Indian Economy - News & Updates - Archive

[tyagi]

Whoosh! From 18K to 19K in just 4 sessions


MUMBAI: Four trading sessions — that's what it took the sensex to rally from 18k to 19k, making it the fastest 1,000-point run in the history of the 21-year-old index. If you think that's a milestone, consider this: Over the last month, the sensex has gained 3,500 points. And during this period, four of its five all-time highs were achieved.

"Milestones are a stone's throw away," muttered a derivatives strategist at a domestic brokerage even as the sensex closed at 19059.

The question is, what's feeding the frenzy? The answers at 19K remain what they were at 18K. Unabated buying interest by foreign fund managers because returns from India remain among the best in the world; and expectations that in the future, the Indian economy and corporates will continue to do well.

In any case, these are variables that don't change over four trading sessions. Which is why, foreign institutional investors have pumped $7 billion into Indian stocks in less than a month.

The rush for Indian paper started on September 19 after Ben Bernanke, chief of the US Federal Reserve, cut key interest rates in an attempt to save the world's largest economy from dipping into a recession. Call it the Ben(ji) effect if you will!

He cut interest rates due to the sub-prime mortgage mess. Sub-prime loans are extended to people with low income and hold the potential for default. The gamble American lending institutions took was that with a certain degree of controls, they wouldn't default. But high interest rates in the US started pushing up the numbers of people who couldn't repay the loans.

As it turned out, American banks had a huge exposure to this segment of borrowers and many started tottering under the weight of defaults. The problem had reached proportions that threatened to derail the American economy. Bernanke reckoned that if he cut interest rates, it would be easier for people to service their loans and the financial services sector could ride out the storm.

But investors in the stockmarket saw it differently. It would be some time before the American financial system recovered from the mess it had gotten itself into. In any case, with lower interest rates, returns on their investments would go down. It made sense, therefore, to look at safer markets that offered better returns. Like India.

"India is being looked at much differently today than a few months back," said a dealer at a foreign brokerage. To that extent, India has been re-rated. Going by FII inflows over the last couple of weeks, it is tempting to believe the India re-rating story is playing itself out well.

In the days ahead, institutional players believe FIIs will become specific in their stock selection, but deal sizes will increase substantially. "FII buying is expected to be more stock- specific, driven by strong growth stories rather than broadbased buying," said Naresh Kothari of Edelweiss Securities.

 

[tyagi]

Global risks not to overwhelm Indian economy, says PM

NEW DELHI: Risks emerging from slowdown in the global economy will not overwhelm the Indian economy and pose 'no great danger' for the country, the Prime Minister, Mr Manmohan Singh said on Friday.

He said risks from the global slowdown are "acceptable ...and as of now I think there is no great danger that these will overwhelm us or derail our economy".

However, he said if the global economy goes into downturn there are risks for the Indian economy as well. But these were acceptable risks, he said.

"When you get integrated into the global economy what happens in the rest of the world does affect us, now that our foreign trade is a much larger proportion of our national income and now that capital inflows from abroad are significant part of the stor y of financing investment in the country," the Prime Minister said at the HT Leadership Summit here.

He said India's relations have become more broad-based and wide-ranging with a large number of countries.

"As our share of global trade and capital rises, as our economy becomes more globally integrated, we will become even more engaged with the global economy. India's voice will be heard, India's views will be sought," he said.

In the past five years, the Indian economy has grown close to nine per cent achieving higher level of integration with the global economy.

The world economy is estimated to slow down from 5.2 per cent in 2007 to 4.8 per cent this year.

The US economy grew by 1.9 per cent in July this year, against 2.8 per cent a year ago. Euro zone is also expected to report slower growth of 2.1 per cent against 2.5 per cent. - PTI

 

[tyagi]

S&P says Indian economy to grow by 9 pct in 2007

MUMBAI (Reuters) - International ratings agency Standard and Poor's said on Tuesday it expects India's economy to grow by 9 percent in 2007 and 8.8 percent in 2008.

Indian interest rates were clearly peaking, and the rupee was likely to end the year at 40.5 per dollar, S&P said in a report released in Mumbai.

