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Saturday, December 31, 2011
Tata Motors to replace starter motor in 1.4 lakh Nanos
Tata Motors is upgrading old Tata Nanos, produced up to mid-September 2011, with a new starter motor to enhance their performance. This is in line with the company’s practice of upgrading its vehicles; on the Nano itself, the company had upgraded the exhaust and the electrical system in November 2010, as was announced then. The installation of the new starter motor, which is a vendor supplied part, began in October this year. Owners of all old Nanos were informed about the exercise, and about 50,000 cars have already been done. There are about 65,000 owners who are yet to visit their dealerships and the company is in continuous contact with them. This new starter motor is already installed in the Nano 2012, which was introduced in November this year with a host of new features, of new colours, new interiors, best-in-class AC, a more powerful gasoline engine and even greater fuel efficiency of 25.4 kmpl, further improving on its record as India’s most fuel efficient petrol car – all at the same price as before.
Food inflation plunges below 1%...Fuel inflation too dips
Food inflation in India plunged in the third week of December, falling under the 1% mark, data released by the Government showed on Thursday. Fuel inflation too dropped. The sharp drop in food inflation over the past few weeks is likely to provide some much-needed breather to consumers and the policymakers alike. However, it will be a while before the RBI starts considering a cut in its policy rates. For that to happen, the headline WPI print should also fall sharply. Food inflation declined to 0.42% in the week ended December 17 from 1.81% in the preceding week, the Commerce & Industry Ministry said today. Food inflation stood at 15.48% in the corresponding week last year. Inflation in the Primary Articles group fell to 2.70% in the week under review, from 3.78% in the week ended December 10, according to the Commerce Ministry statement. It was at 18.85% in the year-ago period. Inflation in the Fuel & Power group stood at 14.37% in the week ended December 11, from 15.24% in the previous week, the Government data showed. It was at 11.85% in the comparable week of the previous year. Inflation in the Non-Food Articles space slid to 0.28% in the week under review from 1.37% in the previous week, the Government data showed. It was at 26.05% in the same period a year earlier.
Bond yields inch up on unscheduled Rs. 150bn auction
Yields on the benchmark 10-year Government bonds climbed to a three-week high on Tuesday after the Government announced a surprise Rs 150bn auction late on Monday. The Government said it will sell Rs. 150bn of bonds on December 30 in an unscheduled auction to partially offset a Rs. 40bn auction cancelled last month and to fund an emerging cash requirement. The move unsettled markets amid growing concerns about the bloated fiscal deficit. The Government is widely expected to miss its target of paring budget shortfall to 4.6% of GDP in FY12 due to deceleration in tax collection and higher spending. In late September, the Government increased its market borrowing estimate for the October-March period to Rs. 2.2 trillion, from Rs. 1.67 trillion. Liquidity in the banking system remained tight on Monday with banks borrowing ~Rs. 1.43 trillion from the RBI's repo window, significantly more than the central bank's comfort level of around Rs. 600bn. Traders in the money market expect more open market operations from the RBI to ease the tight cash conditions. Separately, the RBI and the Government on Friday released an updated calendar for the fourth quarter. The Centre would borrow an additional Rs 400bn in the remaining part of FY12 to meet the budget shortfall.
India and Japan sign US$15bn currency swap deal
India and Japan have agreed on a US$15bn (~ Rs. 800bn) currency swap deal to tide over the ongoing shortage of the US dollar amid mounting concern about the eurozone sovereign debt crisis. The new currency swap arrangement with Japan will also help India support its tumbling currency. The rupee has lost ~15% this year as investors continued to be risk averse on worries about slowing domestic growth and widening deficits. Japanese Prime Minister Yoshihiko Noda renewed a bilateral swap agreement with Indian Prime Minister Dr. Manmohan Singh in New Delhi today. The two nations had signed a US$3bn accord in June 2008 that has since expired. Japan already has currency-swap accords with other Asian peers like China, South Korea Indonesia and the Philippines. Just recently, Japan clinched a deal with China to expand use of the yuan and yen in bilateral trade and purchase Chinese bonds. Reserves in Japan surged to US$1.22 trillion in November from US$1.04 trillion at the end of last year, helped in part by a resumption of currency intervention. Japanese premier Noda urged India and Japan to work towards closer ties between the two nations for better economic, political and regional cooperation.
Infrastructure sector growth rebounds in November
The latest reading on the eight core sector industries could cheer up the markets as well the policymakers alike while also boosting the chance of a reversal in the RBI's policy sooner than later. India's infrastructure sector growth stood at 6.8% in November 2011 versus 3.7% in the same month a year earlier, the Government said on Monday. It may be recalled that India's infrastructure sector output plunged in October to touch its lowest in six years, raising concern about the prospects for industrial production. The growth in the core sector space tumbled to almost zero in October, up by an upwardly revised 0.3%, as compared to 2.3% registered in September. The Index of Eight core industries, having a combined weight of 37.90% in the Index of Industrial Production (IIP) with base 2004-05, stood at 141.1 in November. It was at 140.7 in October and stood at 132.2 in November 2010. Core sector growth during April-November 2011-12 stood at 4.6% versus 5.6% in the corresponding period last year.
