Is economy close to bottoming out?

Did the stock markets smell it ahead of others? The Indian economy is close to bottoming out, says leading research outfit Nomura.

After four quarters of consecutive declines, the index which measures real M2 money supply, non-oil imports, equity returns, repo rate, real bank credit, industrial output and tourists rose in first quarter (Q1) of fiscal 2009-10 suggesting pick-up in economic activity.

Nomura uses a composite leading index (CLI) to identify turning points in the growth rate cycle. The index which had fallen from near 102 levels in September 2007 to 99, shows a breakout from current levels and seems to be rising upwards.

Since the CLI has a lead of two quarters over non-agricultural GDP growth rate-the pick up in Q1 suggests some pick-up in economic activity from the third quarter, feels Nomura economist Sonal Varma.

“Export and production data in several Asian countries (including India) have continued the improvement seen in previous months,” chief analyst Allan Von Mehren of Dankse Bank, Denmark’s largest bank.

Purchasing managers’ index for new orders show that after falling in mid-2008, the index for India has recovered significantly.

However, the recovery for the economy may not be very quick. Nomura says the decline in real GDP growth (the latest data available are Q4 of fiscal 2008-2009 ) will continue in first six months of 2009.

“We forecast real GDP growth to trough in the second quarter of FY09 at 4.5% year-on-year, led by inventory de-stocking and a further weakening of output in the services sector.”

But it maintains that overall, the turnaround in the leading index is positive . “We interpret it as a sign that the Indian economy is now close to bottoming out,” the Japanese outfit said.

Meanwhile, Citigroup economists feel that consumer price index could fall from 9.6% levels in Feb 09 to 5-6 % range soon as good monsoons could see new crop coming in. While latest inflation data pegs the WPI at 0.3% for the week ended 14 Mar, however the consumer price index (CPI) - released on a monthly basis - remained at neardouble-digit levels, up 9.6% in Februray 09.

“Given the base effect and new crop coming in, it is now consensus that normal monsoons will result in the CPI moderating to 5-6 % levels. Importantly , food articles comprise 14% of the wholesale price index but 57% of the CPI,” Citigroup economists Rohini Malkani and Anushka Shah said. - ET

Read the full post...

How to better the current economic situation in India

Economic Times in an article today reported that the based on the lower the expected Inflation numbers (0.44% ) the Reserve Bank of India must further cut its Repo, Reverse Repo and may be CRR rates to provide necessary stimulus to the economy. We all remember that RBI already has cut its rates to record minimum, the latest cut being announced on March 4th, which led to repo rate being brought down from 5.5 to 5%, and the reverse-repo down to 3.5% from 4%.

What do the rate cuts serve to achieve? - Encourage banks to ease consumer and business borrowing by offering lower lending rates.

Well this makes sense in theroy, but is the consumer ready to borrow? Is he or she ready to invest in a car or home or decide to increase their discretionary spending? I do not think so.

The consumer has retreated in to a shell, from where it is difficult to spend money. But why are they consumers so wary of spending? The underlying problem is the fear of uncertainty about tomorrow. If we take a back in to the past 6-8 months, the words slowdown and/or recession were being mocked at in India. The so-called pundits helped build a wall around peoples minds telling them that India will remain more or less unaffected by the ills of the credit crisis plaguing US and much of the major economies. This mis-information shrouded us for taking precaution and preparing ourselves for the upcoming misery. And when the truth dawned up on it was too late to take any evasive action and because it was so sudden the impact has been far more worse.

But who is to blame for all of this. The pundits, the media, the newspapers, TV programs? The onus lies on each and every one of us. If it is our hard earned money we are investing in the market, then we cannot blame someone else for our losses. We had to stay more informed and follow information without verifying and applying logic to it. In one way we cannot even trust the government. If you remember the speech in Feb-08 from P Chidambaram he was very confident of India continuing on the pace of 8-9% fiscal growth. Even 6 months in to 08 the finance ministry did not forewarn or raise flags of possible reactions to the credit crisis of US and Europe.

Today the condition is so bad that business big or small, individuals rich or poor, in one way or other are feeling the pinch. The Elections provide another reason for the consumer to push oneself further deep in the shell. The announcement of the Third Front, Mayawati being projected as the prime ministerial candidate, Congress and BJP not being strong enough to win a majority leads to many investors to believe that the economic stimulus, change in fiscal policy needed to fight the downturn may not be able to come till July-August time frame.

