Investonomics

JULY, 2011 VOLUME I, NUMBER I

Editorial Board Chief Editor; Mr. Alex K Babu Editors; Mr. N.P Rajive Mr. Benoy D Panikar

Editors’ Column

.

Economy
1. As the global economy slips into further uncertainty, the Planning Commission said, it was likely to lower its average economic growth target for the 12th 5- year plan (2012-2017) to 8. 5 to 8 .7% as against the 9-9.5% earlier. 2. Poor rain in July and a not-so-impressive performance by the monsoon in August till now have started impacting cultivation of pulses. 3. Three states and one Union Territory-Maharashtra, Andhra Pradesh, Tamil Nadu and Delhi-account for nearly 70% of the registered companies suspected to be dormant or defunct in the country. 4. Foreign Direct Investment (FDI) into India saw a whopping 310% increase in June to $5.65 billion, the highest monthly inflow in the last 11 financial years, indicating the revival of investor confidence in the Indian economy. FDI flows were also very high in May 2011, with the country receiving foreign investment worth $4.66 billion, a jump of 111 per cent vis-à-vis the same period last year. 5. State oil firms suffered a loss of over 78,000 crore in 2010-2011 fiscal on selling petrol, diesel and domestic LPG at government controlled rates even as the nation’s oil import bill spiralled three-fold. For a nation that is nearly 80 per cent dependent on imported crude to meet its needs, crude oil import bill soared to over 4.50 lakh crore in last fiscal from about 1 lakh crore in 2004
Top Gainer

Market news
Mahindra &Mahindra. Hero Honda. Ambuja Cement. Maruti Suzuki. Kotak Bank.
Top Losers

Reliance capital. Tata Power. Reliance Power. Tata steel. TCS.

1.19 points or 4.30% to 1807. REC posts 13% rise in profit at 662 crore.78 and Health Care down 171. 3. will acquire 30% equity in Indonesia’s Limited. Sector wise news IPO Analysis and Mutual Fund 1. Realty down by 81. 1. says chief economic advisor Koushik Basu. for $450-$550 million (2.66 points or 7.95.75% at 6048. The only gainer in the sectoral space was Auto up 221. Events . 2.70. citing8. Piramal buys 5. conflict of interest. SBI. joining the line of Indianwings in aviation space. Mahindra to spread its firms buying coal assets the globe MTNL is understood to have finalized two private 11. 5. 7. or GAIL and the Indian Oil Corporation (IOC). Gujarat-Based Adani Gas. Sesa Goa to buy 51% in Liberian iron ore for 3G roaming 400 companies. GMR Energy Ltd (GEL). crore) between GEMS.27 were the major losers on the BSE.32% to 5004. an arm of Adani enterprise will Ltd. 3. Oil firms’ under-recoveries at over 78.32 points or 8. Tata Power net soars 35% to 418 crore. Will run at 80% capacity. suing net profit up & Natural Cr. Company news and Corporate Actions ABB India net up 1% at 38.49% to 3170.05 points or 2. Tata teleservices and Aircel mining firm for cr agreement in the Delhi and Mumbai Circle. Birla Sunlife fixed term plan Mutual fund: Open 09/08/2011.189 equity shares has opened for subscription from today and it will close on August 12. 5. 3. Close 16/08/2011.67% to 8534.7 crore. 1. 2.5% at 605Gas Regulatory Board.000-2.Issue Dat On the sectoral front. IT down 454.43. US downgrade could boost India’s credit rating.32. a joint venture pick up 20% of stake in Green Gas PT Golden Energy Mines Tbk. Credit growth dips to 18.00 points or 5. Adani Enterprises net flat at 570 crore. 4. 3. Growth in 12th plan may be below 9%.85. a subsidiary of GMR Infrastructure 9.72 points or 2. GAIL India has forced the board chairman toSteel. Metal down by 761. TECk down 256. 2. Brooks Labs Rs 63cr IPO to open on Augus16.83% to 12300.000 Cr. Corporate ESSAR. across 10. says JSW reconstitute a bench.500 in cash. 6. Tree House Education initial public offering of 84.25%. 2. ICICI Bank raises base rates by 500 bps to 10%. to seek fuel security.5% and deposits up 17. 2011. GMR in red posts loss of 67 crore.5% in Vodafonenews 4. After M&M the Petroleum7.

