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RUPEE LOSES 18 P, BUT BONDS JUMP (India)

Posted by Gilmour Poincaree on January 16, 2009

16 Jan 2009, 0055 hrs IST

ET Bureau

PUBLISHED BY ‘THE ECONOMIC TIMES’ (India)

CLICK HERE FOR THE ORIGINAL ARTICLE

PUBLISHED BY ‘THE ECONOMIC TIMES’ (India)

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Posted in CURRENCIES, ECONOMIC CONJUNCTURE, ECONOMY, FINANCIAL CRISIS 2008/2009, INDIA, INDUSTRIAL PRODUCTION, INDUSTRIES, INTERNATIONAL, RECESSION, RUPEE (India), STOCK MARKETS, THE FLOW OF INVESTMENTS | Leave a Comment »

RUPEE RECOVERS PARTLY, STILL DOWN 18 PS VS DLR (India)

Posted by Gilmour Poincaree on January 15, 2009

15 Jan 2009, 1216 hrs IST

PTI

PUBLISHED BY ‘ECONOMIC TIMES’ (India)

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PUBLISHED BY ‘ECONOMIC TIMES’ (India)

Posted in BANKING SYSTEMS, CENTRAL BANKS, CURRENCIES, ECONOMIC CONJUNCTURE, ECONOMY, FINANCIAL CRISIS 2008/2009, FINANCIAL MARKETS, INDIA, INTERNATIONAL, RECESSION, RUPEE (India), THE FLOW OF INVESTMENTS | Leave a Comment »

PE INVESTMENTS IN LISTED FIRMS TANK $ 2.24 BN (India)

Posted by Gilmour Poincaree on December 27, 2008

26 Dec 2008, 16:34 hrs IST

PTI

PUBLISHED BY ‘THE ECONOMIC TIMES’ (India)

CLICK HERE FOR THE ORIGINAL ARTICLE

PUBLISHED BY ‘THE ECONOMIC TIMES’ (India)

Posted in BANKING SYSTEMS, CENTRAL BANKS, COMMERCE, COMMODITIES MARKET, COMMUNICATION INDUSTRIES, ECONOMIC CONJUNCTURE, ECONOMY, FINANCIAL CRISIS 2008/2009, FINANCIAL MARKETS, FINANCIAL SERVICES INDUSTRIES, INDIA, INDUSTRIAL PRODUCTION, INDUSTRIES, MACROECONOMY, PUBLIC SECTOR AND STATE OWNED ENTERPRISES, RECESSION, REGULATIONS AND BUSINESS TRANSPARENCY, RESTRUCTURING OF PRIVATE COMPANIES, RESTRUCTURING OF THE PUBLIC SECTOR, RUPEE (India), STOCK MARKETS | Leave a Comment »

INFLATION DIPS FURTHER TO 6.61% (India)

Posted by Gilmour Poincaree on December 27, 2008

26 Dec 2008, 12:06 hrs IST

ECONOMICTIMES.COM

PUBLISHED BY ‘THE ECONOMIC TIMES’ (India)

CLICK HERE FOR THE ORIGINAL ARTICLE

PUBLISHED BY ‘THE ECONOMIC TIMES’ (India)

Posted in CENTRAL BANKS, ECONOMIC CONJUNCTURE, ECONOMY, FINANCIAL CRISIS 2008/2009, INDIA, INFLATION, INTERNATIONAL, RECESSION, RUPEE (India) | Leave a Comment »

IS INDIA STILL IN RECESSION ?

Posted by Gilmour Poincaree on December 14, 2008

December 13 2008

by Sri Vikas

PUBLISHED BY ‘FIGHTING DREAMER’

If you Google this topic you are going to get numerous answers with some mind boggling stats to tell you that India is into recession or slowly moving into it.
I am going to tell you a different opinion altogether! I don’t believe even for one second that India is into recession. In fact I will take the “audacity of hope” as my tool to declare that India wont even go close to recession.
You may argue back saying , “dude! don’t you read newspapers or watch news ? did you not check the IIP stats? The numbers are negative man! Our sensex has taken a complete nose-dive. People are loosing their jobs left-right and center. and you still think India is not into recession or moving into it?” ..

I stick by what I just said .You see, India is having a spill over effect of a global recession. And it is that spill over effect that is causing these job loss spree. But compared to our western counterparts Indian companies are not giving out the pink slips in droves. No Sir!

