Archive for August 6th, 2009

2004-05 to be new base yr for WPI: FM

2004-05 to be new base yr for WPI: FM

Finance minister Pranab Mukherjee has said the wholesale price index (WPI) series, which is used to calculate inflation in the country, will have 2004-05 as the base year.

“The WPI series is being upgraded with base year 2004-05 in lieu of the existing one with base year 1993-94,”

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With the advancement of the base year and probably a revision of commodities in the index and their weights, it is expected that the index would provide a better picture of the current scenario of prices.

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The WPI will now become more representative of today’s reality. It will come along with the revision in commodities and weights.

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Though the wholesale price index will become a better measure, but there are doubts like if the government would include services in the index and people will have to continue depending on other indices like the consumer price index.

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“The wholesale price index price data collection completely excludes the services sector,” Mukherjee said, replying to whether the current system of collecting data for monitoring prices is faulty.

The finance minister said information on weekly prices of manufactured products is highly meager.

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Finance minister also added that the data collection for calculating the consumer price index (urban) has already started.

It may be recalled that the National Statistical Commission, 2001, had recommended that the Central Statistical Organisation compile a single national consumer price index by computing the CPI (Urban) and CPI (Rural) separately and then combining them together into an all-India index.

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Consumer-Goods, Pharma Funds Outperform Market in July

Consumer-Goods, Pharma Funds Outperform Market in July

Indian equity  funds focused on the consumer-goods and pharmaceutical sectors – considered defensive as they are less volatile – have outperformed the overall market in the past month as investors cheered the domestic demand and consumption story.

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As share prices started to slip from the high levels seen in mid-June, some fund managers turned defensive, fearing a sharp downside, which also led to more money flowing into these stocks, industry experts said.

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Funds investing in the shares of fast-moving consumer goods companies generated an average return of 17.6% in July, pushing technology-based funds – which gained 17.2% on good quarterly results at top software exporters – to the second place, show data from research firm Value Research.

Pharma-focused funds returned 9.8% during the month.

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In comparison, equity-diversified funds rose on an average 8.4%, while the Bombay Stock Exchange’s benchmark Sensitive Index gained 8.1%.

According to the seasonally adjusted Markit India purchasing managers’ index, the country posted robust manufacturing activity for the fourth straight month in July, suggesting government efforts to spur the economy have helped demand at home.

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Taurus Mutual Fund had turned defensive in June after a sharp market rally since early-March lows. The fund house recorded a 15.3% increase in assets under management over the previous month to INR6.47 billion in July, outpacing a 2.8% rise in the overall industry’s assets.

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According to Value Research, ICICI Prudential FMCG Fund was the best performer among the few FMCG-focused funds in July with a 22.7% return. Reliance Pharma Fund, which returned 12.5%, was the best performer in the pharma space.

Tata Select Equity was the best performing fund in the equity-diversified category with a 15.4% return.

“I think fund managers took a call on these stocks as they had not run up as much as others in the last few months,” said Jagannadham Thunuguntla, equity head at New Delhi-based SMC Capitals Ltd.

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For the past six months, FMCG- and pharma-focused funds have on average returned 46.2% and 52.6%, respectively, underperforming the Sensex, which has soared 66.3%, data from Value Research showed.

“With markets having risen sharply again (Sensex rose nearly 19% in the past three weeks) and the general sense that a correction may be lurking around … we may see money continuing to chase defensives,” said a fund manager at a small fund house.

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