So should the RBI cut rates again? Will this have a big impact on the current state of the economy? Will bank easing borrowing rates encourage people to buy new homes or new cars?

It is the weekend, definitely something for all us to think about !

You can find me at Stockezy.com - or tushar@stockezy.com

Read the full post...

Ashok Chawla says "India to witness 7-7.5% growth this fiscal"

India is projected to witness a growth between 7-7.5% during the current financial year, after remaining in high growth path constantly for the last four years, said Ashok Chawla, secretary, department of economic affairs.

Whereas, the pace of growth next year is dependent upon how long the global recession lasts and how quickly capital flows return to normal, he added. With the presence of strong domestic demand stimulus, he added further that the India expected to maintain a strong pace of economic growth despite continuation of global recession.

India has taken a number of steps to inject liquidity into the financial systems, recapitalized banks and other systemically important institutions to tide over the crisis, he said.

Chawla identified banking sectors and capital markets as areas where the expert teams of India and China to jointly work and evolve a time-bound strategy for closer engagement.

Financial sector reform process would play as a key to improve productivity, efficiency, profitability and coverage of the system, he emphasized. - MyIRIS.

Read the full post...

ICO - Global coffee exports slip by 2.9%

Global coffee exports have declined by 2.9% to 95.11 million bags during the 2007-08 crop year, reports agency sources.

According to the International Coffee Organization (ICO), in 2006-07, global coffee exports stood at 97.96 million bags. During 2007-08 (the coffee year runs from November to October), world arabica and robusta exports totaled 62.5 million bags and 32.6 million bags, respectively.

India, which is at the fourth position in the list of coffee-exporting countries, shipped 1.7 million bags of robusta and 740,000 bags of other milds during November-October 2007-08, ICO data showed.

The world`s largest exporter, Brazil, witnessed a 4.17% fall at 24.54 million bags, Tanzania by 7.82% at 742,608 bags and Cameroon by 23.13% at 566,383 bags, it said.

For the 2008-09 crop year, the ICO has projected 11% increase in global coffee production at 131 million bags as compared with 118.2 million bags in a year-ago period. Meanwhile, the coffee demand in 2008 is estimated to be 128 million bags, it said, adding that consumption levels in traditional markets are likely to be maintained despite the current financial crisis. - MyIRIS

Read the full post...

India to maintain 7.5% growth in 2008-09: PM

Prime minister (PM), Manmohan Singh has said that despite economic recession and the difficult situation in western countries, India`s growth rate would be maintained at around 7.5% in 2008-09. India recorded 7.6% growth in the last quarter of the current financial year.

Economic crisis was looming all over the world due to the recession that started in the US and Europe, and India was not an exception to it, the PM said, adding `we are not untouched by the economic crisis`.

Some western countries` economic growth rate was negative and recession was hovering there, Singh said, adding the Central government had taken measures to face the crisis.

``Our export, industry and credit availability would bear the minimum effect due to the Centre`s steps to face the economic challenge and recover from it``, he added.

This is the first time that growth in four consecutive years has been 9%, he said, adding industries and businesses were given a boost, new jobs were created, and stagnant agriculture got great momentum.

The UPA government considered that the farmer was the backbone of the country and hence the National Agriculture Development Yojna and Food Security Mission were redrawn with priorities in the past four years, he added further. - IRIS

Read the full post...

GDP at 7.6 v/s 7.9 as Indian Economy expands at a slowest pace since 2004.

Indian GDP stands at 7.6% v/s 7.9% in last quater.

India’s economy grew at the slowest pace since 2004 last quarter, increasing pressure on the central bank to cut interest rates.

Asia’s third-largest economy expanded 7.6 percent in the three months to Sept. 30 from a year earlier, after a 7.9 percent gain in the previous quarter, the statistics office said in a statement in New Delhi today. The median forecast of 16 economists in a Bloomberg News survey was for 7.2 percent growth.

Governor Duvvuri Subbarao may have to deepen the rate cuts he started last month to support growth in India’s $1.2 trillion economy as the world sinks into recession. Reducing borrowing costs would also shore up investor confidence after terrorist attacks since Nov. 26 killed at least 121 people in Mumbai, the nation’s financial hub.-Blomberg

Read the full post...

