31 May 2009 | India Economic Scan

31-May-2009

India Economic Scan

In this edition: India's GDP growth at 5.8% beats estimates, Indias budget deficit blows out to 7 year high, Wal-Mart opens Indian Wholesale outlet with Bharti, Business confidence rises in India, Indian stocks surge on Friday.

Top headlines

India’s GDP Growth Beats Estimates Amid Global Slump

• Asia’s third-largest economy expanded 5.8% in the three months to March 31, led by government spending and construction, the statistics office said in New Delhi today. Economists were expecting a 5% increase.
• “This pace of growth is not enough to create jobs for all,” said Shubhada M. Rao, chief economist at Mumbai-based Yes Bank Ltd. “A lot needs to be done, especially higher spending in the budget. How it gets financed is the key question.” (Bloomberg)

India’s Budget Deficit Widens to 7-Year High, Ratings at Risk

• The shortfall climbed to 3.3 trillion rupees (69.95 billion) or 6.2% of gross domestic product in the fiscal year to March 2009, the government said in New Delhi today. That was more than the 2.5% initially estimated last year and February’s revised 6% figure.
• “The government’s fiscal situation will remain precarious this year as well due to higher expenditure,” said Dharmakirti Joshi, an economist at Mumbai-based Crisil Ltd., the local unit of Standard & Poor’s. “Balancing the fiscal stress and sustaining the growth momentum will remain a key challenge for the new government.” (Bloomberg)

Wal-Mart Opens India Wholesale Outlet With Bharti

• Wal-Mart Stores Inc., the world’s largest retailer, and local partner Bharti Group opened their first wholesale outlet in India as rising disposable incomes boost demand in the world’s second-fastest-growing major economy.
• Bharti Wal-Mart Pvt. today opened the cash-and-carry store in the northern city of Amritsar, it said in a statement. The venture plans to open 10 or 15 wholesale outlets and employ 5,000 people during the next three years, the statement said. (Bloomberg)

Business confidence level up: survey

• The latest “Business Confidence Survey” of the Federation of Indian Chambers of Commerce and Industry (FICCI) shows that the economy has started recuperating and can move to a higher growth trajectory.
• “The current survey indicates a major jump in the overall business confidence index to 64.1 from 44 in the last survey. And this is clearly reminiscent of the high confidence level prevalent during the first half of 2007-08,” the survey said. (The Hindu)

Upbeat Data Sends Shares Up In Asia

• The Bombay Sensex 30 Index surged +2.8% to 14,690.90 after figures showed that the Indian economy grew 5.8% in the first quarter, higher than economists' expectations of a 5% expansion. Government spending and construction contributed most of the gain.
• The benchmark crude oil price has surged about 28% this month. Meanwhile, the Saudi Arabian Oil Minister said this week that the Organization of Petroleum Exporting Countries (OPEC) was determined to keep its output target unchanged, and U.S. government data showed a steep drop in U.S. crude inventories. The NYMEX future had gained another 52 cents to $65.60 a barrel as of 4:00pm in Hong Kong. (Forbes)

Source: India Economic Scan

26 May 2009 | India Economic Scan

26-May-2009

India Economic Scan

In this edition: RBI says maintaining growth rate a key challenge, Indian oil producers drop on rumors of a cap on oil producers profits, Tata finds little demand for no-frills car -Nano, Indian Rupee falls - reacts to NK nuclear test, Indian stocks closed up slightly on Monday.

Top headlines

Maintaining growth rate key challenge - RBI

• The key challenge facing India's new ruling coalition is to maintain a strong growth rate, which has suffered in the face of the global financial crisis, the Reserve Bank of India’s deputy governor said on Monday.
• The central bank expects the economy to expand about 6%in the current fiscal year ending March 31, 2010, lower from the previous year's estimate of 6.5-6.7%. (Reuters)

