Current Economic Statistics and Review For the
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Theme
of the week:
Emergence of External Sector As a Dominant Share in the Macro economy
The
transformation of the Indian economy from a foreign exchange scarce
economy to the one of enjoying abundance in external inflows and reserves,
has indeed been a remarkable story of apparent success in managing the
macro economy This story of success has no doubt to be tempered with some
sober thoughts on the features which do not appear as unmitigated success.
First,
unlike in the case of
Recent
BoP Trends
Table 2 presents data on merchandise imports and exports as per
RBI’s balance of payment (BoP) data and trade data produced by the DGCI&S.
While the export size remains by and large similar, levels of
imports differ as between the two sources of data.
But, interestingly, the rates of growth in exports, and even in
imports, do not differ much.
As per BoP data,
that
at 34.4 per cent as per DGCI&S data for the same quarter.
As per BoP data, both export and import growth have decelerated in
Q1 of 2007-08 as
compared with the growth in Q1
of 2006-07 , but as per DGCI & S data while export growth has
decelerated. Imports have shown
an improvement in growth. In imports, the moderation in growth has been
brought about due to a drastic reduction in the growth of oil imports
(which had a meagre rise of 4.2 per cent in Q1 of 2007-08 as
ompared with 50.7 per cent in Q1 of 2006-07) whereas non-oil
imports experienced a strong growth
of
50.4 per cent in contrast to a negligible growth of 7.6 per cent in Q1
of 2006-07. The
stability in the price of crude oil as between the two quarters has helped
moderate the value of crude oil imports.
The Indian basket of crude oil prices averaged at US $ 66.3 per
barrel during Q1 of 2007-08 as compared with US $ 66.8 per
barrel in Q1 of 2006-07. In
fact, the whole of 2006-07 the crude oil prices had been moderated. As per the BoP data, trade deficit has increased to US $ 21.6 billion in Q1 of 2007-08 from US $ 16.9 billion in Q1 of 2006-07. As the data cited above, inferentially, the increase in deficit was primarily because of the non-oil imports. Maintenance imports may have gone up as a result of supply shortages of agricultural commodities domestically, and likewise, imports of investment goods have gone up due to the general improvement in the economy, including possible improvement in investment. Invisibles
A
major factor in strengthening of 2006-07.
Gross receipts have risen by 27.5 per cent in Q1 of
2007-08, while outgo has risen by 18.6 per cent (Table 4).
It
is the items of invisibles with relatively large inflows and small outgo,
which have kept up the momentum of growth (Table 5).
A 20 per cent increase in gross receipts under software services
from $ 7.04 billion in Q1 of 2006-07 to $ 8.44 billion in Q1
of 2007-08 and a 45.4 per cent rise in private remittance from $5.92
billion to $8.61 billion during the same period, are indeed quite
commendable. On the other hand, there are some more items like travel transportation, business services and investment income under which gross receipts are sizeable but there are
substantial outgo under
them. These four items together receipts worth $11.25 billion
during Q1 of 2007-08 but also had outgo worth $11.14
billion, thus providing practically no positive support to the BoP (Table
6). Amongst them, investment
income has an outgo of $2.96 billion, that is, somewhat higher than the
gross receipt under the same head at $2.48 billion, while ‘business
services’ has an outgo of $3.61 billion against a gross receipt of $
4.48 billion. Despite
large foreign exchange reserves and sizeable increases in earnings on
them, the investment income shows a negative balance in Q1 of
2007-08. In fact, this has
always been so in the Indian situation.
During the whole of 2006-07, for instance, gross receipts under
investment income was $8.57 billion but there was an outgo of $12.86
billion during the same year, as a result of repatriation of profits by
FDI and other companies and also earnings by FIIs.
As
for business services, receipts and payments are mainly driven by
trade-related services, business and management consultancy services,
architectural and engineering services and other technical services, and
office-maintenance services. Payments
under all of them together constitute over 80 per cent of receipts (Table
7).
Capital
Flows
Recent
period has seen substantial improvement in capital flows.
Net capital flows were of the order of $15.3 billion in Q1 of
2007-08 – a rise of 44 per cent over that ($10.6 billion) in Q1 of
2006-07.
The sizeable
increase in gross FDI flows began in the whole of 2006-07 when they
aggregated $19.44 billion against $7.66 billion during 2005-06.
What is equally interesting is the sudden leap in direct
investments made by Indian entrepreneurs abroad.
