Economy Watch

Economy News

Weekly Economy Watch as on 8 March 2010.

Inflation

Food prices inflation bounced back to 17.87% for the week ended Feb. 20 after falling a bit in the week ago. Food inflation was at 17.58% in the previous week. Primary articles inflation declined marginally to 15% in the week ended February 20, 2010 as against 15.84% in the previous week. Non-food articles inflation rose to 13.77% as against 12.78% in the previous week.

Rs v/s US $

On Mar. 01, 2010 (Monday), The was closed for Local holidays. On Mar. 02, 2010 (Tuesday), On Mar. 03, 2010 (Wednesday), The partially converted rupee gained 19 paise to end at 45.82/83 against the US dollar. On Mar. 04, 2010 (Thursday), The partially convertible rupee settled marginally stronger to stand at 45.80/81 against US dollar than Wednesday`s close of 45.82/83. It had an intraday peak of 45.76, its strongest since January 19. On Mar. 05, 2010 (Friday),. The partially convertible rupee settled 0.4% stronger to stand at 45.60/61 against dollar, its strongest since January 19 than its previous close of 45.80/81.

Economy & its sectors

January exports jump 11.5%

India`s exports grew for the third straight month in January at 11.5% to USD 14.34 billion, helped by pick up in demand for marine products, tobacco, man-made yarn and fruits and vegetables. However, for the period between April-January 2009-10, exports showed a decline of 17.8% to USD 131.93 billion from USD 160.4 billion in the corresponding period last year, an official statement said. Imports, which showed an increase in December 2009, continued the momentum in January and rose 35.5% to USD 24.70 billion compared to USD 18.22 billion a year ago. The trade gap in the month under review increased to USD 10.36 billion against USD 5.35 billion in January 2009. The Commerce and Industry Ministry sources said fruits and vegetables, marine products, tobacco and manmade yarn did exceedingly well in January, while sectors like tea, coffee, gems and jewellery, drugs and plastics improved their performance. However, engineering goods, textiles, jute, carpets, handicrafts and leather continued to fare badly. After falling for 13 months in a row since October 2008, exports re-entered the positive zone in November 2009.

BSNL out of top 10-profit making PSUs; ONGC is no. 1

Telecom giant BSNL has lost its place in the coveted list of top 10 profit-making central PSUs which is topped once again by Oil and Natural Gas Corporation. Power producer NTPC moved up to the second place, pushing down steel counterpart SAIL to third slot, according to the Department of Public Enterprises Survey for 2008-09. In the 2007-08 survey, BSNL was ranked 6th. However, a steady fall in net profit and revenues in the face of delayed expansion plans and fierce competition have brought its profit to Rs 5.74 billion in 2008-09, moving it out of the coveted list. In 2007-08, BSNL had posted a net profit of Rs 30.09 billion. The unlisted PSU suffered hugely due to its dwindling landline connections. Mineral major NMDC is fourth in the list, while Coal India is ranked 5th.

Ultra low-cost car project with Nissan on track: Bajaj

A day after Japanese auto major Nissan confessed that it has not found an engineering solution for its proposed `ultra low-cost car` for India, its partner Bajaj Auto today said the small car project is going on as per the plan. ``The partners are aligned to the project and to the agreed objectives. The project is proceeding as planned,` Bajaj Auto vice-president for business development S Ravikumar said in statement. The Bajaj comments come in response to a statement made by Nissan Motor executive vice-president Collin Dodge that neither it nor Bajaj Auto has found engineering solutions for the proposed ultra low-cost car. Nissan and its French partner Renault had joined hands with Bajaj Auto in 2008 to manufacture an ultra lowcost car, whose price tag it initially estimated at USD 2,500.

Sugar production likely to exceed 16 MT this year

Food and Agriculture Minister Sharad Pawar today said the country`s sugar output in the current season could exceed 16 million ton (MT) on the back of improved yields in key growing states. However, the output is still much short of India`s annual demand of 23 MT. ``We expect sugar production to be more than 16 MT this year,`` Pawar said. Sugar season runs from October to September. The minister informed that productivity of sugarcane has improved substantially in Karnataka and Gujarat along with the top two producers Maharashtra and Uttar Pradesh. ``The encouraging trend is that sugarcane productivity particularly in Uttar Pradesh, Maharashtra, Karnataka and Gujarat has improved substantially,`` he said. Maharashtra and UP produce nearly 60% of the country`s total sugar output.