Tell you why …

First , India is not a globalized economy. That is , India is not completely globalized like European countries, Japan and China.

Second , India was already facing a huge inflation problem when the sub-prime crisis (which triggered the global meltdown) started . By the way, Indian lending laws are so stringent and fundamentally strong that , our country cannot just go into sub-prime like crisis at all. We Indians are firm believers in saving money and spending in thrift. So dont worry.. India wont go into a sub prime crisis.

Finally, India’s growth story is not due to any external factors . nay.. India’s growth story is completely domestic driven. The so called middle class income expansion is not just coming from IT and ITES services (which is prone to global imbalances) alone. India is a huge growth engine moving forward in all factors. Our business honchos, policy makers made sure that India and its currency stays as much immune from global currencies as possible.That is why , India is not seeing an companies going bankrupt. How else would you explain ICICI, HDFC and other banks flourishing so well when banks from other parts of the global are going bankrupt? come on .. tell me .. why ?

So how can we explain the negative stats of IIP . Just for the perspective. Our numbers are like  -0.4% as compared to 12.2% last year. This is primary because of decline in exports and fear factor among Indians.Did you know that in theory a recession in the rich world should hurt India less than other emerging markets: exports amount to only about 22% of India’s GDP, against 37% of China’s.

Read the real story of numbers here : Negative show: Industrial output contracts in October.  Read the complete article please.

China is making massive money from it exports like hell because they make goods a rock bottom prices due to availability of cheap labour.

Allow me to explain…

Let us take the example of a manufacturing firm of foreign origin/ or even Indian origin which produces 2000units of its products. 100o units for exports and the other 1000 units for domestic consumption. The company shall be termed X. Let us focus on export units – 1000 nos . Due to the global financial problem people in the other side of the globe don’t have enough money to buy the  products of the company X which they usually do.This would mean the products earmarked for shipments remain unsold in warehouses thereby increasing the inventory. Now, the companies get money only after the products are shipped to the other side and bought by consumers. The money/income thus received is then used to pay for the labour involved, raw materials, profits taken and then a huge chunk is put back into the company to produce more of such products for exports again.

Are you with me ?

Good.. So , when there is no money to re invest , obviously the company wont be able to produce any more goods. Also, the manufacturers will be cautious to use the reserve surplus to manufacture more goods because the economic outlook is bleak.  Eventually and in the long run when there is no enough money to pay, people are shown the door.

Meanwhile, even if we Indians have enough money to spend , we will suddenly check the global scenario and a friend will advice to his colleague , “damn, see US and Europe is into recessions, people are losing jobs.. and that India guy who studied in IIT and such a rich fellow . He killed his family and committed suicide cos of bad debts. Maybe we should be careful now . If  such big big countries can have problems ..how soon do you think we will get into trouble like that . Let us be careful now, yaar! Who knows when we will lose our jobs? Let us save now . We can spend when time are good . ”

Wife will advice her husband , ” listen, don’t buy too much from the stores , ok? We will manage . I saw TV news about the finance problem. And i heard from my mom that her friend’s son lost his job . Did you check the share market points today ? It was down and in red for the whole day , yesterday. We have enough for next 2 days . Just buy little “, and for the first time she will use the word budget … ” Let us have a budget from next month, ok ? ” … Sensex, Budget are words which are new to her dictionary..

Mom will catuion her son/daughter ( who  just joined a firm fresh out of college) , ” Listen, don’t go out too much with friends and waste your salary on movies , clothes or jewellery. Manage with what you have. and beta .. don’t resign or jump jobs. When you get the first salary. Give half to me, I will put in your savings. Don’t buy that bike now. Intrest rates are high . Buy it after 6 months “…

The panic button is on and the story goes on …

Media will use the panic to give you more sensational news from abroad and get you more worried.. It is cyclic..

We start saving a lot more than we should. Hence,money gets stagnated .

When you don’t buy stuff how are you going to give money back to the manufactures to produce more? If they dont have enough to produce, how are they going to pay your salary? When they don’t have enough money to pay your salary ,cos of no work getting done , why do you expect them to pay you for nothing and not ask you to leave?

Simple right?

So, as you see .. the story is we get sentimental and extra cautious when we hear the news around us .