India Oil Producers Drop on Report of Cap on Profit

• Cairn India Ltd., a unit of U.K.- based cairn Energy Plc, and Oil & Natural Gas Corp., the biggest energy explorer, fell in Mumbai trading after the Economic Times reported the government plans to impose a cap on oil producers’ profits.
• Cairn fell -4.1%, the most since May 14, to 213.45 rupees. ONGC dropped -0.5% to 1,040.65 rupees, the lowest since May 20. The benchmark Sensitive Index closed +0.2% higher in Mumbai. (Bloomberg)

In India, Little Demand for a No-Frills Car

• The chairman of Tata Motors, Ratan Tata, had 500 engineers work for four years designing the world’s lowest-cost car, convinced that cost-conscious Indian drivers could live without air-conditioning and cup holders.
• But only 20% of Tata’s initial 203,000 orders for the car — the Nano — were for the no-frills $2,600 model. Instead, half of the customers booked the top-end model, which costs 40% more. (NY Times)

Indian Rupee Falls as North Korea Nuclear Test May Spur Outflow

• The rupee weakened -0.4% to 47.29 per dollar at the 5 p.m. close in Mumbai, according to data compiled by Bloomberg. The currency climbed +4.9% last week, the best performance since March 1996. A short position is a bet that an asset or currency will fall.
• “The rupee is falling and it’s a reaction to the North Korean nuclear test,” said Sudarshan Bhatt, chief currency trader at state-owned Corporation Bank in Mumbai. “Banks are reversing dollar short positions to reduce risk. Stocks are expected to drop, and that could add to the rupee’s weakness.” (Bloomberg)

Indian Stocks Gain Led by Ranbaxy as CEO Quits; ONGC Falls

• The Bombay Stock Exchange’s Sensitive Index, or Sensex, rose 26.07, or +0.2%, to 13,913.22. It swung between gains and losses at least 20 times. The S&P CNX Nifty Index on the National Stock Exchange was little changed at 4,237.55. The BSE 200 Index rose +0.8% to 1,697.56.
• Ranbaxy jumped +21% to 267 rupees. Chief Executive Officer Malvinder Singh quit the company previously controlled by his family as its biggest shareholder Daiichi Sankyo Co. boosted efforts to turn around the drugmaker. Oil and Natural Gas fell -0.5% to 1,040.65 rupees. (Bloomberg)

Source: India Economic Scan

21 May 2009 | India Economic Scan

21-May-2009

India Economic Scan

In this edition: India registers inflation at 0.61%, Barclays forecasts 7% GDP growth for 2009-10, BNP says don't sell Indian stocks - points to likely fund inflows from re-weighting, Tata Motors raises $884m in debentures, Sensex stock index falls slightly.

Top headlines

India’s 0.61% Inflation Gives Singh Room for Stimulus

• Wholesale prices rose 0.61% in the week to May 9 from a year earlier after gaining 0.48% in the previous week, the government said in New Delhi today. That matched the median forecast in a Bloomberg News survey of economists.
• “Inflation is not a primary concern at this point of time and that gives policy makers leeway to focus on policies that will help stimulate slowing demand,” said Sonal Varma, economist at Nomura Securities "While inflation can post negative readings, this cannot be characterized as deflation.” (Bloomberg)

Is it for real? Barclays sees 7 per cent growth

• “The worst is over,” said Sailesh Jha, Director, Asian Economic Research, Barclays Capital. He predicted an overall GDP growth of 7% for 2009-10 and 7.5% in financial year 2010-11.
• Standard Chartered Bank (SCB) has raised its Rupee rating from ‘Neutral’ to ‘Overweight’. The bank had predicted the rupee would hover around 47 against the US dollar. Barclays has pitched the rupee to hit about 44 per US dollar by March 2010. (Hindustan Times)

Selling Into India Stocks Rally a ‘Mistake,’ BNP Paribas Says

• Indian stocks may extend gains by 18% as fund managers bolster “underweight” holdings, prompted by the rally after the Congress party won elections, BNP Paribas said.
• If the investors boost their India holdings to 1 percentage point “overweight,” or more than the ratio represented in the benchmark index, the inflow could rise to $7 billion from actively managed funds, BNP said. (Bloomberg)