MMTC invites bids to import RBD palmolein oil

State-run trading corporation MMTC today invited bids for import of up to 7,000 ton of RBD palmolein oil. The bidding will close on March 8, and a decision on them will be taken on the same day, MMTC said in a notice. The shipment should be 6,000-7,000 ton of RBD palmolein oil in bulk at the Kakinada port, it added. The import should be either be from Indonesia or Malaysia, it added. MMTC imports pulses and edible oils in order to meet domestic shortages. Shares of the company declined Rs 0.3, or 0%, to settle at Rs 33,955.00. The total volume of shares traded was 199 at the BSE (Thursday).

Govt. plans to set up 10-20 cold storages by FY 2011

The Central Government plans to set up 10-20 cold storages through public-private partnership by FY 2011, a senior official said. ``We plan to set up at least 10-20 cold storages through the public-private partnership route by FY 2011. We will provide subsidy to those who set up cold storages,`` Union Food Processing Ministry Secretary Ashok Sinha said. The minimum investment will be between Rs 20-40-million per storage, Sinha said. The government also plans to set up at least 30 food parks by FY 2012, he said, adding so far 10 parks have been opened and five parks are in the pipeline. Recently, the Reserve Bank had allowed companies setting up cold storage facilities to raise funds abroad.

Govt. seeks nod to up public expenditure by 317.8 billion

The government today sought Parliament`s approval for raising public expenditure that will result in a net cash outgo of Rs 317.8 billion during 2009-10 over the expenses envisaged earlier. Of the total cash outgo, bulk of the funds totalling around Rs 120 billion will be provided to the petroleum ministry to compensate oil companies for selling kerosene and LPG below the market price, said the second batch of supplementary demands for grants for 2009-10 that was tabled in Lok Sabha by Finance Minister Pranab Mukherjee. In addition, Rs 45 billion would be provided as subsidy on imported decontrolled fertilisers and Rs 35 billion as subsidy on indigenous urea. Among food subsidy, state-run Food Corporation of India will get Rs 12.07 billion for additional allocation of rice and wheat, while Rs 12.52 billion would be given to state governments for procurement of foodgrain.

India`s forex reserves slip by USD 315 mn

India`s forex reserves decreased by USD 315 million to stand at USD 278,357 million as on Feb. 26, 2010, mainly on account of fall in foreign currency assets. As per the weekly statistical supplement of the Reserve Bank of India (RBI) released on Mar. 05, 2010, foreign currency assets increased by USD 212 million to stand at USD 253,991 million. During the same period, the reserve position in the International Monetary Fund (IMF) increased marginally USD 7 million to stand at USD 1,393 million. Special Drawing Rights (SDRs) increased by USD 26 million to stand at USD 5,053 million. Gold reserves declined by USD 136 million to stand at USD 17,920 million. Foreign currency assets expressed in USD include the effect of appreciation or depreciation on non-US currencies (such as Euro, Sterling and Yen) held in reserves.

Stock Markets

Sensex climbs 3.44% during the week

The first week of March turned out be a optimistic week for Indian markets after Budget with Sensex climbing 565.49 points than its last close. Both Sensex and Nifty traded above 1-month high and touched the psychological of 17,000 and 5,000 mark. Sustained buying by funds was seen across board amid volatile week. The 30 share index, Sensex climbed 564.94 points, or 3.44%, to 16,994.49 in the week ended Mar. 05, 2010. On the other hand, the broad based NSE Nifty climbed 166.7 points, or 3.39%, to 5,089.00 in the same period. Food inflation rose to 17.87% for week ended February 20 from 17.58% a week ago driven by higher prices of milk, wheat, rice and vegetables. Mid-cap stocks jumped 337.67 points, or 5.28%, to 6,735.49 in the week. While small-cap shares jumped 432.24 points, or 5.36%, to 8,499.64 during the week. Major gainers over the week in the sectoral indices were Metal gained 7.06%, Realty 6.91%, Auto rose 5.33%, FMCG climbed 4.55%, and Power went up 4.25%.

Major gainers in 30-share index were Tata Motors (11.85%), Jaiprakash Associates (10.51%), Tata Power Company (9.78%), Tata Steel (7.73%), and Bharti Airtel (6.91%) over the week. On the other hand Oil & Natural Gas Corporation (1.98%), and Maruti Suzuki India (0.44%) were the biggest losers in the Sensex over the week. ``IIP data scheduled on Mar. 12, 2010 and expectations of structural reforms in economy by the government would dictate the market trend for the week``, said Aditya Birla Money. `` Technically Nifty weekly chart shows opening white marobouz candlestick which signals bullish continuation pattern. The pattern shows that the bull dominates the prices and there is expectation that this trend may continue for the forthcoming days,`` it added. ``Nifty resistance is seen at 5160 levels and sustaining of it would dictate Nifty to touch 5220 levels in near term. First level of support is seen at 4980 levels and break of it would test 4830 levels in near term,`` it added further.