Archive for the ‘Economics’ Category

Weekly Update 7th – 11th June

Unlike developed economies market that closed in red, our market closed in the positive on the back of robust GDP growth of 7.4% in the year ending March 2010 driven by solid rebound in manufacturing activity.

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Auto & Cement sales numbers also joyed the markets. Good monsoon which is likely to be in range of 98% of the long term average will help in entailing inflation and will boost rural economy, a major factor for the overall growth of the economy kept the markets on a strong foot in the week gone by.

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On the contrary, bad news continued from the rest of the world. Export led recovery is losing momentum in Japan. Manufactures are planning to increase production at a slower pace in the coming months in view of the cut in European government expenditures that may damp sales of Japanese goods over time. Unemployment is increasing and job prospects are worsening together with cuts in household spending.

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Euorpean region economy which is struggling to gather strength after the debt crisis and has sought to cut expenditure got another jolt after Hungary said its economy is in a “very grave” situation, reigniting concern the region’s debt crisis is spreading. Hungary Prime Minister said that talk of a default is “not an exaggeration” because a previous administration “manipulated” figures.

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The country was bailed out with a 20 billion-euro ($24 billion) aid package from the European Union and International Monetary Fund in 2008. U.S. markets saw Indices dropping to four months low after the lower than forecast payroll numbers for the month of May. However the positive news in the payroll survey was in earnings, the workweek, and production hours. Wage inflation picked up with a 0.3 percent rise in May, following a 0.1 percent advance the month before.

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The average workweek for all workers edged up to 34.2 hours from 34.1 hours in April. The gain point out to future hirings and suggests increase in industrial production for the month.

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Overall trend of world stock markets is still down though the markets tried to take a recovery intra week but the US and European markets spoiled the party.

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Base metal commodities did not bounce even slightly which went to show that stock markets tried a recovery without participation of industrial commodities.

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Nifty faces resistance between 5150-5180 levels and Sensex between 17200-17400 levels.

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Sentiments are still very fragile and investors are very watchful in commodity.

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Technically, base metals and energy appear oversold; hence they may generate some lower level buying. However, one should not judge it as a major one sided rally in these commodities as fears on European economy is still hovering. Even, negative outcome of economic data’s from various economies is further indicating slowdown in economic activities. If mercury goes high further and we see further decline in crude and other inventories in US, then it will stimulate buying in crude oil. Natural gas has already seen good short covering in the prices in past few weeks, can witness more buying for the same reason.

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Weekly Update 3rd- 7th May 2010

The week started on a positive note on the back of good global tidings. Markets worldwide have gained after Greece decided to tap into the EU- IMF loan, but the rally could not be sustained and fell like nine pins as heightened sovereign debt troubles in Europe sent global markets in a bit of a tizzy.

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On the global front, FOMC maintained the target range for the federal funds rate at 0 to 1/4 percent as the economy is still seeing high unemployment, modest income growth, employers reluctance to add to payrolls & bank lending contraction. It said that it would continue to monitor the economic outlook and financial developments and would employ its policy tools as necessary to promote economic recovery and price stability. Japan saw unemployment rate climbing to five percent indicating job rebound may moderate. Europe equity markets fell after Standard & Poor’s downgraded three Eurozone members.

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Investors withdrew money from the Europe equity funds & debt funds saw net inflow. Closer home too, markets witnessed volatility as traders rolled over their positions in the derivatives segment from the April 2010 series to the May 2010 series. On the flip side the Q4 March 2010 corporate earnings announced so far have been good with net profit of a total of 441 companies rose 28.70% to Rs 29125 crore on 36.40% rise in sales to Rs 249959 crore in the quarter ended March 2010 over the quarter ended March 2009. The IMF is optimistic about the growth of Indian Economy. It has estimated that India’s $1.2 trillion economy will expand 8.8% this year and 8.4% next year, higher than it projected in January. While RBI expects India’s economy to expand 8% in the year ending March 2011 (FY 2011) with an upward bias expecting normal monsoon this year and sustenance of good performance of the industrial and services sectors on the back of rising domestic and external demand. The IMD has predicted normal monsoons in 2010 at 98% of Long Period Average subject to an error of (+/- 5%). Besides the passing of the Finance Bill 2010 by FM on Thursday with some minor changes in tax proposals may boost sentiment as the government has pledged to the path of fiscal consolidation rather than political opportunism.