Inflation rate drops to 8.84% on cheaper fuel, metals

 The annual Wholesale Price Index-based inflation rose 8.84 per cent for the week ended November 15, marginally down from the previous week’s yearly rise of 8.90 per cent. The latest WPI inflation rate was the lowest reading since May 17 and well below early August’s peak of 12.91 per cent.

The official WPI for ‘All Commodities’ for the latest reported week rose by 0.04 per cent to 235.1 points, up from 235 points for the previous week. The annual rate of inflation, calculated on point-to-point basis, stood at 3.35 per cent during the corresponding week of the previous year.

Fish-Marine cheaper

The Primary Articles Group rose 0.1 per cent as the index for ‘Food Articles’ group rose by 0.1 per cent due to higher prices of moong, rice and bajra (3 per cent each), ragi (2 per cent) and masur, maize and fruits and vegetables (1 per cent each). However, the prices of fish-marine (12 per cent) and gram and tea (2 per cent each) declined.

Soyabean dearer

The index for ‘Non-Food Articles’ group rose marginally due to higher prices of soyabean (11 per cent), gingelly seed and castor seed (2 per cent each) and linseed (1 per cent). However, the prices of raw rubber (4 per cent), cotton seed groundnut seed and raw cotton (2 per cent each) and raw silk (1 per cent) declined.

The fuel, power, light and lubricants group index remained unchanged at its previous week’s level of 353.3 points. The Manufactured Products group rose by 0.05 per cent as the index for the ‘Food Products’ group declined by 0.1 per cent due to lower prices of cotton seed oil (5 per cent), imported edible oil (4 per cent), rice bran oil (3 per cent) and gur (2 per cent).

However, the prices of bran (all kinds) (5 per cent), gingelly oil (4 per cent), sooji (rawa) (2 per cent) and salt and atta (1 per cent each) moved up. The index for the ‘Textiles’ group rose by 1.0 per cent due to higher prices of cotton yarn-cones and hessian and sacking bags (4 per cent each), texturised yarn (2 per cent) and hessian cloth and cotton yarn-hanks (1 per cent each). However, the prices of synthetic yarn (2 per cent) declined.

The index for ‘Rubber and Plastic Products’ group declined by 0.2 per cent due to lower prices of PVC fitting and accessories (12 per cent). The index for ‘Chemicals and Chemical Products’ group rose by 0.3 per cent due to higher prices of acetylene (70 per cent) and oxygen (8 per cent). However, the prices of vitamin liquids (4 per cent) declined.

The index for the ‘Base Metals Alloys and Metal Products’ group declined by 0.6 per cent due to lower prices of ferro silicon (24 per cent), steel ingots (plain carbon) (16 per cent), basic pig iron and foundry pig iron (7 per cent each), zinc (3 per cent), steel sheets, plates and strips (2 per cent) and ms bars and rounds (1 per cent). However, the prices of joist and rolls and other iron steel (3 per cent each) moved up. - TheHinduBusinessLine

Read the full post...

Investor sentiment may take a knock.

Wednesday’s terrorist attack that rocked the financial capital of the country could further dampen investor sentiment already shattered by the credit crisis, say analysts and marketmen.

However, most of them do not expect a sharp fall in key indices.

“There might be a knee-jerk reaction in the market when it opens”, said Mr Manish Sonthalia, Vice-President, Equity Strategy, Motilal Oswal Financial Services Ltd.

Both Bombay Stock Exchange and National Stock Exchange were officially closed on Thursday following the terror attack.

“I don’t see a great impact tomorrow on markets,” said Mr U. K. Sinha, Chairman & Managing Director of UTI AMC. In the past also such developments had only a temporary impact on trading, he said.

Both BSE and NSE said that the expiry in futures and options, and settlement due on Thursday, were postponed to Friday.

The Singapore Nifty Index Futures opened a little lower than the previous close and ended lower by 64 points.

The terror attack as such is not going to impact the market but will have sentimental impact and foreigners may defer their investment plans, said Mr Dinesh Thakkar, CMD of Angel Broking Ltd.

Some analsyts feel that in the event of a market crash, domestic institutions such as LIC might come to the rescue, said the head of research at a broking firm.

On Tuesday, Sensex ended higher by 331.19 points at 9026.72.

