Tuesday, April 16, 2013

DECCAN HERALD 15

Business
BSE Sensex still held a 0.66 per cent gain, led by bank stocks, with State Bank of India Ltd advancing 3.3 per cent. Reasons to be cautious A Reuters snap survey of analysts, made after the release of the official data, showed closely watched core inflation, which strips out volatile food and fuel prices, slowed to around 3.5 per cent in March, the slowest rate in more than three years. Analysts strongly doubted whether any rate cut by the Reserve Bank of India in May would be more than 25 basis points. While expecting the RBI to reduce rates again after next month, Barua warned that the current account deficit and high consumer prices meant there was little chance of "aggressive" cuts. The central bank has made two 25 basis point rates cuts this year in response to cooling inflation, but is concerned that if it lowers rates too much it might undermine the rupee. The currency is burdened by a current account gap that hit an all-time high of 6.7 per cent of GDP in the December quar-

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Rate cut hopes rise as inflation falls to 3-year low

NEW DELHI, REUTERS: India's headline inflation slowed to the lowest rate in more than three years in March, hardening expectations the Reserve Bank of India (RBI) will cut interest rates next month to help the economy recover from its slowest growth in a decade.

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The encouraging price data was released as Finance Minister P Chidambaram began a series of roadshows in North America aimed a drawing billions of dollars of investment to Asia's ailing, third-largest economy. Suffering from low growth and an investment drought, India needs foreign inflows to help fund a worryingly high current account deficit, while the RBI wants lower inflation to feel more comfortable about reducing interest rates that are among the highest of all the major economies. Wholesale prices, India's key inflation measure, cooled to 5.96 per cent in March after an annual uptick to 6.84 per cent in February, the trade and industry ministry said. It was the lowest pace since November

Wake-up Call: Suffering from low growth and an investment drought, India needs foreign inflows to help fund a worryingly high current account deficit. REUTERS

2009 and less than forecast by a Reuters' poll of economists. "The fact that headline inflation is below 6 per cent strengthens the case for rate cut in May," Abheek Barua, Chief Economist at HDFC bank in New Delhi, said. Wholesale inflation has trended downward from 8 per cent in September -- good news for Prime Minister Manmohan Singh's government, which is

gearing up for national elections due in early 2014. Singh has made reviving sluggish investment and economic growth a top priority. GDP growth hit a near fouryear low of 4.5 per cent in the quarter to end-December, while growth for the fiscal year which ended last month is expected to be around 5 per cent, and the lowest in a decade. The lower-than-expected

headline inflation figure briefly buoyed stock and bond prices because of investors' view the central bank was more likely to cut the benchmark repo rate from 7.5 per cent when it next reviews policy on May 3. But both markets stalled once realisation sank in that the January inflation figure had been revised upwards to 7.31 per cent from 6.62 per cent. The benchmark 30-share

Gold crashes to over 15-month low

NEW DELHI, PTI: Gold prices

on Monday tumbled by Rs 750 to Rs 27,600 per 10 gm to hit an over 15-month low in the national capital due to persistent selling by stockists triggered by a heavy sell-off in global markets. The precious metal, which had suffered the most ever in the previous session by losing Rs 1,250, on Monday fell further to touch its lowest level since December 31, 2011. Silver followed suit and plunged by Rs 2,100 to Rs 48,000 per kg in continuation to a drop of Rs 2,500 on Saturday on poor offtake by industrial units and coin makers. Selling further gathered momentum as gold on the global front plunged to the lowest level since April 2011 on speculation that some central banks selling and expectations of some economic recovery. In London, gold dropped by $90.70, or 6.14 per cent, to $1,386.30 an ounce. Silver also fell by 10.52 per cent to $23.13 an ounce. Besides on the domestic front, weak trend at the futures market, where both the precious metals, silver and gold, hit their daily lower limits, further fuelled the downtrend. Also in the spot market, gold of 99.9 and 99.5 per cent purity tumbled by Rs 750 each to Rs 27,600 and Rs 27,400 per 10 grams, respectively. The sovereign declined by Rs 100 to Rs 24,700 per piece of eight grams.

Indias headline inflation cools below 6 per cent

Food inflation down to 8.73% in March
NEW DELHI: Indias wholesale price inflation cooled to below 6 per cent mark in March after a gap of more than three years, backed by softening of prices of primary articles, particularly food items.