India's Tata Motors raises $884 mln in debentures

• Tata Motors, India's leading vehicles maker, has raised 42 billion rupees ($884 million) through an issue of non-convertible rupee debentures, the company said.
• The debentures, issued in 4 tranches with maturities ranging from 23 to 83 months, carry a coupon rate of 2% and have been guaranteed by the State Bank of India, the company said. (Reuters)

Indian Sensex Falls a Second Day, Led by ICICI, Larsen & Toubro

• The Bombay Stock Exchange’s Sensitive Index, or Sensex, fell 53.22, or -0.4%, to 14,007.44 at 10:29 a.m. in Mumbai today. The S&P CNX Nifty Index on the National Stock Exchange was little changed at 4,266.90. The BSE 200 Index increased +0.6% to 1,703.34. Nifty futures for May delivery fell -0.2% to 4,273.
• ICICI Bank, India’s second largest, -3.1%, paring its year-to-date gain to 52%. Bigger rival State Bank of India -2.6%. Its relative strength index, measuring how fast prices rose over the previous 14 days, has been above 70 since May 18, a signal to some investors that the shares will fall. Larsen & Toubro, India’s biggest engineering company, -3.2%. (Bloomberg)

Source: India Economic Scan

19 May 2009 | India Economic Scan

19-May-2009

India Economic Scan

In this edition: India re-elects Congress-led coalition, Investors bet on Congress party leader Singh to remove barriers to trade, Bharat Heavy gets boost on speculation of orders from new government, ICICI ADRs rally to 8-month high on Congress victory, Sensex surges 17% on election news.

Top headlines

Driving India's Economic Reforms

• For the first time since 1962, a government in India that has served its full 5-year term has been re-elected under the same leadership. That's a remarkable achievement for the Congress-led coalition and marks a major departure from the nation's recent political history.
• The Indian economy was a leading participant in the emerging-market boom that began in 2003 and continued through mid-2008, with the country's growth rate accelerating sharply to average nearly 9% over that period from 5.5 to 6% during the preceding two decades. (WSJ)

Indian Stock Surge Shows Investors Anticipate More Open Economy

• India’s record stock-market surge after the election triumph of Prime Minister Manmohan Singh’s Congress Party is a sign of just how much investors want the next government to open Asia’s third-biggest economy.
• Investors are betting the Oxford-trained economist will remove the last barriers to foreign investments in financial services and re-start asset sales to help trim a widening budget deficit. (Bloomberg)

Bharat Heavy May Get 70 Billion Rupees of Orders

• Bharat Heavy Electricals Ltd., whose turbines and generators light up three of every four homes in India, expects as much as 70 billion rupees ($1.5 billion) of new orders in the first quarter as pending government projects are cleared following the Congress party’s electoral victory.
• Shares of Bharat Heavy surged +33% to 2,266 rupees, the highest since Feb. 29, 2008, before trading on the Bombay Stock Exchange was halted for the day. (Bloomberg)

ICICI ADRs Rally to 8-Month High on Congress Victory

• ICICI’s American depositary receipts jumped +25% to $29.29 in New York Stock Exchange composite trading. They surged as much as +39%, the biggest gain since at least March 2000. HDFC Bank, the third-largest lender, increased +21% to $95.70.
• “A stronger economy should support stock performance of the Indian banks,” Anil Agarwal, a Hong Kong-based analyst for Morgan Stanley, wrote in a note today. “Indian banks have underperformed the broad markets by about 10%. We expect this to reverse in the near term, especially as the market becomes more positive on the economic outlook.” (Bloomberg)

Indian markets surge on Congress victory

• As the outgoing cabinet tendered its collective resignation ahead of the formation of a new government, the benchmark 30-share Sensex index on the Mumbai stock exchange soared more than +17% to 14,272.63, up 2,099.21 points.
• Fund managers expect the markets to surge by another 20% in coming weeks, against a backdrop of better-than-expected fourth quarter corporate earnings. (AFP)

Source: India Economic Scan

15 May 2009 Edition | India Economic Scan

15-May-2009

India Economic Scan

In this edition: Indian economy seen pulling out of slowdown, Fitch warns India on budget deficit impact on credit rating, Indian business confidence improves in FY10, India's inflation slows to 0.48%, Indian ADRs rebound.

