10 June 2009 | India Economic Scan

10-June-2009

India Economic Scan

In this edition: India may increase key rates in early 2010, Indian banks told they should give credit at reasonable rates, OECD projects further slowing of the Indian economy, Indian Rupee rises as foreign stock holdings reach one-year high, Indian stocks rise.

Top headlines

India May Increase Key Rates in Early 2010, Goldman Sachs Says

• India’s central bank may start increasing interest rates in early 2010 as inflation accelerates at more than double the expected pace, Goldman Sachs said.
• “Policy easing is at an end,” Tushar Poddar, an economist at Goldman Sachs in Mumbai, said in a report yesterday. “The first rate hikes may come in early 2010 as monetary policy moves from being very loose to a more neutral stance.” (Bloomberg)

Indian Banks Should Give Credit at Reasonable Rates

• Indian banks need to provide credit at “reasonable rates” to help revive the economy and enable inclusive growth, Finance Minister Pranab Mukherjee said.
• “This is an area of concern in many quarters both within the Government and outside,” Mukherjee told the chiefs of Indian state-run banks in New Delhi today. “I would urge the banks to address these concerns expeditiously and in adequate measure. This will help restore the environment for rapid growth and ensure that the growth process benefits all our people.” (Bloomberg)

OECD projects further slowing down of Indian economy

• The Organisation for Economic Co-operation and Development (OECD) today projected further slowing down of the Indian economy, even while indicating that China has hit the bottom and is likely to show improvement in the next six months.
• "The Composite Leading Indicators (CLI) for China increased 0.9 point in April 2009 but was 8.3 points lower than a year ago. The CLI for India increased by 0.4 point in April 2009 but was 7.9 points lower than in April 2008," OECD said. (The Economic Times)

India Rupee Rises as Foreign Stock Holdings Reach One-Year High

• India’s rupee strengthened for a second day as the value of shares held by overseas investors’ rose to a one-year high and the dollar slumped in New York trade.
• India’s currency gained on optimism global funds will boost investment after Prime Minister Manmohan Singh said yesterday the $1.2 trillion economy has potential to rebound to a growth rate of 9%, powered by higher government spending. (Bloomberg)

Sensex Ends Up 3.1%

• Value buying by institutions and retail investors in bellwether stocks helped Indian shares reverse previous losses and end near a 10-month high Tuesday. The Bombay Stock Exchange's Sensitive Index, or Sensex, rose 3.1% points to close at 15,127 after trading between 14,526.69 and 15,161.22.
• Real estate and IT indexes gained the most among the 13 sectoral BSE indexes, rising 6.3% and 4.8%, respectively. DLF, one of Monday's major losers, rose 10.1% to 402.70 rupees, ending as the biggest percentage gainer among the Sensex components. (Wall Street Journal)

Source: India Economic Scan

7 June 2009 | India Economic Scan

7-June-2009

India Economic Scan

In this edition: Calyon says Indian economy to grow 6% in 2009/10, Indian monsoon to revive in 2 days - boost cotton and rice, ICICI Bank to diversify funding and revenue streams, Indian Rupee to rise 10% says Calyon, Indian stocks rise.

Top headlines

India's economy to grow at 6 pct in 2009/10 - Calyon

• Indian economy is likely to grow at 6% in 2009/10 fiscal year and 7% in 20010/11 as the new government is expected to unveil new pro-growth measures, Calyon said.
• It has raised its estimate from its previous forecasts of 5.5% for 2009/10 and 6.5 percent for 2010/11. Calyon's 2009/10 growth estimate matches the Reserve Bank of India's growth forecast.

India Monsoon to Revive in Two Days, Move to Cotton, Rice Areas

• India’s monsoon, which accounts for 4/5ths of the nation’s annual rainfall, may revive in 2 days, improving prospects of its progress towards the main rice and cotton growing regions, the weather bureau said.
• Timely rain helps boost yields of crops including rice that are planted after the onset of the monsoon. Increased production will help Prime Minister Manmohan Singh’s government to keep its promise of distributing grain to the poor at below market prices.