Petrol prices cut by Re 1 per litre

NEW DELHI, DHNS: Following a decline in global crude prices, petrol rates in India were revised downward by Re 1 per litre from Tuesday. The reduction in prices excludes the local taxes, which varies from state to state.

However, the impact of softening of WPI may not be felt by the common man immediately as the CPI index, which measures inflation at the level of consumer, still remained in the double digit. Wholesale prices eased to 5.96 per cent in March, nearly one percentage point lower than the previous month. Inflation cooled off across the sectors, with inflation in food articles declining to 8.73 per cent in March from 11.38 per cent the previous month. Vegetable prices, particularly the cost of onions too declined from the previous month. Prices of milk, egg and fish also moved downward, but prices of cereals did not follow a seminal fall. Food inflation has 14.34 per cent share in the WPI basket. Manufacturing inflation too witnessed a decline at 4.07 per cent, down from 4. 51 per cent in February. For the fuel and

power category, it was up by 10.18 per cent in March, compared to 10.47 per cent in February 2013. Economists, however, said that inflation has slowed in recent months due to weakening of demand in the economy. The recent numbers for automobile sales too underscore the slump in demand. Sales in the car industry fell 6.7 per cent last fiscal year, according to the Society of Indian Automobile Manufacturers (SIAM). The lower than expected inflation numbers boosted the stock markets with the Sensex immediately gaining 0.5 per

Rupee tumbles to 1-week low of 54.62

MUMBAI, PTI: Notwithstanding a partial recovery on lower-than-expected headline inflation, the rupee on Monday closed down by 10 paise at oneweek low of 54.62 on sustained dollar demand from importers and capital outflows. Forex dealers said the US

currency gaining strength against rivals overseas also weighed down on the rupee sentiment. However, recovery in local equities cushioned the fall to some extent, they added. The local currency commenced the day on a bearish note at 54.65 against the dollar

from Fridays close of 54.52 at the Interbank Foreign Exchange (Forex) market. Later, it fell to a low of 54.79 before gaining some ground to 54.58 and finally closing at 54.62, down 10 paise, or 0.18 per cent, from its previous close. This is the lowest level

cent, but it soon fell back after the government revised the January inflation numbers from 6.62 per cent to 7.31 per cent. Reacting to the numbers, Planning Commission Deputy Chairman Montek Singh Ahluwalia said inflationary pressure is coming down gradually and the price rise was coming under control. Industry chambers raised their pitch for a cut in interest rate by the RBI after the inflation data was released saying it was critical as industrial NEW DELHI, PTI: Wipro on growth continued to remain Monday said its promoters will soon sell shares in the sluggish. DH News Service company through the offer for sale (OFS) route. The company is now in receipt of letter from Sebi dated April 15, 2013 acceding to companys request and permitting the promoter and hit by the local currency since promoter group to divest April 5, when it had fallen to through the OFS route dur54.81 against the dollar. ing the twelve weeks cool off FIIs continued to remain period, Wipro said in the filbearish on domestic stocks and ing. pulled out around $77 million The IT major, however, did (Rs 418.37 crore) from mar- not disclose the quantity or kets, according to BSE provi- the probable date of auctionsional data. ing the shares.

Following the cut in cost, petrol will sell in Delhi at Rs 66.09 per litre from Rs 67.29 earlier. In Bangalore, it will cost Rs 72.63 per litre, down from Rs 73.94 a litre, while in Mumbai the new rate will be Rs 72.88 from Rs 74.14 per litre. In Chennai, petrol will cost Rs 69.08 from the current Rs 70.34 per litre. This is the second reduction in the prices of petrol in the past fortnight. They were last reduced by 85 paise on April 2. Diesel prices, however, remained unchanged, although the government has decided to effect a hike of up to 50 paise per month on the highly subsidised fuel till the losses incurred by the state-owned fuel retailers were eliminated. Countrys largest fuel retailer, Indian Oil Corp said since