The Reserve Bank of India forecasts the Indian economy to grow by 8.5 percent in the fiscal year ending March 2008.

 

[Neo]

Petroleum exports to touch $497b by 2012​

(IANS)

15 October 2007

NEW DELHI— Export of petroleum products from India is likely to reach $497.01 billion within the next five years, said a study by industry body Assocham. It said exports of petroleum products are growing at a faster rate than imports.

Petroleum products exported by India have been growing at an astonishing rate of 73 per cent for the past three years, according to "Petroleum Trade", a study done by Associated Chambers of Commerce and Industry of India (Assocham).

"Petroleum exports were valued at $0.03 billion in 1999-2000, which increased to $18.53 billion in fiscal 2006-07, growing at a compound annual rate of 96.5 per cent. Imports on the other hand, increased from $12.6 billion in 1999-2000 to $57 billion in 2006-07," Venugopal Dhoot, president, Assocham said in a statement.

"Even as energy requirements of Indian economy are rapidly increasing, capacity expansion of public- and private-sector refineries would help maintain the growth momentum of exports of petroleum products," he added. The study also indicated that the growth rate of petroleum imports had been declining over the past two years. It grew by 29.7 per cent in 2006-07 compared with a growth of 47 per cent the previous year.

The growth in imports, Assocham said, had been partly on account of the appreciating rupee, which increased by about 10 percent since March this year.

The production of petroleum products increased by 50 per cent during the same period from 79,411,000 tonnes to 119,750,000 tonnes, Assocham said.

Export of petroleum, oil and lubricants from Asia rose to $6.8 billion in 2006-07 from $4.3 billion in 2005-06. Within Asia, countries such as Sri Lanka, Indonesia and Japan are major oil products importing countries from India with exports worth $0.69 billion, $0.55 billion, $0.42 million, respectively, in fiscal 2006-07.

Khaleej Times Online - Petroleum exports to touch $497b by 2012

 

[Neo]

India needs reforms to lift growth: study ​

Friday, October 19, 2007

BANGALORE: India’s economy can expand at a sustained annual pace of 10 per cent over the next decade, but faster growth depends on deeper reforms, US-based investment bank Lehman Brothers says.

An economic boom marked by average annual growth of 8.5 per cent in the past four years, rising to 9.4 per cent in the 12 months to March 31, is no “flash in the pan,” the investment bank concluded in a report this week on the Indian economy.

The growth made India’s 900-billion-dollar economy the world’s 12th biggest last year, thanks in large part to policy reforms carried out in the past decade, said the 171-page report entitled “Everything To Play For.”

“Impressive though its economic transition has been, we judge that India could grow sustainably even faster than at present, and faster than most other studies have suggested, at 10 per cent or so per annum over the coming decade,” Lehman said. “This judgement is contingent on India continuing to actively pursue structural reform,” it said.

Illustrating the benefits of reform, Lehman said India’s investment-to-GDP ratio, at between 30 per cent and 40 per cent, was catching up with the rates regarded as intrinsic to the East Asian economic miracle. Foreign direct investment more than doubled to 19.4 billion dollars in the year to March 31 from the previous 12 months. From less than 6.5 billion dollars financed through the capital markets just five years ago, Indian companies raised about 30.7 billion dollars last year.

India’s economic resurgence goes back to the reforms that began in 1991 when the government, faced with a foreign exchange crisis, lifted socialist-style controls that had stifled private enterprise, trade and foreign investment for four decades. But progress in reforms has stuttered in the face of resistance from political parties and unions. Opposition from leftist allies has forced Prime Minister Manmmohan Singh’s Congress party-led coalition to shelve key reforms such as privatisation of state-owned companies.

The government has also put in cold storage moves to raise the 26 per cent limit on foreign investment in insurance companies and open up the 300-billion-dollar retail market to giants such as Wal-Mart. “The question is not whether 10 per cent economic growth is possible, but whether reforms are possible in the present political situation,” said D H Pai Panandiker, economist at the private think tank RPG Foundation. “Opposition from the allies is holding up reforms and that in turn is holding back faster growth,” he added in a telephone interview from New Delhi.