13% and an OI increase of 2. this very Vegetable rose 14 per cent in July to 913.09. Infrastructure Ltd. first quarter of the current financial year.85.6 million the first quarter ended June as against a profit of 28 crore in the tonne (mt) in 2010-11 as compared to 117 mt shipped in the corresponding period previous year. Federation of Indian 3.38% from the at 5079. Immediate resistance on the basis of options for the Nifty stands at 5240 and support at 4990.929 income grew 23 per cent at 2. GMR demand pressure.02 a . slightly to 1.644 tonnes in from the previous days 1. size of 170 million kg. tracking a choppy domestic equity market and euro 3. Nifty August futures ended the dayconglomerate has a price decrease of flat fromand an Open Interest (OI) increase of 4. Rupee hits 11-week low. quarter ended June stood at 570 crore due to surplus output forecast by LondonNifty August futures ended the day at 5079. The net loss is up by 10 per cent over last year’s 3. inflation would have been higher due to 2. Puts saw some strength till 4600 levels below which weakness was seen in the form of short buildup and could indicate some further downtrend expectation by the market. Iron ore exports from India fell 16. against a net respectively loss of 116. Debt-ridden Wockhardt Ltd made a strong comeback with a below poverty line (BPL) families at 2 and 3 per kilogram. the finance ministry said in the absence of company has a debt burden of 3. 1.373 crore in the first quarterResults.54%. To improve offtake of foodgrain allocated to states under the targeted public distribution system (PDS) and other schemes.38% marginally up by 5 crore to price decrease of basedrupee fell to its lowest in 11 weeks on Tuesday. The Bangalore-based infrastructure company. as much from the previous day’s future close.Economic Data 1.3 crore in the year-ago period. Calls at all levels were weak and most saw short buildup. oil payments eyed company's precious for the with the price remaining range-bound Platinum missed the current rally innet profit metals. On consolidated basis. Calls saw highest movement at 5100 CE in the short direction. industrial In a rare development. market. spot and futures indicates that some positivity in the form of short period jewellery as thewere the overhangthis increase intraders said. Trend for the market indicates negative buildupcrore corresponding period last year.9 crore for the quarter ended June. anCr. the first quarter ended June against 587 crore in the same quarter previous year.9% over six sessions.673 Cr. The jump in profit 2.388 Rupee stays weak on volatile shares. as against the trade on persistent dollar demand from The Indian placed an American currency in early crop Q1 Results banks Market: Nifty month dollar gains overseas on the basisequity markets.12% and an Open Interest (OI) increase of 4. choppy euro:including Research recommendation along Futurescorresponding loss of Ltd. from the Currency government.Commodities and Option The rupee remaineddiversified weak. an biggest for the rupee. on Wednesday reported net loss of 67 crore in 3. crore. Vijay Mallya-controlled Kingfisher Airlines saw its net loss rise over 41% for the first quarter ended June over the corresponding period year-on-year. and further market movement would depend The ITA hadrupee dropped further by 43 paise to Rs 45. of OI decreased the same month last year.200 crore. diamond last year. monetary tightening.9 an increase from the safe as far which risky economic slowdown in 2008.179 tonnes. fundsleepless nights duringfled meansassetsthe August months futuresthe Surat diamond industry seems to have played previous closed at 5072.a extending losses to in the as 2. market. Indian Oil Corporation reported net loss of 3. Nifty 4800 PE saw highest OI movement in the form of long buildup suggesting negative expectation. with registered a nearly –1.95. Mahindra & Mahindra reported a net profit of 605 crore for ended June 30 at the standalone level. according to industry body. a growth of The downgrading of US the quarter vswill have some impact on India’s jewellery exports in the short term. previous year. outflows. is concerned.55 per cent. for the first quarter due to unmet losses of 7. Trend for the market indicates negative buildup of shorts and thus a negative expectation for the market. with 565 crore registered–1. the negative ended at 5092. on heightened worries about The independent consultancy GFMS. which gives a mid-term resistance. The total and 1.03 importers Optionsandoil imports in3view of Put-Call Ratio (PCR) amid weak as compared to 800. credit rating Rupee drops further by 43 paise Nifty September futures 7. slight decrease in the PCR is seen due to the decrease of puts OI to the increase seen in the calls OI. a price decrease of —1.5 per cent to 97. the food ministry has mooted a proposal to sell wheat and rice to 1. dollar. The company saw its losses rise to 264 Cr.05.719 Cr.40 against theon the season. Defending interest rate rises by the Reserve Bank of India was on the back of 131%t growth in its US business. Adani Enterprises Ahmedabad-based with weak Asian currencies. India VIX stood at 27. State-run firm Rural Electrification Corp has posted a 13% Mineral Industries jump in its profit at 662 crore forCorporate Announcements (Fimi). 2. gold prices have surpassed usually costlier platinum profit for the previous day’s future close. between the US. traded for the After having in world oil prices was positive for energy-hungry India.05 with trend is seen continuingindent for 120 million kg of tobacco for the 2011-12 resolution of global events. the country's dues of more than USD 3 billion for imports from the global by While a drop days discount of 1. 4. the premium Iran covering may be seen. net profit of 193. The (RBI) in Parliament.85. The net sales stood at 9.596 of shorts and thus a negative expectation for the foreign Spot outflows as investors across markets.first quarter upthat 63% from 5.12% the precious metal basket.899 crore in the same at a premium of 6.