ter, and a weaker rupee would result in inflationary pressures from higher prices for imports. "The RBI will be in a tough spot as the recent deterioration in the current account position warrants rates to be left high to cool the economy, though the softer inflation numbers provide a window to ease with an eye on supporting the faltering growth outlook," said Radhika Rao, an economist with DBS in Singapore. Some economists believe India could benefit from inflows of funds unleashed by a megamonetary easing in Japan earlier this month, but warn the net impact could be negative if yen flows push up global commodity prices or domestic demand. "The Bank of Japan's quantitative easing will certainly have an impact on all emerging market economies including India as it will increase the flow of capital into their financial markets and create the risk of overheating, as their real sector Public sector lender activity is quite subdued," said Union Bank of India hit Rupa Rege Nitsure, chief economist at Bank of Baroda in the global debt market to raise around $500 million through Mumbai. bond issuance, said two merchant bankers working on the issue. This has comes days after successful bond issuances by State Bank of India last last week and a dozen of corporates in recent months. We have launched roadshows in the leading Asian and Eurothe last price change in inter- pean finance centres on benational prices have declined from $119.23 per barrel to $116.61 a barrel, it was trying to pass on the relief to the consumers. Capital markets regulator It, however, said that rupeeSebi settled allegations of dollar exchange has deteriorat- insider trading charges ed slightly from Rs 54.28 to Rs against Pedriano Investments 54.51 a dollar. Ltd, a promoter of Zensar Other two state-owned com- Technologies, after it paid a panies, Bharat Petroleum and little over Rs 6 lakh towards Hindustan Petroleum are also settlement fees. expected to reduce petrol In its consent order passed prices in line with IOC. on April 12, it said the order On diesel prices, the IOC will come into force immedisaid that it was still losing Rs ately and that it has disposed 6.48 per litre. of adjudication proceedings On Monday, global crude prices fell to a nine-month low and hovered around $101 per barrel. With this the Indian basket of crude oil also deHARMAN India on clined. Prices for the Indian Monday announced crude oil basket dropped to that Lakshminarayan reasRs.5,626 per barrel on April 11 sumes the role as Country from Rs.5,954 on December, Manager and Managing Director of Harman India, ef31. This has raised hope of a fur- fective April 2013. Lakshminarayan will rether decline in fuel prices in the coming fortnight, if rupee re- port directly to Harman mains range bound, analysts Chairman, President, and Chief Executive Officer Disaid.

Union Bank hits debt market with $500-m bond issue

half of Union Bank of India last week, as part of the banks pan to launch a benchmark issue. If the market condition is conducive, we will close the sale programme this week, the merchant bankers said. They also said, this is part of the medium term note (MTN) programme and the fund will be deployed to meet overseas fund obligations. So far 11 companies through 13 issuances have raised $7.5 billion this year.

Sebi passes order in Zensar case

against the company. The regulator had conducted investigations into alleged irregularities in the scrip of Zenzar Technologies Ltd as well as promoters shareholding for the quarters ended March 2009 to March 2010. The probe revealed that Pedriano Investments had failed to disclose information regarding its shareholding within specified time-frame.

Harman India appoints new MD

nesh Paliwal. Lakshminarayan was first appointed to this role in 2009 and he established the foundations for tapping Indian market for growth and market share. Post June 2012, Lakshminarayans association with the company continued as Non-Executive Director.

Wipro promoters to sell shares through OFS

CII seeks 1% rate cut, reforms

NEW DELHI, DHNS & AGENCIES: Industry Chamber CII

Monday said there was an urgent need to revive investment in the country to accelerate economic growth and pitched for an interest rate cut by the Reserve Bank of India, a precondition for making loans cheaper to the industry to kick start investment. CIIs newly elected President Kris Gopalakrishnan said to revive economic growth and to take the expansion rate to 8-9 per cent in the next two years it is essential to kick start investment. The RBI needs to work in tandem with the government in boosting growth by easing interest rates by at least 100 bps in the current fiscal, he said. Concerned over stubborn in-

S Gopalakrishnan

flation, the RBI had been keeping a tight leash on its monetary policy. It cut its key rates after a gap of nine months in January this year. Gopalakrishnan said supply side constraints is the main reason for inflation and reduction in interest rates would help in enhancing investments and increase in boosting capacity.

There are certain things which we can do at the domestic level to boost economic growth. We can not do much (to improve) the external factors, he said. Gopalakrishnan stressed the need for the Cabinet Committee on Investment (CCI) to aim for making a repository of the top 50 stalled projects in terms of the investment incurred and go for their revival on a priority basis. Streamlining procedural reforms is another major step for India to catapult itself to the high growth trajectory, he added. He asked the government to allow FDI in insurance, banking and pension funds. On governance, he said that there is need for independent regulatory authorities for coal, real estate and health.