Downgrade seen

As foreign tourists were held captive in top hotels, there might be a downgrade on the big and reputed names in the hotel industry, said Ms Anita Gandhi, Head of Institutional Business, Arihant Capital Markets Ltd.

The terror attack is bound to create a panic amongst the foreign investors which in turn could impact foreign direct and institutional investments.

The US traded shares of Indian companies were up on Wednesday. ICICI bank was up by 1.8 per cent, Infosys by 6 per cent, MTNL by 3.1 per cent and Wipro by 3.8 per cent.

Meanwhile, the SEBI board, scheduled to meet tomorrow, is expected to consider, among others, the exit route for regional stock exchanges and guidelines for separate exchanges for small and medium enterprises.

The equity, currency, bonds and money markets were officially closed on Thursday.

Source - TheHinduBusinessLine.

Read the full post...

S&P maintains credit watch on Citigroup after govt bailout

Global credit rating agency Standard and Poor's has maintained a credit watch with negative implications on troubled financial giant Citigroup INC , after it received a multi-billion dollar rescue package from the US government. 

"We expect the support to reduce impact of deteriorating asset quality on the ratings and help to restore confidence in the company. As a result, we no longer believe that ratings would fall more than one notch by year-end," Standard and Poor's credit analyst Tanya Azarchs said. 

"However, we would provide our stand-alone assessment of creditworthiness, which excludes government support. This assessment could be lower than the issuer credit rating, to reflect the potential for substantial asset-quality deterioration," Azarchs added. 

S&P maintained credit watch with negative implications on the counterparty credit rating of 'AA-' on Citigroup Inc. 'AA-' refers to an investment grade rating but involving a higher degree of long-term risk. 

"The guarantee package on 306 billion dollar of assets provided by the US government as well the equity investment, are, in our view, a clear message of support for this and other systematically important banks, the agency said. 

"In our view, the immediate package is sufficient to limit the downside risk represented by the troubled assets. It should also remove the causes of a crisis of confidence that could have overtaken the organisation," it said. 

The US government is investing in $20 billion of preferred stock that is redeemable at Citigroup's option for common stock or cash.

Read the full post...

Indian market outlook and daytrading ideas for 24th Nov.

US markets had rallied.

Asia has opened mixed.

Europe was down on an avereage of 3%.

Expect markets to have a flat opening.

The support for the Sensex is 8450-8316 and the resistance to the up move is at 9635-10324.

Nifty: (2693) the support for the Nifty is at 2500 and the resistance to the up move is at 2860-3113.

Day trading ideas.

Unitech

Buy above 32.35 for targets of 33.90 & 34.95

Sell below 29.80 for targets of 28.10 & 27.50

NTPC

Buy above 146.45 for targets of 148.90 & 150.25

Sell below 141.10 for targets of 139.50 & 137.50

Axis Bank.

Buy above 405 for targets of 408 & 411

Sell below 398 for targets of 395 & 392

Happy Investing.

Receive This kind of updates in ur email Id Subscribe - Click here.

Receive SMS updates for free - Click here.

Read the full post...

What happned in Indian Markets this week ?

The Full week was dull almost every day we saw a red stroke or a downtrend but an excellent pulback of 464 points on SENSEX i.e 5.5%. on Friday.

The whole week markets were mainly down because of bad global cues.

Inflation in single digits thats cool.

Crude Oil sliped below 50$ before recovering. Thats also good.

The bad news is worlds second largest economy JAPAN slips in recession.

Germany went in recession last week.

And the same job cuts news continue to rule.

Read the full post...

PM: global institutions must be representative

India will emerge stronger from the global economic crisis and global institutions must be made more representative of developing nations, Prime Minister Manmohan Singh said on Friday.

In speech to a conference, Singh said the world had become more interdependent and the voice of developing nations must be heard in the high councils of global decision-making.

"Global problems require global solutions. This is the most important lesson of the past century for the present century," Singh said.

"But global institutions of governance must be made more inclusive and representative," he said, according to a text of the speech.

Singh took part in a summit in Washington last weekend with leaders of the Group of 20 nations to discuss how to tackle the crisis which has shaken financial markets worldwide, frozen credit markets and pushed some major economies into recession.