Such investments abroad have aggregated US $11.89 billion during
2006-07 against $3.15 billion in 2005-06 (Appendix
Table 2). (Appendix
Table 1)
“Banking
capital” is an item in capital account that absorbs the shocks of
interest rate differentials as between
to
the RBI’s interest rate policy stance.
Recently in July and April 2007, the ceiling rates on NRI deposits
were lowered so as to moderate flows and hence, there have been net
outflows on NRI deposit accounts. Apparently,
while there were net inflows under foreign currency non-resident (Banks)
deposits [FCNR (B)], there occurred higher magnitudes of outflows under
non-resident external rupee account [NR(E)RA] deposits.
Highlights of Current Economic Scene AGRICULTURE According to Food and Agricultural Organisation (FAO), global cereals supply and demand situation has continued to tighten up in recent times reflecting the deterioration of prospects for the 2007-08-world cereal production. It is estimated that global cereal production would be at 2.11 billion tonnes during 2007-08 as against that of 2 billion tonnes during 2006-07, indicating rise by 5.3 per cent. Wheat output is estimated to increase by 1.7 per cent at 604.8 million tonnes while that of rice would rise by 0.2 per cent at 428.9 million tonnes. Coarse grains production is seen to increase at 1.08 billion tonnes, up by 9.7 per cent annually. Global cereal trade is expected to be 253 million tonnes 2007-08, lower by 5 million tonnes as compared to that of last year. While, world trade in coarse cereals in 2007-08 (July - June) is forecasted to be 113 million tonnes sustaining at the level attained during last year. World trade in wheat in the during July - June 2007-08, is projected to be 109 million tonnes down by 4.6 million tonnes from last year and its prices are likely to remain highly vulnerable due to the tight supply situation prevailing in the international market. While, rice trade is set to rise by 4 per cent to 30.4 million tonnes during the same period, and would be under pressure in the upcoming months, as many important rice producing countries are expected to harvest higher output. As
per the forecast of Food and Agricultural Organisation (FAO), paddy
production in The Cabinet Committee on Economic Affairs (CCEA) has approved to grant bailout package to sugar industries, under which special bank loans would be provided to sugar mills equivalent to the actual excise duty paid by them during the 2006-07 (October-September) season and the estimated amount payable in the current 2007-08 season. The interest on these loans of 5-year tenure with a 2-year repayment moratorium would be borne by the centre. At the same time, the loans can be used by mills only for paying off their cane repayment dues. Further the interest subvention from the centre would be only on the portion of arrears of sugarcane price. This package is likely to benefit mainly mills situated in Maharashtra, Gujarat, Karnataka, and Andhra Pradesh where growers are eligible to pay only the central government’s statutory minimum price (SMP) for cane as against that of mills in Uttar Pradesh (UP), Tamil Nadu (TN), Punjab and Haryana that are obliged to pay the higher cane state advised price (SAP) imposed by the state governments concerned. As
per As
per Solvent Extractor association,
According to Solvent Extractors Association (SEA), with the landed price of crude palm oil US $ 1032 being cheaper than crude soyabean oil by US $ 1162, importers are likely to encourage importing more of it. The data compiled by (SEA) has indicated that country’s vegetable oil imports in the first 11 months of the oil year (November-September) has jumped by 9.5 per cent to 4,802,153 tonnes from 4,385,723 tonnes recorded a year-ago, due to rising demand for edible oil in the domestic economy. A total edible oil import during the period has witnessed a growth of 11.47 per cent to 4,213,724 tonnes compared with 3,780,112 tonnes in the corresponding period last year. However, non-edible oil imports have declined by 2.84 per cent to 5,88,429 tonnes from 6,05,611 tonnes.
