SENSEX:

25 January 2012

The SENSEX advanced by 81.41 points or +0.48%, closing at 17077.18 points as sentiments got a boost on the announcement of a 50-basis-point cut in the Cash Reserve Ratio (CRR) by RBI that will release an additional Rs 32,000 crore into the economy. Through the multiplier effect, additional credit amounting nearly Rs 1.6 lakh crore would be generated in the system over a period of time.

The RBI has left the policy rates unchanged, kept inflation forecast unchanged at 7 per cent. It has cut FY12 GDP forecast to 7 per cent from previous 7.6 per cent.

Among other emerging markets, Brazil, China and Russia have either cut borrowing costs recently or reduced lenders’ reserve requirements.

The benchmark touched intraday low of 17018.46 points and high of 17077.18 points. During the day’s session, total turnover generated IRs. 686.66 Crore. Total 30 shares traded, 18 advanced and 12 issues declined.

Among the trades, Volume toppers were SBI, Tata Motors, L&T, Tata Steel and ICICI Bank. Among the Prominent gainers, Coal India was up by +3.90%, Tata Motors +3.78%, Tata Steel +2.97%, Sterlite Industries +2.47% and Maruti Suzuki +2.44%. Among the top losers, Tata Power was plunged by -2.09%, Jindal Steel -1.67%, Hero Moto Corp -1.43%, L&T -1.35% and Hindalco Industries -1.08%.

On the basis of technical analysis of the SENSEX, RSI stood at around 87 points, while the current index is 6.01% higher than the 50 days Simple moving average.

 



                                                        ............Macroeconomic updates...............

India:

16 January 2012

As the U.S economy indicates of a marginal improvement, India\'s American Depository Receipts (ADRs) ended higher on 09.01.12. In the IT space, Infosys was up 2.63% at USD 55.34, Wipro was up 0.49% at USD 10.18 and Patni was up 0.12% at USD 17.38.

In the Banking space, HDFC Bank was up 1.61% at USD 27.09 and ICICI Bank was up 1.22% at USD 28.24. In the Telecom space, Tata Communication was up 0.74% at USD 8.17 and MTNL was unchanged at USD 0.97.

In the other space, Dr Reddys was up 1.68% at USD 30.89, Sterlite was up 0.55% at USD 7.25 and Tata Motors was up 0.42% at USD 19.13.

 Meanwhile at home, India\'s largest mortgage lender expects property prices across the country to correct between 5-to-15 percent on average, as risinginterest rates detered residential buyers and builders. The HDFC chief expects the Central bank (Reserve Bank of India) to cut the cash reserve ratio (CRR), rather than interest rates at its monetary policy review on January 24. A rapid slowdown in food inflation in December has raised hopes of a reversal in the monetary tightening cycle. The CRR now stands at 6 percent.



02 January 2012

 While the top 100 corporations advance tax returns for the third quarter of this fiscal year indicated a steep fall in the profitability and a flat growth rate, the net direct tax collection rose by only 8.63%, when a 19% growth in the direct tax mop-up was required in the current fiscal compared with the previous period. A fall in tax collection, 5.1% drop in industrial output in October 2011 and decline in investments is attributed to the 9% inflation rate prevailing in India since December last year. To curtail the inflation the RBI hiked interest rates 11 times since March 2010 which led to increase in the cost of borrowing, resulting in fall of profits, production and fresh investments.

India\'s external debt increased by USD 10.5 billion to USD 317 billion in April-June period, of which Government (Sovereign) external debt stood at USD 78.7 billion in this quarter under review as against USD 78.2 billion as at the end of March 2011. The ratio of foreign exchange reserves to external debt at the end of June 2011 was 99.6 per cent.

With the Global economies feared to be more critical in 2012, Indian private sector has to establish its future growth through Technology at the core along with dynamic business ventures. The initiative taken in October by leading Indian business firms to develop new linkages with local industry, investing over $25 billion in mineral-rich Indonesia to lift its existing bilateral trade from $14 to $25 billion by 2015, is a pragmatic step in the right direction.

As the future of equity capital markets is reported shifting towards the East, a research study reports that India is likely to be among the most probable listing destinations for foreign companies. In terms of electronic-order-book value, the National Stock Exchange of India is reported as the fourth-largest exchange by number of trades in equity shares globally. With the exception in 2011 calendar year, India\'s primary markets have been growing rapidly. In 2010 a total of 63 IPOs raised USD 8.3 billion for domestic companies, up from USD 4.5 billion raised by 36 IPOs in 2008.

In the years ahead Indian business corporations could further develop the new overseas linkages with its local industry to raise substantial foreign investments. As per the latest official estimate, the country\'s economy is expected to expand by 7.5 per cent in 2011-12.Moody\'s has unified the government of India\'s local and foreign currency bond ratings at \'Baa3/P-3\' with a stable outlook indicating investment grade.

Meanwhile the challenge before the economy is to reduce the inflation rate, which is directly affecting the consumers purchasing power and also to lower the interest rate, which is driving the profit, investments away, while reducing production. Due to the high interest rate and slowing economic growth India’s Non-performing Assets is feared to cross Rs.150,000 Crore during the fiscal ending March 2012, indicating nearly 3 times rise from Rs.56,000 Crore in 2008, due to the bank’s failure to sell the non performing assets effectively.