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Overall the world markets were quite volatile in the week gone by with wild swings on both sides. Shanghai and Hang Seng could not recover from the fall though other markets recovered. Base metals also took a sharp correction. The strength in the stock markets is there more in cash stocks rather than front line heavy weight index stocks. Nifty has support between 5200-5150 levels & Sensex between 17400-17300 levels.

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Recent moves in commodities are showing that they are moving in different directions. It is indicating the state of uncertainty, where commodities are moving on their own fundamentals. Safe haven buying may keep gold in upper range. While after a steep fall, base metals may try to trade in a range.

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Approaching summer demand amid availability of ample crude stocks can keep crude oil in a range. Some agro commodities viz., pepper, jeera, chilli, cardamom, mentha etc., may surge on good overseas as well as domestic demand.

INDIAN ECONOMY – GAINING STRENGTH Final Part :0

Thank you friends for viewing the first part. Now i am posting the final part here enjoy:)

4.Fresh Investments – Infrastructure being one of the key thrust areas on government agenda would continue to see large investments coming in going ahead. Even the corporate are expected to continue with the capacity additions in the light of huge anticipated demand.

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After the sharpest decline in more than 70 years, world trade is set to rebound in 2010 by growing at 9.5%, according to WTO. Exports from developed economies are expected to increase by 7.5% in volume terms over the course of the year while shipments from the rest of the world (including developing economies and the Commonwealth of independent States) should rise by around 11% as the world emerges from recession. This strong expansion will help recover some, but by no means all, of the ground lost in 2009 when the global economic crisis sparked a 12.2% contraction in the volume of global trade – the largest such decline since world war II . Should trade continue to expand at its current pace, the economists predict, it would not take much of the time to surpass the peak level of 2008 in terms of the volume growth.

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Coming back to India front, the continued demand revival in major markets such as the US and European Union, led exports to remain in the positive territory for the fourth consecutive month with shipments in February growing by 34.8% to $16.09 billion from $11.94 billion during February 2009. India’s Imports too saw a growth of 66.4% to $25.05 billion from $15.06 billion in the corresponding period. Cumulative value of imports for the period April, 2009- February, 2010 showed a degrowth of 13.5% to $248.04 billion from $287.09 billion in the corresponding period as a result of both lower international crude oil prices and slowdown in domestic economic activity.

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India’s two-way trade (merchandize exports plus imports), as proportion of GDP is close to 35%. Now, with the expected improvement in the global trade it would further give a fillip to the economic growth.

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The services sector contributes around 65% to GDP. The lead indicators of service sector activity show that, services such as tourist arrivals, cargo handled by seaports and airports, and passengers handled by international terminals which are dependent on external demand are showing recovery with the improvement in global climate. However, services dependent on domestic demand have exhibited a robust and steady growth during 2009-2010, so far.

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In sum, the expected normal monsoon, buoyancy in industrial production & services suggests continuation of growth momentum. With the fiscal deficit being addressed by the government with large focus on infrastructure spending, improvement in corporate sentiments with respect to capital spending & RBI taking steps to withdraw monetary accommodations in a calibrated way is expected to take economic growth back to 9% levels.

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Stay tuned for more update like this :)

INDIAN ECONOMY – GAINING STRENGTH Part 1

Stock market reflects & discounts the overall conditions in the economy.Besides, stock prices in the market are also governed by the investor behavior & valuations. Sometimes investor’s optimism takes the market valuation to a level that it does not matches up with the actual future growth, thus becoming the basis for correction & vice- versa. It is said that “ markets may remain irrational till the life of human being”. Now let us have a look at the economy to see what lies in the future & how it is shaping up for the next leg of growth.

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Indian economy is expected to grow by 7.2% in the fiscal ended on 31st march 2010 & is projected to expand by 8.55 in the current fiscal year and 9% in the next year. The continued improvement in the sentiments of the manufacturing sector which currently contributes around 15% in GDP is likely to play a major role in taking GDP growth to double digits.

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Strong industrial recovery has been the key underlying strength behind the recovery of GDP. During April- December 2009, the index of industrial production (IIP) increased by 8.6% over the corresponding period. Factors that will drive the growth in the industrial production are:

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  • Improvement in agriculture output- Tokyo-based Research institute for global change has predicted normal monsoon rains in india for the current year. On the belief of climatic conditions will remain normal during the year we expect the improved availability of agricultural output to push up production of manufactured food products..