ICICI Bank to diversify funding, revenue streams: Kochhar

• "Looking ahead, we see favourable prospects for the Indian economy.... India has weathered the global storm with a high degree of resilience and we expect the Indian economy to return to a robust growth path ahead of other economies that are experiencing recessionary conditions," ICICI Bank Managing Director and Chief Executive Officer Chanda Kochhar has said.
• "We have demonstrated our success over a long period of time. In fiscal 1985, we had a networth of Rs 1.75 billion, assets of about Rs 21 billion and profits of Rs 0.36 billion. In fiscal 2009, we had a networth of about Rs 500 billion, assets of about Rs 3,800 billion and profits of Rs 37.58 billion. This represents over 20% compounded annual growth over a 24-year period. (Business Standard)

India Rupee to Rise 10 Percent in a Year, Calyon Says

• India’s rupee, which posted its best month on record in May, is set to rally 10% to 43 per dollar by mid-2010 as fund inflows from abroad pick up and lower oil prices improve the nation’s trade balance, Calyon said.
• “With risk appetite coming back gradually, and against the post-election backdrop, we believe the rupee should benefit from the oil-induced improvement in the trade balance,” wrote Barbe at the investment-banking unit of France’s Credit Agricole SA.

Indian Stocks Rise, Longest Weekly Winning Streak Since 2005

• The Bombay Stock Exchange’s Sensitive Index, or Sensex, climbed 94.87, or +0.6%, to 15,103.55. The S&P CNX Nifty Index on the National Stock Exchange added +0.3% to 4,586.90. The BSE 200 Index increased +0.4% to 1,848.04.
• Sterlite Industries (India) Ltd., the nation’s biggest copper and zinc producer, added +2.1%, while Hindalco Industries Ltd., the largest aluminum maker, climbed +3.5%.

Source: India Economic Scan

3 June 2009 | India Economic Scan

3-June-2009

India Economic Scan

In this edition: Indian exports fall for 7th month - imports fall faster, ICICI bank plans $200m small firms investment fund, Indian stock sales to rise in 2009 says Goldman Sachs, Helios plans India "Slumdog Millionaire" stock fund, Indian stocks pullback slightly.

Top headlines

Exports fall for seventh month on weak demand

• The ministry of commerce and industry said on Monday that exports in April fell by 33.2% on an annual basis to $10.7 billion (Rs50,290 crore today). They had dropped 33% in March as well.
• Imports also declined for the sixth successive month in April by 36.6% to $15.7 billion. While oil imports fell by 58.5% to $3.6 billion due to lower crude oil prices, non-oil imports declined 24.6% to $12.1 billion as a slower economy lowered domestic demand for industrial inputs and machines for new factories. (Live Mint)

India ICICI plans $200 mln small firms fund-sources

• India's ICICI Bank is set to launch a $150 million to $200 million fund in a few weeks that will be invested in small and medium companies, two sources briefed of the plans said on Tuesday.
• The small and medium companies spans sectors such as jewellery, textiles and engineering that typically lean on founders for equity and banks for debt. These sectors usually fall below the threshold for a private equity fund, while venture capital firms focus on start-ups in software and back offices. (Reuters)

Indian Stock Sales May Jump This Year, Goldman Says

• Share sales by Indian companies may increase to $13 billion this fiscal year as a revival in the nation’s economic growth lures investors, Goldman Sachs Group Inc. said.
• Companies may raise $4 billion to $6 billion from initial public offerings in the 12 months ending March 31 and another $5 billion to $7 billion through share placements over the next two to three months, said Anshul Krishan, who heads the India Financing Group at the local unit of Goldman. Stock sales totaled $808 million in the 12 months to March 31. (Bloomberg)

Helios Plans India ‘Slumdog Millionaire’ Stock Fund

• Helios Capital Management Pte, the hedge-fund manager once backed by Tudor Investment Corp., plans to start a “Slumdog Millionaire” fund that will buy underperforming shares of Indian companies.
• “We want to find slumdogs from the Indian equity markets who have the potential of becoming millionaires,” Samir Arora, founder of Singapore-based Helios Capital, said in an interview. (Bloomberg)

Indian Stocks Fall for First Time in Four Days; DLF Declines

• The Bombay Stock Exchange’s Sensitive Index, or Sensex, fell 71.18, or -0.4%, to 14,769.45 at 2:19 p.m. in Mumbai today. The S&P CNX Nifty Index on the National Stock Exchange lost -0.8% to 4,495.40. The BSE 200 Index declined -0.6% to 1,796.70.
• Reliance Industries, the largest company by market value, slid -1.3% after authorities questioned some of its gas- field reserves claims. DLF, the biggest real estate developer, dropped -1.6%. Ranbaxy Laboratories Ltd. lost -6.8%. (Bloomberg)

Source: India Economic Scan

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