Archive for the ‘Politics’ Category

RBI, Monetary Projections And Indian Economy

Hello Friends,

Just an extension of our previous blog ”RBI And Its Policies – Part 1β€³.

RBI, Monetary Projections And Indian Economy

RBI, Monetary Projections And Indian Economy

In this Blog we would touch upon the aspects as that of Monetary projection from RBI, assessment of economy scenario at present and relevance of RBI policy on economy.

Monetary projection:

For policy purposes, money supply (M3) growth for 2009-10 is placed at 17.0 per cent, down from 18.0 per cent projected in the Annual Policy Statement.

Consistent with this, aggregate deposits of scheduled commercial banks are projected to grow by 18.0 per cent.

The growth in adjusted nonfood credit, including investment in bonds/debentures/shares of public sector undertakings and private corporate sector and Commercial Papers (CPs), has been revised downwards at 18.0 per cent as in the Annual Policy Statement.

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Economy:

Since the last review in July 2009, there has been a discernable improvement in the global economy.

The recovery is underpinned by output expansion in emerging market economies, particularly in Asia.

World output has improved in the second quarter, manufacturing activity has picked up, trade is recovering, financial market conditions are improving, and risk appetite is returning.

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A sharp recovery in equity markets has enabled banks to raise capital to repair their balance sheets.

If we talk about the home country then there are definitive indications of the economy attaining the ‘escape velocity‘ and reverting to the growth track.

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The performance of the industrial sector has improved markedly in recent months.

Domestic and external financing conditions are on the upturn.

Capital inflows have revived.

Moreover activity in the primary capital market has picked up and funding from non-bank domestic sources has eased.

Liquidity conditions have remained easy and interest rates have softened in the money and credit markets.

Growth projection for GDP for 2009-10 on current assessment is placed at 6.0% with an upward bias, the same as the previous policy review.

But some darker parts also persist.

There are clear signs of rising inflation stemming largely from the supply side, particularly from food prices.

Private consumption demand is yet to pick up.

Agricultural production is expected to decline.

Services sector growth remains below trend.

Bank credit growth continues to be sluggish.

The central bank has warned of possible asset price bubbles, raised banks’ provisioning requirements for commercial real estate loans and lifted inflation forecast.

WPI inflation for end-March 2010 is projected at 6.5 per cent with an upward bias.

This is once again higher than the projection of 5.0 per cent made in the Annual Policy Statement in July 2009.

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Stay Tuned for more on the topic.

We would look into Monetary Policy stance, more facts about economic indicators and Analysis from the Analyst from monetary point of view.

Note : For More Finance Gyan, Latest Industry, Stock Market, Economy News and Updates, please click here

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NEWS CAPSULES

Hello Friends,

Last week witnessed lots of action with results of some major companies coupled with the RBI’s monetary policy.

Moreover, Week gone by, Indian markets turned distinctly weak as a sluggish global trend continued to cast a shadow on markets.

NEWS CAPSULES

NEWS CAPSULES

Having said that here we bring you latest updates from the Indian market and Industry.

NEWS CAPSULES

1.

A hawkish Reserve Bank of India (RBI), while staying away from hiking key rates like repo or reverse repo, hiked the statutory liquidity ratio(SLR) to 25% from 24%.

The cash reserve ratio (CRR), the minimum amount banks need to park with the RBI, was also left unchanged.

2.

Sun TV Network Ltd (Sun TV), owned by Kalanithi Maran, is looking at foreign partners to produce non-fiction contents.
The company joined hands with Dutch firm Endemol to launch a television game show.

3.

Tata Steel, the sixth-largest steel maker in the world, has posted a 49.49 per cent drop in net profit at Rs 902.94 crore in the second quarter, following a sharp fall in steel and ferro alloys’ prices.

Total income fell 16.46 per cent to Rs 5,692.11 crore.

4.

The Anil Dhirubhai Ambani Group-controlled Reliance Natural Resources (RNRL) has posted a 5 per cent rise in net profit at Rs 21 crore for the quarter ended September 30, 2009, against Rs 20 crore for the corresponding previous quarter.

During the quarter under review, RNRL’s total income decreased to Rs 66 crore from Rs 81 crore for the same quarter ended previous year.

The company posted an earning of Rs 0.13 per share for the quarter.

5.