He said the G20 meeting was the first time developing nations' voices had been heard with respect in a global forum and said there was agreement that recourse to protectionism was no remedy.

Indian authorities are struggling to shore up growth against the impact of the global financial crisis and have taken a host of steps including sharp rate cuts to fend off damage to the broader economy.

Singh said the world was in a deep crisis but despite an adverse international environment India had the capacity to sustain a growth rate of about 8 percent.

"We will, through the use of fiscal policies, through the use of monetary policies, through the use of public investment, ensure that the shortage of demand coming as it is from the global slowdown is neutralised to the maximum possible extent," he said.

Read the full post...

Inflation at 8.90 for week ended November 8.

Inflation fall marginally at 8.90 compared to 8.98 last week.

Inflation slipped to single digit after 21 weeks at the beginning of this month.

Analysts said a decline in global commodity prices, robust domestic agricultural output and a fall in demand in a slowing economy helped bring the rate to single-digits well ahead of earlier expectations.

Receive free SMS from us. Click here.
Receive free Email Updates from us. Click here.

Read the full post...

JPMorgan cuts India growth forecast and sees rate cuts

JPMorgan has cut its forecast for India's economic growth in 2008/09 and 2009/10, it said in a note on Monday, adding that it expects agressive rate cuts by the Reserve Bank to support the growth momentum. 

The Indian economy may grow 6.7 per cent in the year ending March 2009, JPMorgan said, down from its earlier forecast of 7 per cent. The economy may grow 6.2 per cent in 2009/10, down from its previous estimate of 6.8 per cent, the bank said. 

India's economy grew at an annual rate of 9 per cent or more in the past three years, second only to China among the major economies. Last month, the Reserve Bank cut its estimate for FY09 growth to 7.5-8.0 per cent, but analysts expect it to be lower. 

Other global financial groups like Citigroup, Goldman Sachs, Morgan Stanley and Nomura have also lowered their estimates for India's GDP growth over the past one month. 

My readings from ET

Read the full post...

FM bullish on Indian Economy says "Economy will rebound in 6 to 9 months".

The financial meltdown will not spare any sector of the economy, but on the brighter side recovery could be just six to nine months away, Finance Minister P Chidambaram has said.

India has been growing by 9 per cent and above for four straight years, but various estimates suggest that the impact of the economic crisis could shave off anywhere between 1 to 2 percentage points.

"We are not revising it (GDP forecast) upwards or downwards. It could be anywhere between 7-8 per cent... The only other large country recording such growth will be China," Chidambaram said.

Commenting on the decline in inflation to single digit -- 8.98 per cent -- after five months, he said, "I don't think we should get too excited about the single digit inflation as it is still close to 9 per cent, much above our tolerance level.

"We would like the inflation to come down. We hope it will happen in the next few weeks, so I think we are jumping the gun when we are talking about a rate cut."

As regards the impact of slowdown on India Inc, he said, "Bottom lines in the profit and loss account will indeed be affected but it doesn't mean that something dramatic has happened in the Indian economy."

Stressing that India is still an attractive destination for foreign investors, he said the country's policy stance has attracted significant foreign direct investment as well as portfolio investment in the last four years.

Read the full post...

India's Sept industrial output seen up 4.7 pct yr/yr - POLL

India's industrial output probably grew 4.7 percent in September from a year ago, picking up some speed from August's slowest pace in nearly a decade, but analysts said with major economies on the ropes the months ahead would be tough.

The median forecast in a poll of 11 analysts was well above the 1.3 percent annual growth in August but far below July's upwardly revised 7.4 percent and even further behind last year's double-digit rates.

"The momentum of industrial growth has slowed. Manufacturing, especially capital goods, is going to see a drop in output," said N.R. Bhanumurthy, economist at Institute of Economic Growth.

"All the factors -- global slowdown, the rising cost of production and declining domestic demand -- will have an impact on the industrial production numbers." Industrial output rose 6.8 percent in September 2007.

Policy makers are ratcheting down their expectations for growth in Asia's third-largest economy.

Many now say it is likely to slow to 7 percent in the fiscal year to March 2009, sharply slower than the 9 percent expansion clocked up in the past three fiscal years.

In the June quarter, the economy grew 7.9 percent from a year earlier, its slowest rate in 3-½ years.