National
Agricultural Cooperative Marketing Federation of India (Nafed) has planned
to import 15,000 tonnes of crude palm oil before November 20, 2007, to
keep a check on edible oil prices by boosting supplies. The imports would
be sourced either from As per National Agricultural Cooperative Marketing Federation of India (Nafed) mustard oil price has increased from Rs 49 to Rs 52 per kg on an average as mustard seed price rose form Rs 2,150 to Rs 2,275 per quintal, as its production has declined to 7.10 million tonnes as against that of 8.13 million tonnes. Increase in mustard oil price by 6 per cent is seen not only due to festive demand and anticipation of decline in rabi sowings of mustard but as farmers would shift to cultivation of wheat, minimum support price (MSP) of which has been hiked by Rs 250 per quintal to Rs 1000 per quintal, as against mustard seeds that has witnessed an increase of just Rs 85 per quintal in its MSP to Rs 1800 par quintal. As
per report of Export of cashew kernels during April - September 2007-08 has declined by 2 to 3 per cent due to production loss in the industry and workers not being able to report for work due to widespread viral fever (chikungunya). Shipments during the first six months of the current fiscal stood at 57,157 tonnes valued at Rs 1,097.06 crore as against that of 58,210 tonnes worth Rs 1,222.93 crore in the corresponding period a year ago. The average unit value in April–September 2007 dropped to Rs 191.94 per kg from Rs 210.09 per kg. Meanwhile, import of raw nuts increased during the first half of the current fiscal to 3,90,686 tonnes valued at Rs 954.72 crore from 3,56,240 tonnes worth Rs 1,081.71 crore in the corresponding year. The unit value of raw nuts imported also dropped to Rs 24.44 per kg from Rs 30.36 per kg in the first half of last fiscal. Mother
Dairy India Ltd and Gujarat Cooperative Milk Marketing Federation Ltd (GCMMF)
have raised prices of milk sold in As
per Marine Products Export Development Authority (MPEDA), Tuna fishing in Exhibition
Advisory Committee (EAC) and the Indian Poultry Equipment Manufacturers’
Association (IPEMA) would be jointly organising India’s largest poultry
exhibition that would be held during November 2 to 4 2007, in the Hitex
Exhibition Centre, Hyderabad, which it would be titled as ‘Poultry India
2007’. This would create a platform and strengthen the Indian poultry
industry to find export potential opportunities and development. During
this event, the latest technology, machinery and equipment will be
displayed to showcase various aspects of poultry production such as
breeding, housing, management, nutrition, packaging, preservation and
marketing of eggs and poultry meat products. This decision was undertaken
as
Excess
rainfall in July and August 2007 has damaged lots of kharif horticultural
crops nearly worth Rs 154 crore in the state of Karnataka.. Crops
like Potato, tomato, chilli, onion, banana, mango, coconut, areca nut,
pepper, cardamom, and betel vine have been affected the most besides
hampering almost 48,826 hectares and making80,485 farmers to suffer
losses. The worst affected
areas include western ghats districts of Dakshina Kannada, Udupi, Kodagu,
Chikmagalur followed by north interior parts of the state, comprising
districts of Haveri, As
per International Coffee Organisation, world coffee exports for the
October - August 2006-2007 have totalled to 89.5 million 60- kilogram
bags, which have been higher by 10.71 per cent from the same period in the
previous year. Reduction has been seen in coffee exports from its
producing countries The
Amsterdam based common fund for commodities (CFC), an inter governmental
financial institution of UN, has approved the fund of US $2.91 million to
finance a project on ‘Increasing the resilience of coffee production to
leaf rust and other diseases’ in India and some African countries. Australian
Centre for International Agricultural Research (ACIAR) and Indian Council
of Agricultural Research (ICAR) have jointly decided a medium term
strategy to increase the yield of wheat to an optimum level by developing
resistance to pests and diseases and several biotic and abiotic stresses.
The researchers do not have any plans to develop transgenic crops at
present.
InflationThe annual point-to-point inflation rate based on wholesale price index (WPI) declined to 3.07 percent for the week ended September 22,2007. During the comparable week of the earlier year, it was 5.36 per cent.
During the week under review, the WPI declined by 0.2 per cent to 214.7 from 215.1 at the previous weeks’ level (Base: 1993-94=100). The index of ‘primary articles’ group, (weight 22.02 per cent), dipped by 0.8 percent to 224.7 from its previous week’s level of 226.4, mainly due to lower prices of fruits and vegetables, bajra, amize, moong, eggs and fish and raw cotton raw rubber some oil seeds. Marginal rise in the index of ‘fuel, power, light and lubricants’ group (weight 14.23 per cent) was witnessed due to aviation fuel price increase.