Top headlines

Economy seen pulling out of slowdown - paper

• India's economy should emerge from its downturn soon, a poll of chief executives of 31 companies by a newspaper showed on Thursday.
• All but 10 out of the 31 chief executives polled believe that India has seen off the economic slowdown, raising hopes the new government will inherit an economy that is on the mend, The Economic Times daily, said. (Reuters)

India Budget Deficit Puts Rating at Risk, Fitch Says

• “India faces considerable challenges in balancing the need for short-term stimulus measures to counter the economic downturn and the necessity of re-establishing a sustainable medium-term path for the country’s public finances,” Fitch said in an e-mailed statement today.
• Fitch, which has assigned India a BBB- rating, its lowest investment grade, expects the nation’s new government to step up spending to arrest slowing economic growth. That will widen India’s national budget deficit, including state government finances, to more than 10 percent of gross domestic product for the second year in a row, according to Fitch. (Bloomberg)

India business confidence improves in FY10 - survey

• India's business confidence for the first half of the fiscal improved on hopes the economy would revive later in the year, but global economic instability and slowing consumer demand still weigh, a survey showed.
• The survey, released on Thursday by the Confederation of Indian Industry (CII), comes amid talk of a recovery in Asia's third-largest economy following encouraging car sales and signs of reviving manufacturing activity in April. The CII Business Confidence Index for April-September 2009-10 rose 2.4 points to 58.7 from October-March 2008-09. (Reuters)

India’s Inflation Slows to 0.48% in Week Ending May 2

• India’s inflation rate stayed under one percent for a ninth week, giving the central bank room to maintain record-low interest rates and support economic growth.
• Wholesale prices rose 0.48 percent in the week to May 2 from a year earlier after increasing 0.70 percent in the previous week, the government said in New Delhi today. Economists expected a 0.30 percent gain. (Bloomberg)

Indian Stocks Trading in U.S. Rebound, Led by ICICI Bank

• ICICI Bank Ltd. India’s second-largest lender, jumped more than 6 percent on the New York Stock Exchange. Tata Motors Ltd., India’s biggest maker of commercial vehicles, rose 4.3 percent on the prospect that a growing economy will boost sales of its Nano car.
• The Bank of New York Mellon India ADR index gained 3.8 percent to 578.43, the most since May 4. (Bloomberg)

Source: India Economic Scan

India Economic Scan | 12 May 2009

12-May-2009

India Economic Scan

In this edition: India grew 6.5% in FY09 says PM, SBI Chief says worst over for Indian economy, ICICI gains on potential increase in stake by Temasek/Singapore, BSE hires BoA's Madhu Kannan, Indian stocks fall to one week low.

Top headlines

India grew 6.5 pct in FY09, CPI inflation to fall - PM

• India's economy grew an estimated 6.5% in the just-ended 2008/09 fiscal year and consumer price inflation is expected to moderate in 5-6 months, Prime Minister Manmohan Singh said.
• "The wholesale price inflation is already down to around 1 percent and there is a time lag for the consumer price inflation to also fall," said Singh.
• India's wholesale price index rose 0.70% in the 12 months to April 25, above the previous week's annual rise of 0.57%. But annual CPI inflation stood at 9.63% in February, as prices of food products remained firm.

Worst is over for Indian economy: SBI chief

• O P Bhatt, chairman of the country's largest lender State Bank of India (SBI), said 'The worst is over for the economy. Auto and housing loans have started picking up already,'
• SBI, which accounts for about 25% of all loans and deposits in the country, has posted a net profit of Rs 9,121 crore for 2008-09 as against Rs 6,729 crore the year before, a rise of 35.5%.
• On the overseas operations of the bank, he said SBI would concentrate on 'consolidating the existing business network'. The bank is present in 33 countries. It has plans to increase its Singapore operations from the present five branches to 12 this year and to 20 next fiscal.