Reflecting the slowdown, India's manufacturing output expanded at its slowest pace in 14 months in September as domestic demand cooled in the face of seven-year high interest rates, according to the ABN AMRO Bank purchasing managers survey.

The drop in the index (PMI) also showed that a slow down in global demand was starting to bite into exports.

Industrial production, which accounts for about a fifth of gross domestic product and is mostly geared to meet domestic demand, rose 8.1 percent in 2007/08.

September's figure may draw some support from 5.1 percent annual expansion in the infrastructure sector in the month. Infrastructure accounts for nearly a quarter of the country's factory output.

Source: - Reuters.com

IIP data is gona be realised tomorrow

Read the full post...

Are you a textile employee ? Is your job safe ?

"Many textile employees from all over India are in a pickle after the textile industry, which has warned the government of 5-6 lakh lay-offs due to the global downturn ."
The main reasons are -
Higher Interest rate.
Global economic crisis.
ET writes " The Northern India Textile Mills Association (NITMA) said that none of its representatives was invited to the meeting convened by Prime Minister Manmohan Singh on November 3 to discuss the state of the economy."
The industry, directly and indirectly, employs about 35 million people.
Garment exporters have reported a 30-35 per cent drop in volume in the July-September quarter.
The Confederation of Indian Textile Industry (CITI) has estimated 6-7 lakh people are facing job threats because of a slump in export demand.
More readings in Economic Times.

Read the full post...

Barack Obama wins historic US election and will he be able to change the American Economy.

"Barack Obama wins the 44th US elections and is elected as a new President of US after defeating McCain."
"He is the first Black President for US"
"The win by Mr Obama, son of a black father from Kenya and white mother from Kansas, marked a milestone in US history. It came 45 years after the height of the civil rights movement led by Martin Luther King."

Over midnight the US residents gather outside White House to cheer him.
He is in talks to improve the financial crises on the Wall Street and has also saluted the US Army force which is in Iraq as well as in Afghanistan.
Americans are betting on him to change their country forever and give it a new direction.
Mr Obama has promised to restore US leadership in the world by working closely with foreign allies and dropping some of the policies that made Mr Bush an unpopular leader at home and abroad.

How will the change in President affect the US economy ? (Both Positive and Negative)
A - New President brings new hopes .
He brings new policies and reforms.
His style of leadership.
Welfare towards home country and other countries too.

How will India benefit ?
India and US share a good relationship. He will bring a change.
There are various types of economical cycles and their structure. In Cyclical structure every country is depended on each other say for example if US goes in recession the countries exporting to US may also follow in its route.
The conditions at present are not good due to subprime crises. When the conditions in US change Indian conditions are bound to change.
Thus the cyclical economic structure will ensure a positive move in Indian when the economic condition in US change. This can happen over a period of time.
I congratulate Barak Obama.
Cheers.
Picture Source - Hollywoodtoday.net

I hope you have tried our special search. Click here.
Receive free SMS from us. Click here.
Receive free Email Updates from us. Click here.

Read the full post...

India to feel the pain ‘sooner or later’: PM

After brainstorming with top world leaders in Beijing on the raging financial turmoil, Prime Minister Manmohan Singh has cautioned that India's economy was also bound to feel the pain ‘sooner or later’ as "we are not in complete control."

"We are not in complete control. There are bigger players and we are victims of that. The crisis is not of our making," Singh said after participating at the 7th Asia-Europe Meeting (ASEM) Summit in Beijing, attended by 45 leaders.

"Well, it all depends on how long it takes the world community to restore confidence to the global financial markets," the economist-turned-politician, whose speeches were listened with rapt attention in Beijing, said.

Sooner or later, "the economy is bound to experience the pain," Singh warned during an interaction with reporters on board his special aircraft while returning home from his two-nation tour of Japan and China.

Tracing the origin of the current global financial crisis, Singh said it emerged in the US and Europe.

Singh said that despite strong corrective measures like injecting more liquidity and capitalising the banking system, he was still "worried."

"The type of integrated world economy we live in we are not immune and I had mentioned in Parliament earlier this week on Monday and I repeated that same sentiment in Beijing (while attending the ASEM summit)," Singh said.

However, the Prime Minister said his Government has had "a reasonably good term" in office till now.

Source: - Financial Express.

Receive free SMS from us. Click here.

Receive free Email Updates from us. Click here.

Read the full post...