Don’t do that ..!

Check not the news .. check the real facts . Check real information released by the government and listen to well known business industry leaders.

The India Finance Ministry with RBI under the leadership of Dr Manmohan Singh and Deputy Planning Commissioner Montek singh Ahluwalia is doing a good job. The steps taken as of now ( with two stimulus package and petrol price reduction) is showing signs . Inflation has come down. The full impact is yet to be seen. A third stimulus package is on the cards. So relax.. Our policy makers are much better than our counterparts in other parts of the world.

India is having spill over effect. Not a recession. True , our economy has slowed down. From an extremely robust GDP growth of 8-9% we now predict 6% . But that would still make our country one of the fastest growing economy in the world. Only India from the so called BRIC (Brazil,Russia,India,China) nations is faring well compared to others.

But remember in economics and finance, as in other aspects of life the rule still holds water – What goes down should come up. And what comes up , should definitely go down” . Be it Sensex, economy, failure, success, happiness, sadness, love, hatred ..  You can just play the game of the gods..

As one great poet cum dramatist so aptly put ” the world is stage …. “

I realize this is a very long post. Might be boring for some. But I have tried to put facts and my thoughts in a very simple way. I am no economist and will gladly accpet that I am wrong if proved so ..

I welcome your suggestions and ask those who read to spread the word around if you see merit in my opinions.

Also, check this article,China and India : Suddenly vulnerable , from Economist on what they think about the effects of global recession on India and China.

 

CLICK HERE FOR THE ORIGINAL ARTICLE

PUBLISHED BY ‘FIGHTING DREAMER’

Posted in BANKING SYSTEMS, COMMERCE, COMMODITIES MARKET, ECONOMIC CONJUNCTURE, ECONOMY, FINANCIAL CRISIS 2008/2009, FINANCIAL MARKETS, INDIA, INDUSTRIAL PRODUCTION, INDUSTRIES, INTERNATIONAL, MACROECONOMY, NATIONAL WORK FORCES, RECESSION, RUPEE (India), THE FLOW OF INVESTMENTS, THE WORK MARKET, THE WORKERS | Leave a Comment »

INDIA, STILL AN ATTRACTIVE INVESTMENT DESTINATION?

Posted by Gilmour Poincaree on December 11, 2008

10 December 2008

ValueNotes Team – nikhil@valuenotes.com

PUBLISHED BY ‘VALUE NOTES’

Mumbai was struck with terror on 26 November 2008. These attacks were carried out in the city’s central ValueNotes Online Surveybusiness area, which is the nerve center of business activities. The attacks caused significant damage to two premier hotels (the Taj Mahal and the Oberoi). As the world comes to terms with the terror attacks in Mumbai a question arises about the impact of such an incident on the Indian economy. The Indian hospitality and aviation industries have already felt the direct impact in the form of a 20-30% cancellation in hotel and airline ticket bookings. While this may be short term in nature the bigger concern is whether overseas investors will continue to perceive India as an attractive investment destination.

ValueNotes.com conducted an online survey to evaluate whether the Mumbai terror attacks weakens India’s image as an attractive investment destination among foreign investors and adversely affects foreign capital flows. While 42% of respondents felt it would adversely affect foreign capital inflows, 53% thought otherwise.

India has been one of the most popular destinations for foreign investment in the last decade. India has also had a history of terror attacks. Despite these attacks foreign capital has continued to pour into India, as shown in the graph below.

Reserve Bank of India, ValueNotes Research

The foreign portfolio investment has also grown since 1990-91 irrespective of such disasters. India has seen four-fold increase in FII since 1995-96 till 2005-06. A look at the FII investment shows that though there has not been steady flow of FII but overall it depicts a rising trend.

Reserve Bank of India

Today, terrorism is no longer a regional problem but a rising global concern. Further, India is not an isolated exception as cities like New York, London and Madrid have also been targeted.

The global downturn triggered by the recession in the US and Europe have made India more attractive as an investment destination. While no economy is insulated from the global financial crisis, India is still well placed thanks to its strong reserves ($283.94 billion on 3 Oct 2008), robust policy framework, strong GDP growth and steady rise in domestic demand in recent years. The “Trade to GDP” ratio in India which stands at 37% is much lower as compared to Singapore’s 432%, Malaysia’s 218%, Thailand’s 138%, Taiwan’s 120% and China’s 65%.