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  • Rising consumer demand – as the business conditions are improving & corporate are giving wage hikes, we believe this will strengthen the sense of financial security in the minds of urban middle-class. A rise in purchasing power and availability of easy and affordable loans are expected to increase the demand for durable goods like auto, consumer appliances.

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  • More availability of mining products- we expect natural gas & crude oil output would increase as the result of the efforts that are being done by companies like Reliance & Cairn India. Coal Production will also rise owing to the allocation of new coal blocks by the government. Fertilizer & Electricity sector would be the key & direct beneficiary with the improvement in the gas & coal availability.

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    Stay tuned for more on this 🙂

    NEWS ROUND UP

    Economy

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    ·IIP for the month of January grew 16.7% on year. The mining sector grew 14.6% in the month while the manufacturing sector grew 17.9%. The electricity sector witnessed a growth of 5.6% in the month.

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    India’s annual food price index increased 17.81% as on week ended February 27, slower than the 17.87% growth recorded last week. A year ago, food prices were up 7.54%.

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    Healthcare

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    ·Fortis Healthcare announced the largest overseas acquisition by an Indian company in the healthcare space, buying the entire 23.9 per cent stake held by TPG Capital in Singapore’s Parkway Holding Ltd for $686 million (Rs 3,119 crore).

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    Capital Goods

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    ·ABB Ltd. has bagged orders worth $22 million (nearly Rs 100 crore) from Haryana Vidyut Prasaran Nigam for the supply of four sub-stations. The company would deliver four sub-stations equipped with automation, protection and control systems to HVPNL.

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    ·Areva T&D India has bagged a contract worth Rs 400 crore from Uttar Pradesh(UP) Power Transmission Corporation for building a substation. The company’s transmission and distribution division will build a 765 KV extra high voltage substation at Anpara thermal plant in UP.

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    ·Thermax announced a JV with US-based Babcock & Wilcox Power Generation Group to manufacture super-critical boilers in the country. The total investment in the JV is estimated at Rs 700 crore.

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    ·McNally Bharat Engineering Company has bagged an order worth Rs 245.42 crore from Steel Authority of India Ltd for infrastructure related works at Rourkela steel plant. The contract is for inter-plant transportation facilities at Rourkela steel plant.

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    Mining & Minerals

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    ·State-owned miner NMDC is planning to invest around Rs 2,400 crore to lay a pipeline between its Chhattisgarh plant and Visakhapatnam in Andhra Pradesh.

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    Realty & Construction

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    ·Gammon India has bagged an order worth Rs Rs 631.81 crore from Delhi Tourism and Transportation Development Corporation for construction of bridge. The company has received the project for construction of bridge and its approaches over river Yamuna, Delhi.

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    ·Hindustan Construction Company (HCC) has plans to invest around Rs 50,000 crore in its township project in Lavasa, near here, over the next 10-12 years ·Hindustan Construction Company (HCC) along with its joint venture partner has bagged a contract worth Rs 197 crore from North Frontier Railway for
    development of a tunnel in Imphal.The company has bagged the project along with its JV partner Coastal Projects Ltd for developing a railway tunnel between Jiribam and Tupur in Imphal.

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    ·Nagarjuna Construction Company secured new contracts aggregating to Rs 1,221 crore. The first order is of two contracts valued at Rs 647 crore from Hyderabad Growth Corridor. In addition, it has secured three contracts worth Rs 358 crore from Maharashtra State Electricity Distribution.

    ·Construction firm Ahluwalia Contracts India is in acquisition talks for specialised construction firms, with a war-chest of up to Rs 100 crore, and hopes to sew up the deal by June. The New Delhi-based firm sees a 25-30 per cent organic growth for next five years and acquisitions of up to Rs 100 crore could be funded from its internal resources.

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    Banking & Finance

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    ·Rural Electrification Corporation Ltd (REC) signed a memorandum of understanding (MoU) with NTPC Tamil Nadu Energy Company Ltd (NTECL), a joint venture company set up by NTPC and the Tamil Nadu Electricity Board (TNEB), to fund a power project in North Chennai. Of the total project cost, 30 per cent is being met by equity and balance through debt.

