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