ICICI Gains on Report That Singapore Seeks Clarity

• ICICI Bank Ltd., India’s second- largest, climbed in Mumbai following a report that the Singapore government has asked if a mandatory open offer to buy more shares would be triggered by its funds increasing their stakes.
• Temasek, through Allamanda Investments Pvt., owns 7.6% of ICICI, and the Government of Singapore Investment, known as GIC, holds 2.3% as of March 31, according to regulatory filings. The Life Insurance Corp. of India owns 9.4%.
• ICICI last traded up 0.499% at 523.35 rupees.

Bombay Bourse Hires Bank of America’s Madhu Kannan

• The Bombay Stock Exchange, Asia’s oldest bourse, named Madhu Kannan as managing director and chief executive officer, filling a vacancy nine months after Rajnikant Patel quit.
• Kannan previously worked at Bank of America-Merrill Lynch as a managing director for global strategy. Prior to that, he was a senior vice president in the global corporate client group at NYSE Euronext, in charge of the Asian, Middle East and North African markets.
• The BSE, founded in 1875, has lost ground to its younger rival, the NSE, which handles twice as many share trades and is the world’s largest single stock futures market.

Indian Stocks Fall to One-Week Low, Led by Reliance Industries

• The Bombay Stock Exchange’s Sensitive Index, or Sensex, fell -1.6% to 11,682.99. The S&P CNX Nifty Index on the NSE declined -1.8% to 3,554.60. The BSE 200 Index dropped -1.6% to 1,381.24. SGX Nifty futures for May delivery retreated 2% to 3,555.5.
• Reliance Industries retreated -2% to 1,861.6 rupees. Larsen & Toubro declined -2.8% to 963.8 rupees. The two companies made up 32% of the Sensex’s decline.
• Hindustan Unilever fell -2.9% to 226.05 rupees. The company posted a 3.7% increase in profit in the quarter ended March after a one-time charge for retirement benefits and restructuring. Net income increased to 3.95 billion rupees ($80 million), lagging the 4.51 billion rupee analyst estimate. Net income before one-time items rose 20%, the company said.

Source: India Economic Scan

India Economic Scan Weekly Brief - 10 May 2009

India Economic Scan Weekly Brief - 10 May 2009

Chief statistician, Pronab Sen said the Indian economy is likely to grow 8% in the current fiscal. The finance ministry projected a growth of 6% while RBI put it at 5.7% this year and the IMF estimated it below 5%. The Confederation of Indian said "We are factoring in GDP (gross domestic product) growth of 6.1-6.5% in 2009-10, based on sector growth rates of 2.8-3%, 5-5.5% and 7.5-8%, respectively for agriculture, industry and services,”

According to the advanced estimate figures of the Central Statistical Organisation, the economy grew by 7.1% in 2008-09 after the expansion rate dipped to 5.3% in the 3^rd quarter. ABN AMRO PMI for April showed India expanded after months of contraction while the output index for 6 core sectors for March released last week showed a growth of 2.9%, the highest in the last 6 months.

India doesn't rely on exports as much as some other emerging markets, for instance in 2008 the export-to-GDP ratio for Singapore was 96% versus India's 15%. However Morgan Stanley estimates that earnings at Indian companies will decline 16% in 2009, compared with a 25% decline for emerging markets as a whole.

Indian banks raised 13.05 billion rupees via Certificates of Deposit (CDs) on Wednesday. United Bank of India (UBI) raised 4.5 billion rupees by selling 6-month notes carrying a coupon rate of 4.49%. Andhra Bank sold 2.3 billion rupees of 4.4% 6-month notes. Punjab & Sind Bank, Central Bank of India, State Bank of Patiala, IndusInd Bank, IDBI Bank, also sold CDs.

Housing Development Finance Corp, India’s biggest mortgage lender, said Q4 profit declined 4.6% to 7.33 billion rupees ($148 million) in the three months to March 31 from 7.68 billion rupees a year earlier, the company said in a statement to the Bombay Stock Exchange. Profit in the year-earlier quarter included a one-time gain of 2.02 billion rupees from the sale of a 26% stake in HDFC General Insurance Co. to a unit of Munich Re.