The terror attack may temporarily increase the risk-perception of India and postpone the business and leisure plans of foreigners. This will affect business and tourism in the short-term with reduction in bookings of hotel and airline tickets. However, such a disaster will not affect the inflow of foreign capital given the past history and strong perspective of India as an attractive investment destination. Moreover, the fast recovery of US post the 9/11 attack also builds-up on the confidence in India. Post the 9/11 attack, the US economy showed resilience and though it incurred short-term costs there has not been a major long-term direct impact on the economy. ValueNotes analyst Nikhil Marathe feels that it is crucial to ensure that terror does not escalate into a chronic problem and towards this, it is imperative that the government initiate sustained and relentless anti-terror measures. Strengthening India’s internal security will help renew investor confidence and improve the risk-return perception of foreign investors.

Disclaimer:

The authors have taken due care and caution in compilation of data and analysis. The opinions expressed above are only the views of the authors, and not a recommendation to buy or sell. The authors do not accept any liability whatsoever arising from the use of any of the above contents.

The authors do not guarantee the accuracy, adequacy or completeness of any information and are not responsible for any errors or omissions or for the results obtained from the use of such information.

CLICK HERE FOR THE ORIGINAL ARTICLE

PUBLISHED BY ‘VALUE NOTES’

Posted in BANKING SYSTEMS, CENTRAL BANKS, COMMERCE, COMMODITIES MARKET, ECONOMIC CONJUNCTURE, ECONOMY, FINANCIAL CRISIS 2008/2009, FINANCIAL MARKETS, INDIA, INTERNATIONAL, RECESSION, RUPEE (India), STOCK MARKETS, THE FLOW OF INVESTMENTS | Leave a Comment »

CEMENT COMPANIES CUT PRICES (India)

Posted by Gilmour Poincaree on December 9, 2008

10 Dec 2008, 01:29 hrs IST

AGENCIES

PUBLISHED BY ‘THE TIMES OF INDIA’

NEW DELHI: Major cement manufacturers, including ACC, Ambuja Cements and Shree Cement, on Tuesday announced CEMENT FACEprice cuts by up to Rs 7 per bag in response to the government’s move to reduce CENVAT by 4%. The companies, however, have not passed on the entire benefit of excise duty cut due to hike in railway freight by about 8% from Monday.

Led by the country’s largest manufacturer ACC, leading firms like Ambuja, JK Lakshmi, JK Cement, Dalmia Cement and Shree Cement have slashed their rates. Cement is available between Rs 150 and Rs 250 across the country.

ACC cut the prices by up to Rs 5 per bag, while Ambuja Cements reduced by up to Rs 6 per bag at different places across the country.

“The Indian Railways have increased the freight tariff by changing the classification for coal and cement which is expected to push the prices of cement up by Rs 1.50 to Rs 2 per bag. After factoring in the increased railway tariff, the price of our cement is expected to go down by Rs 4 to Rs 6 per bag from today,” Ambuja Cements said.

The maximum amount of reduction was announced by Delhi-based JK Lakshmi Cement by up to Rs 7 a bag.

The company’s whole time director Shailendra Chouksey said the highest quantum of reduction would take place in Uttarakhand, while in Delhi it would come down by Rs 5. “We are also evaluating the freight charge hike by the Railways. This reduction (in cement prices) has been done considering that fact also,” Chouksey said.

Other manufacturers like JK Cement, Shree Cement and Dalmia Cement have also reduced cement prices between Rs 4 and Rs 5 across the country.

CLICK HERE FOR THE ORIGINAL ARTICLE

PUBLISHED BY ‘THE TIMES OF INDIA’ (UK)

Posted in CEMENT, COMMERCE, COMMODITIES MARKET, CONSTRUCTION INDUSTRIES, ECONOMIC CONJUNCTURE, ECONOMY, FINANCIAL CRISIS 2008/2009, INDIA, INDUSTRIAL PRODUCTION, INTERNATIONAL, RECESSION, RUPEE (India) | Leave a Comment »

RUPEE ENDS 7-DAY FALLING STREAK (India)

Posted by Gilmour Poincaree on November 22, 2008

22 Nov 2008, 0000 hrs IST, ET Bureau

MUMBAI: After a gap of several days, the rupee took a break from its falling routine and posted gains on Wednesday. However, this is the second week in a row that the currency posted weekly losses, as a slide in global stocks fuelled concerns foreign investors would step up equity sales. Liquidity was comfortable, with banks parking more than Rs 9,000 crore with the Reserve Bank of India (RBI), although overnight call money rates closed higher. Bonds dealers are expecting interest rate cuts any moment now. Bonds rose on these hopes.