Wipro Limited, backed by increases in price realisation, utilisation and fixed price contracts at its flagship IT services business, posted a 19 per cent increase in its net profit to Rs 1,162 crore for the second quarter ended September 30, 2009 as compared to the corresponding quarter of the previous financial year.

6.

United Spirits, India’s largest spirits firm, has posted a 25 per cent decline in net profit to Rs 69.6 crore for the quarter ended September 30, 2009 where as the same was at Rs 94 crore for the quarter ended September 30, 2008.

7.

Jet Airways, India’s largest private airline, reported net losses of Rs 406.69 crore for the second quarter ended September 20, down nearly 6 per cent from the same quarter last year.

The loss was mainly because of lower yield per seat following Jet’s decision to shift over half of its capacity to its low-cost service.

The shift of capacity to low-cost arm Jet Konnect was executed in May this year.

Jet Konnect fares are at least 25 per cent cheaper than full-service fares and a high load factor of 77 per cent did not offset the lower yield per passenger from cheaper fares.

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However, For More latest Industry, Gyan, Stock Market and Economy News Updates, Click here

Centre To Go Ahead With PSUs Disinvestment :)

Prime Minister Manmohan Singh reiterated that Centre will go ahead with the disinvestment in public sector undertakings (PSUs).

Prime Minister Manmohan Singh reiterated that Centre will go ahead with the disinvestment in public sector undertakings (PSUs).

While efforts will be made to recover loss-making units, the Centre will go ahead with the disinvestment in public sector undertakings (PSUs) stated Prime Minister Manmohan Singh.

However, this is said :

–Β  to unlock the true value of a company,

– improves its corporate governance standards and

– also help it in raising resources for funding future expansion plans.

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Additionally, several PSEs are entering the capital markets striving to become active global players.

At the same time several PSEs got their shares listed on the markets in the last 2 years and many more want to do so, showing they are not shying away from market scrutiny and are ready to face new challenges.

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Further, stressing the need for strengthening the public sector, MMS said that the government was committed to restructure and recover sick and loss-making PSUs.

Moreover, amount of Rs. 15,250 crore is provided by the government in the last 5 years as cash and non-cash support to 36 such enterprises.

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On the other hand, stating that the Centre was committed to giving PSUs flexibility and autonomy to operate effectively in a competitive environment, MMS stated that they have delegated more powers to the boards of Navratna and Miniratna companies.

This was done in order to facilitate improvement in their performance, implemented revised salaries for executives of public sector enterprises and introduced innovative measures like performance related pay.

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Indian Govt to Negatiote with Swiss Banks over Secret Black Money Info !

black money

A day after Swiss banks said it will not allow India to ‘fish’ for details about illegal money stashed in their banks, Government Monday night said it was not interested in getting information on all secret accounts held by Indians but will pursue specific cases.

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Union Finance Minster Pranab Mukherjee on Monday said the Indian Government will look into the matter of Swiss banks rejection to hand over details of the Indian clients.

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“They (Swiss Bankers Association) have not refused (to divulge information). They have suggested they are not for fishing and we are also not interested in fishing their whole list (of bank accounts),” Mukherjee told reporters.

He also added, “We will also work on specific information and we will also like to follow the Organisation for Economic Cooperation and Development pattern.”

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Earlier India’s hope to acquire information on Indian black money stashed away in Swiss banks dealt a severe blow, with the latter refusing on Sunday to reveal any details, saying that “Swiss law and tax model convention don’t permit name-fishing expedition” by a third country.

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The blow to India came barely a week after Swiss banking giant UBS AG turned over details of 4,450 secret accounts to the United States, under an agreement agreed upon by the two.

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On the Other side, Government has come under attack from the opposition for not “properly” making efforts to unearth black money parked in Switzerland.

The BJP wanted the government to mount diplomatic pressure on Switzerland to get the details.

“When the US government can get the list of persons (who have illegally stashed money in Swiss banks), why can’t the Indian government…It is the responsibility of the government. How can there be double standards,” CPI(M) Politburo member Brinda Karat said.

JD(U) attacked UPA government accusing it of not “properly” pursuing the matter with Swiss authorites and “not actually wanting to do it”.

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The Congress defended the government saying it was doing all it can under its jurisdiction to get the black money out as it was an issue of public interest and concerned the common man.

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“They (Swiss Bankers Association) have not refused (to divulge information). They have suggested they are not for fishing and we are also not interested in fishing their whole list (of bank accounts),” Mukherjee told reporters.

