Tuesday December 12, 2017
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Reforms, rate cut and rupee movement to propel markets


By Rohit Vaid

Mumbai, Hopes of further economic reforms, rate cuts, range-bound commodity prices and stabilisation of the yuan and rupee are expected to propel the Indian equity markets during the upcoming week, experts said.



“Investors have appreciated the government’s effort in trying to pass key economic legislation in the (just-concluded) monsoon session (of parliament). Markets believe that the government will be able to meet the GST (Goods and Services Tax) roll-out deadline,” Devendra Nevgi, chief executive of ZyFin Advisors, told IANS.
“There are solid hopes that the government will either call a special or joint session of parliament to get the GST bill passed. If this happens then it will send in a very positive signal to the world that India is serious about reforms and ease of doing business,” he added.

Lately, investors have been reluctant to place bets given the possibility that the whole reforms process might be stalled due to the government’s inability to conduct business in parliament.

Nevertheless, the key macro-economic data points released last week is expected to keep the investors solely focused on the apex bank’s moves on a rate cut.

Investors are hopeful of a rate-cut based on healthy macro-economic data points including the Consumer Price Index (CPI), the Index of Industrial Production (IIP) and the Wholesale Price Index (WPI).

The macro-economic data points showed a fall in India’s annual retail inflation rate to 3.78 percent in July, the annual wholesale inflation to (-) 4.05 percent, there was a rise in the factory output to 3.8 percent in June.

The WPI, coupled with the CPI, have pointed out at a gradual reining in of prices. The RBI has set a target for CPI inflation at 6 percent by January 2016.

“The double of joy of growth and inflation numbers have stoked optimism for an inter-policy rate cut, which could support banks’ run in the week ahead,” Anand James, co-head, technical research desk, Geojit BNP Paribas.

Banks will be at the centre of the markets attention, especially in the light of government’s announcements on recapitalisation of public sector banks and setting-up of a Banks Board Bureau.

“The announcements by the finance ministry on the PSU banks should have positive impact on the PSU banks’ functioning over the medium to long term perspective,” Dipen Shah, head of private client group research, Kotak Securities.

The government on August 14 announced its plans to provide Rs.25,000 crore capital in the current and next fiscals to banks, while Rs.20,000 crore would be provided during 2017-18 and 2018-19.

The Rs.25,000 crore this year will be provided in three tranches.

At the same time, Indian markets will be impacted by global trend in commodity prices, rupee and yuan movements.

The yuan’s surprise devaluation last week had stroked fears of competitive devaluation across Asia, especially before the (US) Fed’s monetary policy decision due in September.

The yuan has fallen by 4.6 percent since August 11, its biggest devaluation since 1994.

The devaluation, intended to boost exports, has made investment in China cheaper, thereby leading foreign funds away from India.

This also impacted the rupee, which on August 13 fell to its lowest level against the US dollar in 24 months at Rs.65.23.

However, relief came to the global markets when yuan rose 0.05 percent on August 14. This helped stabilised rupee which stood at Rs.64.99 against the dollar.

“The trend in commodity prices globally, rupee movement and the sharp bounce back on Friday seems to continue in the week ahead,” Vineeta Mahnot, equity research analyst, Hem Securities.


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Narendra Modi pays Tribute to India’s Former PM Narasimha Rao on his 95th Birth Anniversary

Narasimha Rao was India's 9th Prime Minister and is referred to as the "Father of Indian Economic Reforms"

P.V. Narasimha Rao. Image source: www.thedailybeast.com
  • PV Narsimha Rao was India’s 8th Prime Minister and is referred to as “Father of Indian Economic Reforms”
  • He died at the age of 83 due to heart attack on December 23, 2004
  • Rao was born on June 28, 1921 at Karimnagar in Telangana

Prime Minister of India, Narendra Modi paid respect to former Prime Minister of India- P.V. Narasimha Rao on his 95th birthday on Tuesday, June 28.

Pamulaparti Venkata Narasimha Rao was by profession an Indian Lawyer and a politician who served India as a Prime Minister from (1991–1996). He was India’s 9th Prime Minister and is referred to as the “Father of Indian Economic Reforms”.

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PM pays tributr to PV Narsimha Rao (Source: Wikimedia Commons)
PM Narendra Modi pays tribute to P.V. Narasimha Rao Image Source: Wikimedia Commons

“Tributes to P.V. Narasimha Rao on his birth anniversary. He led India at a crucial time and his leadership was both notable and vital,” Modi tweeted.

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Narasimha Rao was born on June 28, 1921 at Karimnagar in Telangana and served as the Prime Minister of India from June 21, 1991 to May 16, 1996. P.V. Narasimha Rao died at the age of 83 due to heart attack on 23rd December 2004.