Lehman said India needed to develop its financial markets, reduce public debt, ease restrictions for the banking, insurance and retail sectors and improve infrastructure and cut back its notoriously cumbersome bureaucracy. Public ownership of companies and banks remains excessive in India, which also needs more flexible labour laws for companies to increase employment in a country where half the 1.1 billion population is under 25 years old, it said.

“India has learned a great deal from its structural policy reforms of the past decade and we suspect strongly that these lessons will be carried forward, and built upon, in the coming years,” Lehman’s India head Tarun Jotwani said.

Some economists argue that India has now developed a momentum where it can lift itself to 10 per cent growth even without reforms.

“Reforms or no reforms, 10 per cent is possible, because the economy has become insulated from politics,” said T K Bhaumik, chief economist at leading Indian conglomerate Reliance Industries. “Going beyond that will require reforms, but whether further reforms are possible is a million-dollar question,” he said in an interview from Mumbai.

India needs reforms to lift growth: study

 

[Contrarian]

India has fifth largest forex reserves in world


MUMBAI: India on Friday joined the elite group of world's five biggest holders of foreign exchange reserves as it added about $4.5 billion last week to take the kitty to $261 billion. The country surpassed South Korea, which had $257 billion in forex reserves as of September-end, to stand at the fifth spot. While India reports its reserve position every week, South Korea does so on a monthly basis.

China leads the pack with $1,434 billion, followed by Japan ($946 billion), Russia ($440 billion) and Taiwan ($263 billion). According to RBI's weekly bulletin released on Friday, India's foreign exchange reserves increased by about $4.5 billion during the week ended October 19.

The rate at which the country's foreign exchange kitty is growing, especially after the US housing mortgage crisis, the country will soon overtake Taiwan. Among the BRIC (Brazil, Russia, India and China) countries, Brazil has the lowest foreign exchange reserves of $164 billion, according to the latest IMF data.

The other major holders of foreign exchange reserves in the world include Singapore ($152 billion), Hong Kong ($141 billion) and Germany ($126 billion). Total foreign currency reserves of the members of the Eurosystem, including countries which have adopted Euro as their currency, have been estimated at $453 billion.

India's foreign exchange reserves have continued to grow despite the efforts of the government and Reserve Bank to moderate inflows and encourage outflows through various policy initiatives.

India has fifth largest forex reserves in world-India Business-Business-The Times of India

 

[Contrarian]

Daimler plans to make heavy trucks in India


TOKYO: Daimler, the world's largest truck-maker, has reached an agreement with a partner in India to jointly produce heavy trucks in the world's second-most populous nation.

"We have found a partner and we will make an announcement very soon," said Andreas Renschler, who heads the division, in an interview in Tokyo on Thursday. "If you move into these markets you have to locally produce things."

Navistar International, MAN AG and other truck-makers are entering India with local partners to meet demand in the world's second-fastest growing major economy.

 

[Contrarian]

Neo, keep posting here mate...you seem to have forgotten the existence of this thread!

 

[Neo]

India to tap Africa for more crude ​

Friday, November 02, 2007

NEW DELHI: India will import about 38 per cent more crude oil from Africa within three years to feed growing domestic demand and fuel its development as an export hub, the petroleum secretary said.

Asia’s third-largest oil consumer is set to import 4.5 per cent more crude overall in the current financial year to end-March 2008, M S Srinivasan said late on Wednesday. “Sixteen per cent of our crude imports, around 18 million tonnes, are imported from Africa. As requirement increases, imports will go up,” Srinivasan said.

“In the next two to three years, our imports from African countries are expected to be 20-21 per cent, around 24-25 million tonnes.” Most of the crude would continue to come from Nigeria, but India also buys from Angola and Libya.

He said overall imports of crude will rise slightly next year. “Last year, we imported 110 million tonnes, this year (2007/08) it is going to be around 115 million tonnes.” “We are trying to diversify our crude basket. We have been importing crude from well over 30 countries,” he said.

India imports about 70 per cent of its crude needs and is adding export-oriented refining capacity, while Africa is fast emerging as an energy hotspot. India plans to expand its refining capacity by 62 per cent to 4.82 million bpd by 2012, to take advantage of its proximity to oil sources and emerging markets.