Mukherjee said, “We will also work on specific information and we will also like to follow the Organisation for Economic Cooperation and Development pattern.”

Earlier India’s hope to acquire information on Indian black money stashed away in Swiss banks dealt a severe blow, with the latter refusing on Sunday to reveal any details, saying that “Swiss law and tax model convention don’t permit name-fishing expedition” by a third country.

BJP action against Jaswant Singh

Tax relief likely to boost commodity trading

Growth in commodity trading over equity trading has been evident in recent years. Some market observers said removing tax on commodities trading, while retaining tax on securities transactions, may accelerate growth.

Tax

Jagannadham Thunuguntla, equity head of SMC Capital, said the Budget proposal could turn the focus of traders and arbitrageurs to commodities from equities. This may push up share of trading volumes significantly in commodities.

Trading Share

In 2007, the share of equities in the overall financial market transactions was 82 per cent and that of commodities was 18 per cent.

This year the share of equities market has reached 63 per cent, but the share of commodities has shot up to 37 per cent.

Ajit Day, who owns equity brokerage and commodity trading outfits, said the impact of removal of commodity transaction tax will be minimal as the rate of tax was much lower than that in the equities market.

“Commodities’ derivatives market is still in its formative stage and dominated by speculative transactions. The linkages between spot market and derivatives commodity market are thin; there are many regulatory issues to be resolved too. So the growth of the two markets is strictly not comparable,” he added.

Monthly income funds back with a bang, payouts grow

Income

The turnaround in the capital market since early March has come as a boon for monthly income plans (MIPs) of mutual funds. Buoyed by rising indices and consequent improvement of their net asset values (NAV), MIPs have resumed giving healthy dividend.

MIPs are hybrid products that invest a portion of the portfolio in equities that could go up to 25 per cent and the rest in debt and money market instruments. An MIP pays dividend at regular intervals. Based on the choice of the investor, this interval could be monthly, quarterly or half-yearly.
Dividend payment by MIPs had taken a heavy beating towards the end of 2008 and the first couple of months of this year. This happened due to the slump in the capital market, which was impacted heavily by the domestic economic slowdown and the global financial crisis.

In the past three months, MIPs have given as high as 5.9 per cent monthly dividends (that is, 5.9 per cent of the face value of total number of units held by an investor). On a quarterly basis, the dividend has been as high as 13 per cent.
Mutual Fund

Franklin Templeton India MIP Bonus Fund, that gave a dividend of 0.96 per cent in February, distributed 4.5 per cent dividend at the end of April and 5.90 per cent in the beginning of June. Similarly, DSP Black Rock (DSPBR) Savings Ma-nager Moderate paid a dividend of 0.36 per cent in March, which rose to 1.70 per cent in April and 3.15 per cent in May. Reliance Mutual Fund paid 0.53 per cent dividend under its monthly income plan in January and increased it to 1.75 per cent in April and 2.24 per cent in June.

The quarterly payments of dividend under MIPs have also seen significant increase between March and June quarters. In the quarter ended March, Reliance MIP paid a dividend of just 0.70 per cent, which jumped to 13.31 per cent in June. In case of DSPBR Savings Manager Consv-DQ, the March quarter dividend was a meagre 0.79 per cent, which rose to 2.63 per cent in the quarter ending June. ICICI Prudential MIP paid a dividend of 0.88 per cent in the March quarter compared with 2.16 per cent in June.

Experts say though the equity investment of most MIPs is not more than 25 per cent, the kind of jump that the stock market has seen in the past three months is enough to generate good distributable earnings for these funds.
Alok Singh, head (equity and structured products) of Fortis Mutual Fund, said a fund normally distributes dividend when its earnings increase. β€œThe recent market rally has resulted in decent growth of NAVs of these funds,” he added.
In the past three months, the average returns given by monthly income funds has been 7.69 per cent with the highest category return being 17 per cent. Jagannadham Thunuguntla, equity head of SMC Capitals, said mutual funds must pay good dividends to make schemes more attractive for investors as equity market conditions are improving.

In 2008, when the equity market was in the doldrums and mutual funds were facing a severe liquidity crisis, most MIPs failed to pay regular dividends to investors. The percentage of dividend paid has seen a growth since April, though all mutual funds have given regular monthly dividends.

Source: http://www.mydigitalfc.com/news/monthly-income-funds-back-bang-payouts-grow-418