The index of ‘manufactured products’ group (weight 63.75 per cent) dipped by 0.1 per cent to 187.2 from 187.4 for the previous week due to decline in the prices of gur, oilcakes cotton yarn etc. The
latest final index of WPI for the week ended August 11,2007 has undergone
upward revision; as a result, both the absolute index and the implied
inflation rate stood at 213.7 and 4.24 per cent as against the provisional
data of 213.4 and 4.10 per cent. Banking HDFC
Bank’s net profit rose to Rs 368 crore during the second quarter of the
current financial year ended September 30, 2007 registering an increase of
40 per cent over the same period of last year. UCO
Bank has posted a 50 per cent rise in net profit at Rs 243 crore for the
half year ended September 2007 from Rs 162 crore in the corresponding
period last year. Indian
Bank has reported a 46 per cent growth in net profit at Rs 248 crore in
September 2007 quarter on the back of higher growth in interest income and
fee-based income. IFCI,
a term lending institution which is now classified as a non-banking
finance company, has reported a four-fold rise in its net profit for the
second quarter of 2007-08 compared with a year earlier, on account of
income received from the sale of assets. The company’s profit in the
second quarter of 2007-08 was Rs 497 crore, up from Rs 116 crore a year
earlier. ICICI
Bank’s three-year long wait to open a branch in the Financial SectorCapital Market Primary Market Varun Industries Ltd, the largest exporter of stainless steel kitchenware and house ware items, is to enter the capital markets with an IPO of 90 lakh equity shares with an issue price of Rs 60 of face value Rs 10 each aggregating to Rs 54 crore between October 25 and October 31. The company plans to use the funds raised to meet the expenditure for brand building in the domestic market and to meet working capital requirements. Leading
paper products manufacturer of South India, SVPCL Ltd, is to enter the
markets with a public issue of Rs 34.50 crore through a 100 per cent
book-building process between October 22 and October 26. The price band is
fixed at Rs 40-45 per equity share of Rs 10 each. The company plans to use
the net proceeds from the issue to expand its existing manufacturing
facilities in The Ministry of Corporate Affairs (MCA) is likely to refer the complaints received on the proposed initial public offering of the Anil Ambani Group company Reliance Power Ltd to the capital market regulator, Securities and Exchange Board of India. According to the complaints, the proposal to transfer all projects from REL to Reliance Power has not been taken to the shareholders of Reliance Energy. Secondary
Market On 16,October 2007 market regulator Sebi, proposed restrictions on the issue of participatory notes (PNs) by Foreign Institutional Investors, in an apparent bid to stem the unceasing inflows into the booming Indian stock market. In a surprise development Sebi late in the day, a discussion paper suggesting an immediate ban on issue of PNs by FIIs against underlying derivatives (futures and options on shares) while also restricting issue of PNs in the cash segment was displayed on its website. Subsequently, following the massive crash of the market, the Sebi Chairman clarified that it is considering a proposal to allow proprietary sub-accounts to issue participatory notes (P-notes) that could be of some relief to foreign institutional investors (FIIs). Sebi in order to clear the doubts hanging over participatory notes by making the registration process for foreign institutional investors swifter and hassle-free. For this, Sebi may upload a road map on its website on Monday October 22.2007. A senior Sebi official said the regulator was also expected to clear pending applications of at least 40 to 50 FIIs in one tranche some time this week. This was aimed at telling the market that the regulator should not be faulted for FII registration delays and was, in fact, encouraging certain funds to register instead of taking the participatory notes route BSE sensex hit another milestone on October 15 2007, crossing 19,000 points. It took just five trading days to reach the mark from the 18,000 level on October 9. Still it is one of the most tumultuous weeks for the stock markets as it ended on a volatile note on October 19, 2007 as foreign investors continued to dump stocks and derivatives positions for the third day running on fears that the proposed curbs on stock investments through participatory notes, (P-notes) may come into force on October 25, 2007. The index, which hit a new record of 19,058.67 early in the week, saw three days of sharp falls. While on October 17 2007, the stock market suffered a big scare, the benchmark Sensex plunged to 10 per cent following Sebi’s move on restricting PNs, forcing a one-hour trading halt for the third time in the history of the markets, but recovered dramatically following clarifications from the finance minister and market regulator and buying interest from domestic institutions. BSE sensex closed the week at 17,559.98 with a loss of 860 points or 4.66 per cent on October 19,2007. The Nifty shot up to 5,736 points before dropping to 5,215, for a corresponding loss of 3.92 per cent. On October 17, the BSE Sensex tanked 1744 points following Sebi’s proposal to tighten rules for the purchase of shares and bonds through offshore derivative instruments, including participatory notes. FM said the move was part of a series of steps aimed at moderating inflows of overseas capital and only trying to cap the proportion of money coming in through participatory notes vis-a-vis the derivative position. On
October 19,2007 Finance Minister P Chidambaram told global investors that
no further measures were in the offing to curb capital inflows, even as Over 270 applications from foreign institutional investors (FIIs) are awaiting the Securities and Exchange Board of India’s (Sebi) clearance as the debate on the speedy clearance of registrations by the capital market regulator rages on.
