Archive for September 5th, 2009

FII Net Inflow Crossed $8 Billion in 8 Months :)

FII Net Inflow

FIIs’ net investments in Indian equities crossed $8 billion in calendar 2009 with foreigners buying stocks worth $274 million on Friday.

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At the end of July, net inflows from FIIs stood at $7.3 billion and it took another 20 trading sessions before net inflows crossed the $8-billion mark, the first time this year.

The sensex has risen 65% till now in 2009.

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Last year, hit by recession back home FIIs took out nearly $12 billion from Indian stock markets but with sentiment improving from March this year, they have returned with net investment amounting to $9.3 billion, Sebi data shows.

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Data include stocks bought by FIIs through QIPs and public offers, buybacks and also investments in unlisted companies, fund flow trackers said.

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As per experts this phenomena has happened because India is being considered as one of the better performing market since the October crash.

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Experts maintains that despite immediate headwinds such as impact of poor monsoons on agriculture and uncertain rural economy, the growth potential in the economy cannot be overlooked.

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“Investors will be looking for value and India could be very well the destination” experts pointed out.

With FIIs holding 16% of India’s biggest 500 companies, market experts believe FII holding may rival the 19.1% peak in 2007 as the third-largest Asian economy continues to grow at a decent pace.

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Rising Sugar Prices Threatens to Make Coming Festival Season Bitter :(

Skyrocket prices of Sugar

Rising sugar prices are threatening to make the coming festival season bitter and are causing concerns for many consumers.

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Moreover, in order to meet increasing demand, India will be forced to import sugar in large quantities and this in all possibility will further increase sugar prices.

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However, local production has plunged to 14.5 million tonnes in the 2008-09 with demand at 23 million tonnes, the deadline for duty-free raw sugar imports has been extended by nine months to December 2010.

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Additionally, the government is going to start a fortnightly sale of non-levy sugar with the September quota set at 2.11 lakh tonnes 🙂

This year most deficits have been met by opening stocks and next year they’ll need much larger imports of about 6 million tonnes of raw sugar and 1 million tonnes of white sugar.

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Moreover, nearly 4 million tonnes of sugar have been already purchased by the Indian industry, while India’s sugar shopping spree abroad has sent prices of refined sugar in the global market skyrocketing.

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Additionally, it is said that the world market has recorded a 28-year high and has shot up 60% to $610 per tonne in August 2009 from a level of $380 per tonne in October 2008.

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Private Sector Life Insurers Sailing in Choppy Waters :(

Private insurers sailing in choppy waters

Even after 8 years in operations, most of the companies seem to be sailing in choppy waters while the latest profit/loss numbers reveals that almost all of the 22 companies are still making losses.

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Net losses of the private sector life insurers have risen to a whopping Rs 4850 crore during the last fiscal from 2001-2002, showing a uncanny rise of over 2000%.

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However, Reliance Life has suffered the highest loss of Rs 1085 crore and its pool of the policy holders fund is a meager Rs 50 crore.

Moreover, ICICI Prudential Life is sitting on a net loss of Rs 780 crore while the cushion for policy holders is Rs 200 crore.

As for Birla Sunlife, the loss amounts to Rs 700 crore with a 130 crore surplus for the policy holders fund while HDFC Standard Life has netted losses of Rs 500 crore with a policy holders fund of 160 crore.

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Additionally, IRDA is looking at the numbers very closely now and is also doing a check on the risk profile of individual companies and trying to build in a system of early warning given the fact that life insurance is a long gestation business.

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Meanwhile, it is the speedy expansion in business that has cost the companies dear and the coming days will see a change in strategy.

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At the same it is said that such multi million losses may hit valuations of private life insurers especially if the companies are keen to list on the stock exchanges.

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