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