All the BSE Sectoral indices have fell down over the week with the highest decline in BSE- Reality of 8.35 per cent followed by the BSE Capital goods 7.13 per cent, BSE FMCG 5.62 per cent and BSE-PSU 5.33 per cent. The
metal sector stocks, a relative under performer until last month, were the
fastest gainer on October 16, 2007 buoyed by a surge in inflows from
international commodity funds. The BSEs metal index skyrocketed by 9.16
per cent or 1,358.74 points to close at a record 16,200. According to
brokers, the industrial production data released by the Central
Statistical Organisation on Friday was another trigger. The Sebi has asked for data from the NSE and the BSE, regarding the transactions on October 16 and 17,2007. The market regulator’s query follows the 1,700-point crash in the market on October 16 within minutes of opening. The objective of the investigation is to find out trades done on behalf the foreign institutional investors, domestic institutions and on the proprietary accounts of the broking houses. Incidentally, the Nifty futures ended at a premium reflecting buying trend. Dealers explained that on a day when markets crash, the Nifty ends with a discount. Sources said the crash on Thursday followed rumours that NSE may hike margins. The exchange should have issued a clarification immediately. Consolidated Construction Consortium Ltd listed their shares in both the BSE and the NSE on October 15,2007. In the NSE, the stock closed at Rs 792.10 and the total traded quantity was 3995119 shares at an average price of Rs 768.98 with a turnover of Rs 3,0721.67 lakh. Whereas, on the BSE, it closed at Rs 791.45.
Supreme
Infrastructure India Ltd made its debut on the NSE and BSE at a premium of
73.61 per cent and 75 per cent respectively, compared with the offer price
of Rs 108. On the NSE, it closed at Rs 166.10 and traded 6,900,423 shares.
Whereas on the BSE it traded a total of 4,728,152 shares and closed at Rs
175.25. Supreme Infrastructure Communications services company, Dhanus Technologies Ltd, listed its shares on BSE and NSE on October 17,2007. On the NSE, it opened at Rs 295 and stood at a price of Rs 309.75. The total number of shares traded in the NSE was 4,370,615 shares and it made a turnover of Rs 1,34,108.80 lakh. On the BSE, it opened with a premium of 1.76 per cent and closed at Rs 311.15. It traded 4,017,705 shares on the BSE. Derivatives
The extreme volatility has been seen this week, which is likely to continue into the settlement. The spot Nifty closed at 5,215 while the October contract was held at 5,193, November was held at 5,174 and December at 5173. Open interest fell by 18.8 lakh in the October futures but it expanded even more in November (25.9 lakh). However, the FII component of index futures shrank overall while index options expanded slightly. Among other indices, the CNX-IT is at 4,847.60 in the October futures and at 4,894 in spot. The BankNifty is at 7,409.75 in October, 7,445.8 in November and at 7,424 in spot. Open interest dropped in the October contract and expanded only marginally in November. However, liquidity is just about adequate. The Nifty Junior lost 9 per cent in the spot market to close at 9,116. The October contract is 9,101.20 while November is almost illiquid and sitting at 9,197. It will be difficult to lock the difference due to lack of liquidity. In the options market, the put-call ratio in terms of outstanding Nifty options dropped to 1.1, which is on the verge of bearish. Many new calls were opened while puts were cashed and put open interest fell. According to Yogesh Radke, derivative analyst, Edelweiss Securities, there was unwinding of position in the derivative segment. The implied volatility in Nifty 5,200 option in the intra-day had shot up to 56-57%, indicating that the market will continue to witness a high amount of volatility in the coming days. Long-term derivative products may soon make a debut in the Indian capital markets. Having imposed restrictions on fresh investments through participatory notes (PNs), the government is now working with market regulator SEBI to identify new instruments like long-term derivatives to attract investors through the regulated route. This is being done mainly to discourage complex derivatives of nine months and above being traded outside the country by foreign investors through PN route. SEBI’s actions on Wednesday were aimed primarily at preventing exotic derivatives based on Nifty and blue chip Indian stocks being traded through the PN route. Such derivatives don’t exist in the domestic market. The idea is to bring all such transactions within Indian jurisdiction, benefiting Indian players and improving tax revenues.
