora will meet Finance Minister Palaniappan Chidambaram today, the newspaper reported.

Refiners, including Indian Oil Corp., Bharat Petroleum Corp. and Hindustan Petroleum Corp., need government protection, the newspaper cited Deora as saying.

India's Rupee Falls on Speculation Importers Selling Currency

India’s rupee fell for a second day on speculation refiners and other importers sold the currency for dollars to settle month-end bills.The rupee declined 0.2 percent to 42.815 a dollar as of 9:10 a.m. in Mumbai,

The partially convertible rupee could edge higher on Tuesday, lifted by a rise in Asian stocks, but dollar buying by oil refiners to meet month-end commitments is expected to check gains.

* India imports most of its oil and refiners are the biggest buyers of dollars in the currency market, with their demand tending to peak towards the end of each month. Oil’s surge to record highs has increased the amount of dollars they need to buy to pay for imports.

* The rupee ended at 42.73/74 per dollar on Monday, off an intra-day high of 42.52 and a shade weaker than Friday’s close of 42.69/70. It hit a 13-month low of 43.21 last week.

* Asian stocks rebounded on Tuesday from the previous day’s dip, as bargain hunters scoured the market after five days of losses, though rising inflation and high oil prices kept investors uncertain about the outlook.