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    Distilleries

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    ·The country’s largest liquor maker United Spirits is undertaking an aggressive promotion campaign for its recently launched energy drink ‘Romanov Red’.

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    The company will invest over Rs 5 crore in the next one year on promotions, as it aims to garner a 15 per cent share in the domestic energy drink market that stands at around 1.5 million cases (of 24 cans) per annum.

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    Stay Tuned for More updates 🙂

    Points Discussed in Budget :)

  1. Excise duty on silver rose to 10%
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  2. Surcharge on domestic cos reduced to 7.5% from 10%..
  3. Excise duty on oil rose to 10%.
  4. Fiscal deficit will be at 5.5% in 10-11, at 4.8% in 11-12 and 4.1% in 12-13
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  5. Revised income tax slabs 🙂
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  6. Net market borrowing for 2010-11 at Rs 3, 45,010..
  7. Extended 1% interest subsidy scheme for affordable housing.
  8. Rs 5400 cr of funds allocated for urban development..
  9. Defense allocation rose to Rs 147344 cr.
  10. Rs 48000 cr allocated for Bharat Nirman.
  11. Farmer loans extended for 6 months to June 30th 2011.
  12. Allocated Rs1.73 lakh cr for infrastructure..
  13. Agriculture credit flow targets at Rs. 375000cr.
  14. FDI worth $20.9 bn in April to Dec 2009.
  15. Proposed Rs 16500 cr for PSU banks.
  16. Challenge for a 9% growth, need to review stimulus.
  17. Stay Tuned for More updates 🙂

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    More Hybrid Varieties of Tur/Red Gram Set to Hit Market

    Hello Friends here we come up with the Latest Agri Commodities updates from various parts of the country.

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    More hybrid varieties of Tur/Red Gram set to hit market

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    More hybrid varieties of Tur/Red Gram set to hit market

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    The Hyderabad-based International Crops Research Institute for the Semi-Arid Tropics (Icrisat), a non-profit, non-political agricultural research organisation, is set to release three new hybrid varieties of pigeon pea (tur or red gram) for commercial multiplication by seed companies, a senior scientist said.

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    “After the commercialization of cytoplasmic male sterility (CMS)-based pigeon pea hybrid (ICPH 2671) two years ago, we have developed three more hybrid varieties.

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    The test results are promising and we will give parental lines to seed companies for multiplication later this year,” CL Laxmipathi Gowda, Global Theme Leader, Crop Improvement and Management, Icrisat, told reporters.

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    🙂

    In Other major Commodities Update, there are news of Cane farmers in Maharashtra set to rake in at least Rs 4k crore of additional income in the current 2009-10 season and South India planters’ income dropping to Rs 1,479 cr.

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    Cane farmers to reap bonanza

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    Cane farmers in Maharashtra are set to rake in at least Rs 4,000 crore of additional income in the current 2009-10 season due to better prices paid by sugar mills.

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    During the previous 2008-09 season (October-September), mills in the State crushed 400.27 lakh tonnes (lt) of cane and paid an average final rate of Rs 1,513 a tonne to growers at their farm-gate.

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    That translated into a total income of Rs 6,056 crore for the farmers.

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    For the ongoing season, total crushing is expected at 455 lt, with the final farm-gate price of cane averaging around Rs 2,250 a tonne.

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    That would result in an income of Rs 10,237 crore or Rs 4,181 crore more than what was paid out in 2008-09, said Mr Prakash Naiknavare, Managing Director, Maharashtra State Cooperative Sugar Factories Federation.

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    🙂

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    South India planters’ income drops Rs 1,479 cr:

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    Going by the production figures and prices for coffee, tea, rubber, pepper,cardamom and vanilla, the plantation owners earned a total of Rs 14,834.84 crore in 2008.

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    In 2009, it dropped to Rs 13,355.51 crore.

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    Plantation industry sources said the data on the lower income for the growers do not take into account the rise in production costs.

    This means, the plantation sector, as a whole, could have taken a bigger hit.

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    The drop in rubber production has been a big drag on the income of the planters, who had to cope with Rs 10 a kg fall in prices.

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    The average price in 2009 was Rs 97.56 a kg against Rs 107.74 in 2008.

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    Currently, rubber prices average over Rs 130 a kg.

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    🙂

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