Government
Securities Market Primary
Market On October 17, 2007, RBI auctioned 91-day and 182-day T-bills for the notified amounts of Rs.3,500 crore (out of which Rs.3,000 crore under MSS) and Rs.2,500 crore (out of which Rs.2,000 crore under MSS), respectively. The cut-off yields for 91-day and 364-day T-bills were 7.10 per cent and 7.45 per cent respectively.
RBI re-issued 3 year maturing paper of 5.87 per cent 2010
and 11.30 per cent 2010 for Rs.5,000 each with the
cut-off yields of 7.80 per cent and 7.86 per cent, respectively.
Both the auctions were held on October 18, 2007 under the Market
Stabilisation Scheme (MSS). Under the Market Stabilisation Scheme (MSS) on October 25, 2007, the RBI will re-issue 5.87 per cent 2010 and 11.30 per cent 2010 for Rs.3,000 crore each through a price based auction using multiple price method. Secondary
Market
Market participants have been cautious ahead of the mid-term review of credit policy and RBIs aggressive interventions to mop up liquidity. However, the market remained impervious of the spiraling international crude oil prices. The heavy intervention by the RBI in the forex market had impinged on the yields. The yield on 10-year benchmark security has declined by two basis points.
Foreign exchange inflows resulted in banks taking recourse to the reverse repurchase window at the weekend liquidity adjustment facility auctions. The recourse to the reverse repo window was Rs 31,950 crore from 30 bids. Bond
Market ICRA
has reaffirmed the LAAA rating, indicating highest credit quality, to the
Bonds programmes of GAIL ( During the week under review, State Bank of Bikener and Jaipur tapped the market by issuing upper tier-II bonds by offering 10.28 per cent with a step-up of 50 bps if call is not exercised at the end of 10-years for an amount of Rs 100 crore. The issue has been rated AAA by Crisil. Despite the law ministry clearance for investing forex reserves in the overseas subsidiary of India Infrastructure Finance Company (IIFCL), which is meant to provide easy funding access to domestic infrastructure companies, the RBI has rejected the proposal, announced by the finance minister in his Budget speech. Reiterating its earlier view, the RBI, in a letter to the finance ministry, has said while refinancing loans by the IIFCL’s overseas subsidiary is feasible and can be implemented with ease, buying its securities is against its current policy. The RBI has suggested that the subsidiary should borrow from the market, which the bank will refinance. However, the finance ministry feels the subsidiary will not be viable if it borrows from the market. Foreign Exchange Market According
to Citigroup Inc, the world’s third-biggest trader of foreign exchange, RBI continued its interventions in the foreign exchange markets, though entirely through swaps. The swaps were mostly for one-month duration, through spot purchases and 30-day forward sales. As result, one-month forward premium remained soft at 0.6 per cent. RBI intervention and oil companies’ purchases pushed down spot dollar-rupee exchange rates to Rs 39.79 last weekend from Rs 39.33. Long forward premia however remained soft with three month, six month and 12 month at 1.31, 1.11 and 1.16 percent respectively, implying that the outlook remained firm for the rupee. This was largely on account of inflows through banks, mostly from non-resident Indians for subscription to the proposed equity sell-offs from public sector enterprises, including the power sector financier Rural Electrification Corporation. The outflows by hedge funds notwithstanding, the net inflows in the form of short-term capital remained positive. According to data from the Sebi, last week the net FII inflow was in excess of $1 billion. RBI will be the regulatory authority for currency futures trading, the draft guidelines for which will be issued soon by the central bank. In a meeting between the central bank and market participants, it was also decided that futures would be introduced both as an exchange-traded product and over the counter (OTC). Amidst frequent demands for the capital convertibility to neutralise the impact of heavy capital inflow, RBI governor YV Reddy has said the approach towards fuller capital account convertibility will be with focus on the enabling conditions for minimising the risks and maximising the benefits. Commodities
Futures derivatives Forward Markets Commission (FMC), a regulator for commodity futures market, has decided to reorganise market holidays for all the national and regional exchanges soon. All the commodity futures exchanges including national and regional have different holidays during the year due to its regional importance. Some exchanges are closed on a particular day while others are not. Under such conditions, Members or market participants who have multiple memberships in the different exchanges will face inconvenience and cannot trade in more than one exchange. According to BC Khatua, chairman of Forward Markets Commission, all the exchanges should follow a similar holiday pattern like the government. The National Commodity & Derivatives Exchange (NCDEX) an Indian commodity exchange, part-owned by Goldman Sachs Group and Intercontinental Exchange, plans to trade raw sugar futures as output of the sweetener is expected to rise further. It would model the contract on the global benchmark offered by New York-based Intercontinental Exchange. The commodity futures panel, the five-member panel, under the chairmanship of Abhijit Sen, member, Planning Commission, was expected to submit its report by end of the current month may take at least one more month to submit its much-awaited report to the government on the impact of futures trade on the prices of essential commodities. According to Sharad Joshi a member of the panel, it will take some more time, as the members need to go through 500 pages of the draft report to prepare a 50-page final report.