(inputs from IANS)



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Success depends on how human, other resources harnessed: President

Source : geoawesomeness.com

New Delhi : Success of any nation state depends on how effectively it harnesses all available resources at its disposal, foremost among these being the human resource, President Pranab Mukherjee said on Wednesday.

Addressing members of the 55th course of National Defense College at Rashtrapati Bhavan, the president said the role of the armed forces has also expanded far beyond traditional military matters with revolutions in military affairs and globalization.

“It is clear that future conflicts in the complex defense and security environment will require a more integrated multi-state and multi-agency approach. Preparing military leaders, police officers and civil servants to deal with the complex security environment will have to be addressed in a comprehensive manner,” he said.

Mukherjee said the present global environment poses numerous challenges to the world because of its dynamic nature.

He said the astonishing pace at which events have unfolded in the recent past could not have been foreseen a decade earlier.

The president said various organs of the state must understand the strengths and limitations of each other in a democratic system.

“Political leadership and senior civil services officers must be conversant with the capabilities and limitations of the defense forces. Similarly, armed forces officers need to understand the limitations and constitutional frame work under which the political set up and civil services function.”

“However, both of them should be aware of the larger perspective of national security in order to take informed decisions of vital importance,” the president said.

He said each country was guided in its actions by its national interests.

Mukherjee said security was no more confined to preservation of territorial integrity alone as it encompasses economic, energy, food, health, environmental and several other dimensions of national well being.

“The power relationships are constantly changing, and unless a country understands, appreciates and adjusts itself to the changes that are taking place around it, its own security will be seriously jeopardized,” he said.

He said there must be a conscious effort to strengthen the underlying linkages and not divide them into watertight compartments.

“Intensive research and quality analysis in all fields and disciplines is thus a pre-requisite which calls for a holistic approach to studies across a vast spectrum of disciplines,” he said.

He said the NDC undertakes the task of development of human resource for national security with senior officers from armed forces, civil services and friendly foreign countries endowed with background knowledge to make policy decisions related to national security. The president hoped that the course will make the participants more aware and well-informed individuals, who can make well reasoned decisions taking the country’s security perspectives into consideration.

“The success of any nation state depends on how effectively it harnesses all the available resources at its disposal, foremost among these being the human resource,” he said.


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Services sector propels India’s economic activity


Mumbai: Services sector expansion propelled the overall economic activity in India during October, a key macro data showed on Wednesday.

The Nikkei India composite PMI (purchasing managers’ index) which is a key macro data that indicates monthly trends in overall economic activity showed a rise of 52.6 in October from 51.5 in September.

An index reading of above 50 indicates an overall increase in the economic activity, below 50 an overall decrease.

The composite PMI weighs the average of the manufacturing output index and the services business activity index. It is based on original survey data collected from around 700 companies spread across sectors in India.

According to the composite PMI report published by the leading global diversified provider of financial information services — “Markit”, the October expansion trend was the joint-fastest since March.

The survey said the latest improvement was driven by services, as goods producers saw growth of production wane.

“India’s economic growth shifted into a higher gear in October, driven by the service sector. Although manufacturing production continued to expand, growth eased and was sluggish by historical standards,” said Pollyanna De Lima, economist with Markit.

On a standalone basis, the Nikkei India manufacturing PMI recorded a 22-month low in October at 50.7, down from 51.2 in September and from 52.3 in August.

The Nikkei services business activity index for India for October stood at 53.2 from September’s 51.3.

The services index noted growth in three out of the six surveyed categories, led by post and telecommunication.

The survey also revealed a quicker increase in new business inflows since February.

“The upward trend in private sector output reflected stronger inflows of incoming new work, one that was the most marked since March,” De Lima said.

“Services companies saw a faster rise in new business than their manufacturing counterparts, with data implying that price discounts supported growth of new projects.”

The services PMI disclosed that the demand conditions also improved in October.

On the input prices, the survey pointed-out a slight rise in petrol and food costs for the services sector. The purchase prices for manufacturers rose for the first time in three months.

Notwithstanding the rise in input costs, service sector employment levels was remained unchanged with approximately 98 percent of survey members reported no change in payroll numbers since the preceding month.

However, goods producers signalled higher staffing numbers, but the rate of job creation was only marginal.

The report cited that the services companies lowered their selling prices for the second successive month in October to improve competitiveness.

The reduction in selling prices at services firms offset higher charges at goods producers, the study said.

“Private sector firms remained wary of costs and left payroll numbers, once again, unchanged. Average input prices rose in both the service and manufacturing sectors, although at rates that were relatively weak,” De Lima added.

The survey added that the services business sentiment regarding the 12-
month outlook for activity remained positive in October, which was the strongest since July.

The strongest levels of confidence were seen in the ‘other services’ and ‘hotels & restaurants’ categories.