Yields on benchmark notes due 2019 climbed to a two-week high as the government prepared to offer 120 billion rupees ($2.4 billion) of bonds. The sale is part of the record 2.41 trillion rupees India plans to raise in the first half of the fiscal year that started April 1 to help fund stimulus spending

Overseas investors bought stocks worth 65.08 billion rupees ($1.3 billion) in April, the most since October 2007, according to the nation’s market regulator. The BSE’s 18-member banking index has advanced +68% since March 9, when the benchmark index fell to its lowest level this year. In comparison, the Sensitive index has gained 46%.

Source: India Economic Scan

India Economic Scan | 7 May 2009

7-May-2009

India Economic Scan

In this edition: Indian economy to grow 8% says Chief Statistician, Tata Housing starts low-cost housing project, India sugar imports in 2009 nearly complete, Indian banks raise 13.05 bln rupees via CDs, Indian stocks drop on Wednesday.

Top headlines

Indian Economy Likely To Grow 8% This Year- Chief Statistician

• Indian economy is likely to grow 8% in the current fiscal, according to chief statistician, Pronab Sen. The finance ministry projected a growth of 6% while RBI put it at 5.7% this year. IMF estimated it pessimistically below 5%.
• ABN AMRO PMI for April, released on Monday, showed India expanded after months of contraction while the output index for 6 core sectors for March released last week showed a growth of 2.9%, the highest in the last 6 months.
• Sen estimates Indian economic growth close to 6.7% for the year ended March 31, 2009 following an average growth of 8.5% for 5 consecutive years.

Tata Housing to build low-cost housing near Mumbai

• India's Tata Group launched a low-cost housing project near Mumbai, joining a spate of Indian developers that have moved to the affordable housing segment, as demand dries up for more expensive homes.
• Unlisted group firm Tata Housing Development Co said it will invest up to 1 billion rupees in a 1,200-unit township at Boisar, in the outskirts of Mumbai, and will sell apartments at prices ranging between 390,000 rupees and 670,000 rupees.
• The company will hold a lottery to allot flats and will sell application forms at 200 rupees each. The flats will be delivered in about 2 years.

India sugar imports in 2009 nearly complete

• "The bulk of the imports have already been completed," Narendra Murkumbi of Shree Renuka Sugars Ltd said at the third annual International Sugar Organization/Datagro sugar conference in New York.
• Murkumbi said "no more than 400,000 tonnes" of sugar will be brought into India in Q3 2009.
• India's sugar production is forecast to rise to 20.8 million tonnes in 2009/10, from 14.7 million to 15.0 million tonnes the previous season. Consumption is seen at 23 million tonnes.

Indian banks raise 13.05 bln rupees via CDs

• Indian banks raised 13.05 billion rupees via Certificates of Deposit (CDs) on Wednesday, Thomson Reuters data showed.
• United Bank of India (UBI) raised 4.5 billion rupees by selling 6-month notes carrying a coupon rate of 4.49%. Andhra Bank sold 2.3 billion rupees of 4.4% 6-month notes. Punjab & Sind Bank, Central Bank of India, State Bank of Patiala, IndusInd Bank, IDBI Bank, also sold CDs.
• The yield on the Reuters benchmark three-month CD fell to 3.4% from Tuesday's close of 3.65%, and volumes in the secondary CD market fell to 2.15 billion rupees from 4.5 billion rupees on Tuesday.

Indian Stocks Drop for a Second Day; ICICI, HDFC Bank Fall

• The Bombay Stock Exchange’s (BSE) Sensex, fell -1.5% to 11,952.75. The S&P CNX Nifty Index on the NSX slid -1% to 3,625.05. The BSE 200 Index declined -1.5% to 1,401.81. Nifty Index Futures for May delivery fell -0.7% to 3,640.50.
• The BSE’s 18-member banking index has advanced +68% since March 9, when the benchmark index fell to its lowest level this year. In comparison, the Sensitive index has gained 46%.
• Havells India +36% to 222 rupees, HBL Power Systems +19% to 174.20 rupees, Siemens India +2% to 332.65 rupees, Tulip Telecom +25% to 595.50 rupees.

SOURCE: http://india.chinaeconomicscan.com/7may09.html

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