National Commodity and Derivatives Exchange (NCDEX) on October 19,2007 announce the final settlement prices (FSP) for red chilli, maize and turmeric for October contract. It has fixed FSP for red chilli at Rs 4,249.30 per quintal while the prices of maize and turmeric would be Rs 657.45 per quintal and Rs 2,041.30 per quintal respectively. Corporate SectorLeading
television networks that are members of the Indian Broadcasting Foundation
(IBF) have decided to drop all spot advertisements from their channels
from October 15, 2007 if the advertisers and their media agencies do not
agree to pay the 25 per cent surcharge levied on them. World
Bank arm International Finance Corporation (IFC) has planned to buy 12.5
per cent stake in Mumbai-based brokerage house Angel Broking for Rs 150
crore. BHEL
has secured a Rs 150 crore order from the UAE, for the supply of two 42 MW
gas turbine generating units to the Al Ghail Power LLC. Nagarjuna
Construction Company Ltd., in a joint venture with South Korean steelmaker
Posco, has bagged an Rs 1,560 crore order from SAIL. Riding
on high crude oil refining margins, the country’s largest private sector
company Reliance Industries Ltd (RIL) has posted a 28 per cent increase in
its net profit to Rs 3,837 crore for the second quarter ended September
30, 2007. Last year’s profit for the same period was Rs 3,000 crore
which was restated to account for the amalgamation of its unit IPCL. Total
sales during the period were up by 6 per cent at Rs 33,402 crore. With
intense competition from direct-to-home (DTH) companies and the continuing
adverse impact of regulations, the average revenue per user (ARPU) for the
country’s 60,000 cable operators has declined by around 30 per cent
across the top 30 cities in 10 months. A year ago, the ARPU for the cable
operators ranged between Rs 150 – 200. This has now come down to between
Rs 130 – 160. Bicon
Ltd, Bangalore-based biotech company, propelled by sales of self-developed
insulin products, has reported 20 per cent higher profits at Rs 54 crore
for the second quarter ended September 30, 2007, compared with the
corresponding period last year. ACC,
the country’s largest cement maker, has posted a rise of 30 per cent in
its net profit for the quarter ended September 30, 2007, at Rs 292 crore
compared with Rs 225 crore in the corresponding quarter last year. Higher
sales, improved realization coupled with good demand scenario helped the
company offset the increase in inputs costs mainly in coal. The company is
in the process of expanding its cement manufacturing capacity from the
current 20 million tones per annum to over 27 million tones, within 2
years with an overall investment of around Rs 4,000 crore. Information
Technology HCL
Technologies, the country’s fifth largest software exporter has posted a
23.3 per cent increase in its net income year-on-year to Rs 308 crore for
the first quarter ended September 30, 2007, on the back of robust
outsourcing deals and growth in the number of new clients. 3i
Infotech, the Rs 670 crore IT products and services company, has acquired
US-based J&B Software and its subsidiaries for $25.25 million (around
Rs 100 crore). J&B is engaged in the business of providing software
products and services related to remittance processing in the TCS
has announced the largest outsourcing deal in the domestic IT industry,
worth $1.2 billion (around Rs 4,800 crore), with the Netherlands-based
Nielsen – a leading provider of consumer and media information services.
The deal will enhance TCS’s presence in media consulting.
*These statistics and the accompanying review are a product arising from the work undertaken under the joint ICICI research centre.org-EPWRF Data Base Project. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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