India to tap Africa for more crude

 

[Neo]

India’s trade gap narrows​

NEW DELHI, Nov 1: India’s trade deficit narrowed by almost $2 billion in September from a year ago as exports surged despite strong rupee gains against the dollar, the government said on Thursday.

The trade gap for September was $4.42 billion, compared to 6.09 in the same month a year ago as exports rose 19.26 per cent to $12.79 billion while imports gained a modest 2.31 per cent to $17.21 billion, official data showed.

India’s rupee has climbed more than 12 per cent against the dollar.

India’s trade gap narrows -DAWN - Business; November 02, 2007

 

[Neo]

Indian exports up 19 percent ​

NEW DELHI: India’s exports rose more than 19 percent in September from a year earlier, steady from the previous month, but analysts expect the rise in value of the rupee to stem the pace of growth in the months ahead.

High global oil prices and robust demand for capital goods in a rapidly expanding economy are likely to maintain pressure on India’s import bill and widen the trade deficit, analysts said.

The Indian rupee fell off 39.22 hit in early trade on suspected central bank intervention on Thursday. The level was its strongest since March 1998. But September’s trade deficit narrowed 28 percent to $4.42 billion from $6.10 billion a year earlier, a government statement said. It stood at $36.92 billion in the first six months of the fiscal year that began in April.

Analysts attributed the slowdown in imports to last year’s high base and were confident that they would pick up in the months ahead.

“High oil prices and a stronger rupee along with fast pace of economic activity would ensure that this dip in imports is a blip,” said Siddharth Kapur, economist with ABN Amro Bank. “Even the high base effect is at play in bringing down the year-on-year growth in imports in September. Non-oil import growth during the first half of the fiscal year has been strong at 34.13 percent.”

Exports rose to $12.80 billion in September from a year earlier — close to August’s annual expansion of 18.9 percent to $12.69 billion — while imports grew a paltry 2.31 percent to $17.22 billion.

During April-September, exports were up 18.52 percent to $72.28 billion from a year earlier, and imports rose 25.51 percent to $1.09 trillion.

Exporters have been complaining about the sharp rise of the rupee against the dollar and the government has announced a series of measures to provide relief. But Trade Minister Kamal Nath said exports will pick up from October and the government hopes to meet its annual target of $160 billion. reuters

Daily Times - Leading News Resource of Pakistan

 

[Neo]

India to get $944 mn loans from WB​

NEW DELHI: India on Friday signed agreements for loans worth $944 million (Rs 3,400 crore) to help it revamp 400 industrial training institutes (ITIs), recapitalise rural cooperative banks and improve community-based water management banks.

The biggest chunk of the loans is being earmarked for rural cooperative banks which would receive $600 million (Rs 2,160 crore). The package is part of a massive revamp planned by the government which also includes a $1 billion assistance from the Asian Development Bank.

The restructuring which involves changes in regulation of cooperative banks is to be implemented through Nabard and will be spread over five years.

The revamp of ITIs which is part of the multilateral agency’s India Vocational Training Improvement Project will include a $280 million (over Rs 1,000 crore) credit facility for the project that through a policy reform and also by making the design and delivery of training more demand responsive. Another 100 ITIs are being upgraded through central assistance, labour minister Oscar Fernandes said. The loan is spread over a four-year period.

India to get $944 mn loans from WB-India Business-Business-The Times of India

 

[Neo]

RIL inks $935 mn deal with Transocean​

MUMBAI: Reliance Industries (RIL) is believed to have contracted drillships from world’s largest offshore drilling contractor, Transocean for $935 million. The contract has been awarded to a 50:50 JV company between Transocean’s subsidiary and Pacific Drilling.

The joint venture company will own two ultra-deepwater drillships, currently under construction at Samsung Heavy Industries’ shipyard in South Korea, of which one (Deepwater Pacific 1) has been awarded to RIL for a four year drilling contract, which may be converted on or prior to October 2008 to a five-year drilling contract.
The drilling contract is expected to commence in the third quarter of 2009, following shipyard construction, sea trials, mobilization to location and customer acceptance.