Sensex, Nifty crumble 25% in 2011...Rupee down 16%
During the year 2011, the BSE Sensex tumbled by over 5,000 points, or ~25%, from 20561 on January 3 to 15,454 on 30th December. While the NSE Nifty dropped more than 1500 points, or ~25%, from 6157 to 4624, during the year. Investors lost a whopping Rs 20,00,000 crores in market value with the total market cap down ~28%. India was among the top losers in the Asia-Pacific region and the worst performer in the BRIC space.
Q2 FY12 GDP fell below 7% while IIP for October shrank for the first time in more than three years. India has been running a large current account gap and a yawning fiscal deficit as well. As a result, the rupee slid to all-time lows of over Rs 54 against the dollar on December 19 before recovering slightly. The rupee lost 16% in 2011 - its first annual loss since 2008.
Lok Sabha approves new Lokpal Bill by voice vote
The Lok Sabha on Tuesday passed the Lokpal Bill to create an anti-corruption ombudsman, according to reports. However, the government failed to get the two-thirds majority it needed to make the bill a Constitutional Body, like the Election Commission. A visibly angry Pranab Mukherjee, termed it as a ‘sad day for democracy’. The FM blamed the BJP for the incident and threatened them that "people will teach you a lesson," reports said. Just before the vote began, the SP and BSP parties staged a walkout and did not vote on the Lokpal Bill, reports said. The Bill will now be sent to the Rajya Sabha. Prime Minister Manmohan Singh's government has been the target of middle-class frustration with everyday graft and multi-billion dollar scandals in Asia's third largest economy. Anna Hazare, who began a three-day fast to coincide with the parliamentary debate, wants the ombudsman to have greater powers to investigate high ranking scammers, reports said. His health reportedly deteriorated on Tuesday evening as his blood pressure fell and his temperature rose above 102 degrees. The activist was already suffering from a viral infection before he commenced his fast.
Weekly Newsletter - Dec 31 2011
To say that 2011 was challenging would be an understatement. There was no dearth of bad news be it the never-ending list of scams, or spiraling inflation, or hardening interest rates, or general economic slowdown, or a sliding rupee, or policy paralysis or the eurozone debt crisis. So, naturally investors shied away from Indian markets. In fact, India was among the top losers.
But after having experienced so much turmoil across the board, things can only look up sooner or later. The outcome of UP elections could have a significant bearing on the policy decisions of UPA II, including the Budget. It might also change political equations at the Centre. Once inflation moderates to acceptable levels and the state elections are over in March, we could see reversal in interest rates and few policy initiatives as well.
The December F&O expiry has seen traders rolling over short positions, leaving chance for a short squeeze. Corporate results, IIP, inflation, RBI policy action and global events will underpin the markets' direction next month.
Lokpal Bill in limbo as Rajya Sabha runs out of time
The extension of the Winter Session of Parliament turned out to be futile as despite the passage of the Lokpal Bill in the Lok Sabha, it failed to even be put to vote in the Rajya Sabha. According to reports, after a twelve hour marathon session, the Bill could not be put to vote as chaos broke out in the House half an hour before the Session would automatically end at the stroke of midnight. The House was adjourned sine die by Chairman Hamid Ansari in the face of stiff opposition and a verbal spat that broke out between several members, including the government’s ally Trinamool Congress. The bone of contention was that the BJP wanted the Bill to be put to vote immediately while the Government insisted it required time to resolve contradictory 187 amendments moved by the members. Parliamentary Affairs Minister Pawan Kumar Bansal said that the government was willing to put the Bill to vote provided the House passed the Bill voted by the Lok Sabha on Tuesday. This, in turn, meant that the amendments which the Opposition wished to move would have to be kept on the backburner.
Market slips as investors brace for weak Q3 earnings season
Bears tightened their grip on the market in the last week of the calendar year 2011 as investors were concerned about upcoming Q3 December 2011 corporate earnings season. Recent media reports that Indian and Mauritian tax officials have begun talks on revising the double taxation avoidance pact between the two countries also weighed on sentiment as it could adversely impact foreign fund flow into Indian equity market.
About 40% of foreign institutional investors (FIIs) inflows and around 42% of the foreign direct investment (FDI) in India are routed through Mauritius. While short-term capital gains are taxed at 15% in India, they are exempted in Mauritius. Several companies take advantage of the double taxation avoidance pact between the two countries and escape paying taxes in both the countries.
Goodwill Hospital and Research Centre IPO Analysis
Goodwill Hospital and Research Centre (GHRC) is the wholly owned subsidiary of Ojjus Medicare Private Ltd (controlled by Harvansh Chawla). GHRC has a multi specialty hospital at Noida under the name Ojjus Medicare with focus on Neurology and Neuro surgery, Cardiology and Cardiac surgery and Orthopedics with emphasis on Joint Replacements and Sports Injuries. The 220-bed hospital is the few amongst private hospitals in South and South East Asia equipped with Perfexion Gamma Knife (Sophisticated radio surgery) for minimally invasive surgeries. The hospital also offers services in areas of Mother & Child Care, Pediatrics, Diagnostic, Critical Care Medicine, Oncology, Gynecology & Obstetrics, Nephrology, Dermatology, Gastroenterology, Dental & Eye care etc.
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