Mukherjee said "it has recovered from the loss in the morning. but the US would remain on top. however. Expressing happiness over the quick recovery shown by the Indian stock market. which brutally battered sentiments. we will be able to face the challenges. says Sanjaya Baru. helping the government tame inflation and cut subsidies. failed to lift sentiments in India. 4. i. India’s fundamentals were strong and capable of meeting any challenge posed by the downgrade of the US economy and the crisis in some euro-zone nations." he added. It is down from $107 per barrel to $102 per barrel. says Parthasarathi Shome. including crude oil. The finance minister Pranab Mukherjee said. but led to a decline in commodity prices. Though some respite came for the domestic bourses on Wednesday when benchmarks staged a relief rally and halted the six session southward journey by surging around one and half a percent amid evaporating jitters over US sovereign debt rating downgrade. Big swing indicated a loss of faith among investors as they feared that the global economic slowdown will be inevitable unless a slew of encouraging economic reports emerge to indicate that the global economy is not faltering. Investors welcomed Fed's announcement to keep the interest rates unchanged at ultra low levels through mid 2013. The US downgrade has created some problems for India.90%. it was too early to say how the markets would behave in future. Goldman Sachs have upgraded India to market weight that means the basic fundamentals are strong and macro-economy recovery is moving toward a positive direction. Referring to the movements in the Indian stock market. India's macro-economy was moving in a positive direction and hoped international commodity prices would decline.e. Q&A . he said. the disappointing food inflation numbers released by the government which showed that the annual rate of food inflation accelerated to four and half a month high levels to 9. but we have the capabilities of facing these challenges. which was much better than other Asian countries. with the efforts of all concerned. particularly with the cooperation of the RBI. “"The challenge is there. Economics may be shifting power from the West to the East.Indian benchmark equity indices went through gut-wrenching ups and downs through the second week of August which was filled with wild moves largely on the declining side. 3. The irrepressible turbulence in markets across the globe in last five trading session has sent many investors into a state of paralysis. where the average is going down of various Asian markets are varying from 2-4%. which will help us to manage inflation and also help in reducing subsidy on oil. Question: Stock markets around the world is showing a declining trend over the last week. Last Week Round up Experts Opinions 1. The domestic economic reports too added to pessimism. But what followed in the subsequent sessions was profit booking in the local markets as the clarification over the base-less rumors that Societe Generale was on the verge of collapse and France could soon lose its top-notch credit rating if it is forced to bail out its banks on Thursday and better than expected US employment data on Friday. 2. The downgrade of the US economy by S&P last week has created havoc in stock markets worldwide. The week started with entrenched jitters over the unprecedented US debt rating downgrade by S&P from AAA to AA+ coupled with a negative outlook over the weekend. Some of the investment banks. says Akash Prakash The region offers plenty of opportunities for trade with India. How it could affect Indian Market? Answer: With all eyes on the global situation. if you compare it with Asian markets. watching helplessly as the BSE Sensex swoon around 450 points. The central bank’s ill-timed policy decisions do not bode well for the country’s economic growth." Mukherjee said "collectively. but the country could handle any situation arising out of international developments. The prices of oil and other commodities will come down further. says Rajeev Malik The growing possibility of a further economic downturn in the US makes another round of stimulus likely.

Question: How have you read the events of the last few days? Is the scare over? Have we seen the bottom for now? Answer: In the last six months. the growth expectation has to get knocked off. especially from the US point of view. RBI has hiked 120 basis points just in a matter of 90 days. especially with respect to the automobiles sales where inventory levels are rising. According to him. However. CIO. Only now we are witnessing some bit of a slowdown. Methodology Formation of Finance forum Distribution of Hedge Yuva Id card Formation of fund house There are five types of fund formation. Fund by management Fund by student Individual student fund Fund by a particular batch Virtual Portfolio This movement believes in creating a financially strong young India and this initiative is to enlighten the youth into making educated investment decisions. And that essentially means a blessing in disguise for India. portfolio management. it’s good time to accumulate now. Birla Sun Life said. Half of the growth expectations gets knocked off tapering off the general expectation on the commodity prices. Year to date. Below is the edited transcript of his interview with CNBC-TV18's. India has underperformed the global markets significantly till last week. this is where I think the expectation gets built up from India point of view. Second. The main objectives are: To Hedge the gap between students and investments. India was struggling as an economy to control the inflation. given the slowdown that we could probably witness. As and when we see moderation in inflation and growth is coming to some bit of risky spot from the long-term benefits point of view. would be in a sweet spot with respect to putting a pause on rate hike. it’s very difficult to time the market. India probably could get insulated from the global meltdown. “The government and the regulators will take certain measures to get back the confidence in the Indian market. So. People on Face book and Orkut are fast becoming a part of this movement. But in the last three days. India could get insulated from the global meltdown. which has never happened in the history. a significant outperformance has come in vis-à-vis the global market. The whole policy rates are now a bit on an elevated level. The US downgrade shaves off the growth expectations. RBI. he said. as compared to other central bankers. It’s the area which is not well managed especially in south India. For that the Yuva team visit collage. Interviews Hedge Yuva and School News Hedge Yuva is a financial forum which provides educational and technical support for the young generation about the financial Industry. this is again coming in handy for India. So. other educational institution and explains the importance of investment. To remove fear factor.In an interview to CNBC-TV18. then there is a high probability of looking at lowering down the interest rates.” he added. To make people well informed. The drop in inflation could largely be led by the fall in the commodity prices including the oil. Brace yourself for the events lined up at Hedge Yuva and join the fast growing clan of “smart investors”! . A Balasubramanian.

Sign up to vote on this title
UsefulNot useful