The rupee ended at 50.04 against the dollar, 0.3% stronger than 50.18 at close on Thursday, when it hit a record low of 50.60 during trade. Stock market benchmark BSE Sensex snapped a seven-day losing streak and rose 5.5% on late buying by large domestic funds. Foreign funds have sold a net $13.5 billion of Indian stocks this year, after buying $17.4 billion in 2007.

“The upward movement in the rupee was also because of dollar losing against the major world currencies,” says the head of fixed income at a local MF. He said that the dollar fell dramatically in the non-deliverable forwards market, reducing the arbitrage opportunity. However, he said that the outlook for the rupee still remains subdued.

Overnight cash rates closed slightly higher on Friday after outflows toward treasury bill auctions drained some funds from the system and due to borrowing by banks for fresh auctions earlier in the day. Call rates closed at 6.25%, higher than Thursday’s close of 6.20%. However, banks parked Rs 9,220 crore with the central bank through its daily twin money market operations, indicating sufficient cash supplies with banks.

The government sold Rs 7,000 crore worth of treasury bills and another Rs 9,000 crore of bonds this week. The money leaving the system on account of the latter is to be compensated by the buyback of short dated MSS bonds that took place earlier in the week.

Bonds rose, as dealers say that it is only a matter of time before RBI announces a cut in rates. Yields of the 10-year government securities fell to 7.19% reflecting the bullishness in the market.

CLICK HERE FOR THE ORIGINAL ARTICLE

PUBLISHED BY ‘THE ECONOMIC TIMES’ (India)

Posted in BANKING SYSTEMS, CENTRAL BANKS, CURRENCIES, ECONOMIC CONJUNCTURE, ECONOMY, FINANCIAL MARKETS, INDIA, INTERNATIONAL, RUPEE (India), STOCK MARKETS, THE FLOW OF INVESTMENTS | Leave a Comment »

RUPEE GAINS ON HOPES OF DOLLARS’ INFLOW (India)

Posted by Gilmour Poincaree on November 18, 2008

November 18, 2008 Tuesday Ziqa’ad 19, 1429

By Our Staff Reporter

KARACHI, Nov 17: Rising hopes for inflow of foreign exchange changed the exchange market A FIFTY RUPEES BILLsentiments and reduced speculations which strengthened the rupee significantly against the dollar on Monday.

The Saturday’s announcement on $7.6 billion IMF loan package for Pakistan supported the factors resisting the free fall of rupee and the local currency gained 35 to 40 paisas in the inter-bank market.

The dollar was traded at as low as Rs79.80 while it was at Rs80.20/25 on Saturday. This was a big slide of dollar which gained over 24 per cent since January 2008.

If the IMF board approves the agreement which is yet to be signed, Pakistan could get $4 billion in one year and that would fill the balance of payments gap.

The advisor to prime minister on finance had stated recently that the IMF loan would help Pakistan fill gaps (imbalances) of two years.

It was also announced that friends of Pakistan were ready to support, but they want endorsement of the IMF.

“The government’s announcement and IMF’s response largely impacted the market which cautiously moved in favour of rupee,” said Atif Ahmed, a currency dealer in the inter-bank market.

The currency dealers were cautious to predict about further recede of dollars against rupee, but said that the rupee may get more strength once dollars practically reach Pakistan and build the reserves.

“The speculative and panic elements will find it difficult to get place once reserves reach up to $12 billion and more,” said Atif.

CLICK HERE FOR THE ORIGINAL ARTICLE

PUBLISHED BY ‘DAWN’ (Pakistan)

Posted in CURRENCIES, DOLLAR (USA), ECONOMIC CONJUNCTURE, ECONOMY, FINANCIAL MARKETS, IMF, INDIA, INTERNATIONAL, RUPEE (India), THE FLOW OF INVESTMENTS | Leave a Comment »