During the first six months of the contract, the contract dayrate charged by Transocean is $495,000, regardless of the duration of the remaining terms of the contract. The dayrate for the remaining three and a half years of the contract is $530,000. On or prior to October 31,2008, the contract may be extended to five years, in which case the dayrate would be reduced to $515,000 for the remaining four and one half years.

Contract revenues which could be generated over the contract period are estimated to be $766 million for the four-year term.

RIL inks $935 mn deal with Transocean-India Business-Business-The Times of India

 

[Neo]

Jet eyes Brussels Air stake​

MUMBAI: Last week, Jet Airways sent out invitations to the media to accompany its promoter Naresh Goyal on a trip to Brussels. The meet, the invitation read, was to showcase the airlines’ new VIP lounge at Brussels airport — the hub out of which Jet Airways runs its international operations. During the course of this visit, he also met the Belgian PM Guy Verhofstadt.

The meeting with the PM has triggered intense speculation in Brussels that Jet Airways is interested in buying out a stake in Brussels Airlines. Highly placed sources in Belgium said, “I can’t believe he (Goyal) came here just to tell Verhofstadt that Jet Airways would expand in Brussels and open a new VIP lounge...A participation in Brussels Airlines, or maybe a takeover, was certainly on the agenda”.

Jet Airways recently chose Brussels as the hub for its international operations and is currently operating flights to the US and Europe via the city. The airline also has a code share agreement with Brussels Airlines to provide onward connections to various destinations in Europe and Africa.

Brussels Airlines, held by SN Airholding — a consortium of Belgian corporate giants, reported revenues of nearly a Euro 1 billion in 2006. A stake, or a significant control in Brussels Airlines would mean a larger presence for Jet across 450 destinations in Europe. Sources at Jet Airways declined to comment.

Sources in Brussels added, "SN Airholding was the outcome of a political pact to salvage some of the assets of the bankrupt Belgian national carrier Sadena. Although, the pact holds till 2009, a good bid could dissolve it earlier. Moreover, the group never had the intention to run the airline independently and would eventually sell out to a larger airline or forge an alliance."

Some of the SN Airholding’s shareholders are banks and pharmaceutical companies, which have been on the lookout to exit the airline since the last one year, as it is not their core business. In recent times, Brussels Airlines has been expanding its network and now operates flights to Africa, a sector monopoloised by Air France. "Owing to the Euro strengthening against the dollar, the airline is expected to post a profit for the current financial year."
Jet has a debt gearing of three times and is looking to improve that through a rights issue of $400 million.

Jet eyes Brussels Air stake-India Business-Business-The Times of India

 

[Neo]

Inflation drops to five-year low of 3.02 per cent​

NEW DELHI: Inflation rate fell to 3.02 per cent, a new low in five years, closer to Reserve Bank's three per cent target for the medium term.

The drop in inflation could be gauged from the fact that it was 5.61 per cent in the corresponding week a year ago. In the previous week, it stood at 3.07 per cent.

This is the first official figure on wholesale prices- based inflation after the RBI announced its mid-term credit review on October 30, in which it asked banks to keep 0.5 per cent more cash with the central bank to tighten excess money supply in the system.

During the week, prices of various items moved in a narrow range. In fact, in most groups, the price index moved up. This implies prices did move up, although at a slower pace.

While food items like maize, arhar, masur and wheat turned expensive, some others like fish marine, bajra and urad turned cheaper.

Among manufactured goods, prices of chemicals and chemical product prices declined while most other items rose.

In energy segment, prices of bitumen, naphtha and furnace oil rose.

Though inflation has been at sub-four per cent for quite some time, RBI has said rising international oil and food prices could push it upwards.

The price of oil rocketed on Friday to a record 96.24 dollars per barrel on worries over tight supplies.

On Thursday, Petroleum Minister Murli Deora had met Finance Minister P Chidambaram to weigh options to address the issue of impact of rising global petro prices on domestic oil companies.

Inflation drops to five-year low of 3.02 per cent-India Business-Business-The Times of India