FORTNIGHTLY NEWSLETTER

Dec 02-15, 2013

Dear Reader
The negative growth in industrial performance evidenced at the threshold of the third quarter is disappointing. The decline in industrial production during the month casts a shadow on hopes that the economy has bottomed out and there would be a turnaround in industrial activity in the second half of this fiscal. CII fully appreciates RBIs compulsions to keep inflation under check, however, it is also important that the RBI takes cognizance of the steep slide of industrial production and revert to the accommodative monetary policy to revive demand. Chandrajit Banerjee
(Director-General, CII)

INDICATORS
Industrial output declined by 1.8 per cent in October 2013 as compared to 2.0 per cent growth in the previous month and 8.4 per cent growth in the same period last year. The decline in IIP during the month was underpinned by contraction in many of its sub-sectors such as manufacturing, mining, basic and consumer goods. While high interest rates continue to impinge on these sectoral growth rates, policy bottlenecks too have been the culprit. WPI inflation accelerated to more than 1 year high of 7.5 per cent in November 2013 as compared to 7.0 per cent in the previous month on the back of increase in food and fuel inflation. In a worrying development, the September inflation reading was revised up to 7.1 per cent versus provisional print of 6.5 per cent.

CPI data for the month of November showed persistence of inflationary pressure as retail inflation rose to a series high of 11.24 per cent on y-o-y basis. The spike in headline CPI inflation was largely driven by food prices but, outside the food space, the news was sobering as core CPI moderated. Foreign Exchange Reserves as on 06 December 2013 stood at US$295.7 billion, an increase from the US$286.7 billion recorded in the previous fortnight.

In this issue

Market

Global News

Industry News

Policy Developments

POLICY DEVELOPMENTS
In view of the reasons explained by RBI, it was decided to include incremental bank loans to medium manufacturing enterprises (as defined in the MSMED Act, 2006), extended after November 13, 2013, as priority sector advances. The incremental bank loans to medium service enterprises extended after November 13, 2013, up to the credit limit of Rs.10 crores, would qualify as priority sector advances. In line with the above, similar incremental loans to micro and small service enterprises up to the credit limit of Rs.10 crores, (as against the present ceiling of Rs.5 crores), shall also be treated as priority sector advances. The Reserve Bank of India has communicated that Tata Sons Limited has withdrawn its application made on July 1, 2013 for a new bank licence. The company has indicated that its current financial services operating model best supports the needs of the Tata Groups domestic and overseas strategy, and provides adequate operating flexibility to its companies, while securing the interests of the Groups diverse stakeholder base. The Reserve Bank has accepted withdrawal of the application.

Exchange Rate Movements

02-Dec 03-Dec 04-Dec 05-Dec 06-Dec 07-Dec 08-Dec 09-Dec 10-Dec 11-Dec 12-Dec 13-Dec

62.5 62.0 61.5

86.0 85.0 84.0 83.0

100 50 0

61.0
60.5

-50 -100
-150 -200 -250

04-Dec

06-Dec

10-Dec

USD

EURO (RHS)

BANKING INDICATORS
Rs. Billion Indicators Total Bank Credit Food Credit Non Food Credit Aggregate Deposit Broad Money (M3) Credit Deposit Ratio
Source: RBI

Outstanding as on 29 Nov 2013 56,650.3 1,041.9 55,608.3 74,779.3 83,820.2 75.76

% Variation over Fortnight 0.3 2.4 0.2 1.2 0.8

12-Dec
Year 14.2 3.6 14.6 16.1 14.5

02-Dec

08-Dec

EQUITY MARKETS
Global stock markets traded weak in the last Global Stock fortnight due to slew of lower-than-expected Indices economic data coming out of the major advanced economies.
NYSE: DJIA FTSE 100 Closing Value as on 13 Dec 2013 15,755.4 6,440.0 15,403.1 3,066.0 1,962.9 Fortnightly Change (%)

-2.1 -3.2 -1.7 -3.5 -4.0

Indian stock markets too traded lower, mirroring Nikkei 225 the decline across the global indices.
Straits Times KOSPI

Source: Yahoo Finance

Net Institutional Activity Equity Fortnightly FII (US$ Million) Year -to-date FII (US$ Million) 1,389.2 18,850.6 0 Debt 617.7 -8,236.30

Indian Equity Indices BSE SENSEX BSE 500 S&P CNX NIFTY S&P CNX 500
Source: NSE, BSE

Closing Value Fortnightly as on 13 Dec, Change (%) 2013 20,715.6 7,573.0 6,168.4 4,756.1 -0.4 -0.3 -0.1 -0.3

Source: SEBI

COMMODITY MARKETS
NYMEX West Texas Intermediate Crude Oil on 13 December 2013 was trading at US$97.0 per barrel.
Commodity Spot Indices MCX AGRI Closing Value as on 14 Dec 2013 3042.1 4830.5 4226.8 4051.4 Fortnightly Change (%) -1.3 0.0 4.4 1.5

New York spot price for Gold was trading at US$1,232.0 per ounce as on 13 December MCX METAL 2013. MCX ENERGY
MCX COMDEX Source: MCX, NCDEX

INDUSTRY NEWS
Consumer Affairs, Food & Distribution
In order to discourage import of sugar, the customs duty on sugar import has been raised from 10 per cent to 15 per cent with effect from 8.7.2013. Since then there has been hardly any imports under Open General Licence (OGL) worth affecting domestic market. The Government has formed an Informal Group of Ministers under the Chairmanship of Minister of Agriculture to look into the problems being faced by the Sugar industry. The group has, inter-alia recommended extending bank loans to sugar mills with interest subvention by the Central Government. The other relief measures taken by the Government to help the sugar industry inter-alia include dispensing with the release mechanism for sale of sugar, abolition of levy obligation on sugar mills for sugar produced from October, 2012. OIL & GAS INDEX
Source: BSE

BSE Indices AUTO INDEX BANKEX BSE CAPITAL GOODS BSE CONSUMER DURABLE BSE FMCG BSE HEALTHCARE BSE MID CAP BSE SMALL CAP BSE TECK INDEX METAL INDEX

Closing Value Fortnightl as on 13 Dec, y Change 2013 (%) 12,034.3 12,969.5 9,852.3 5,622.1 6,400.7 9,410.8 6,302.5 6,131.1 4,801.6 9,621.4 8,564.0 -2.3 1.9 0.4 -2.1 -2.5 -0.9 -0.4 0.5 1.3 2.2 -1.0

Agriculture
100 per cent Foreign Direct Investment (FDI) is allowed under automatic route in storage and warehousing including warehousing of agriculture products with refrigeration (cold storage). The National Centre for Cold Chain Development (NCCD) has been established as an autonomous body and registered as a Society under the Societies Registration Act 1860.

CNX Segment Indices CNX NIFTY Junior CNX MIDCAP BANK NIFTY CNX IT CNX Realty CNX Infrastructure
Source: NSE

Closing Value as on 13 Dec 2013 12158.3 7605.0 11366.9 8957.6 172.5 2405.9

Fortnightl y Change (%) -1.7 -1.0 1.9 1.6 -1.0 -0.9

GLOBAL NEWS
UK
UK inflation fell to its 4-year lowest level in November 2013. The Consumer price Index (CPI) grew 2.1 per cent on y-o-y basis last month, as against 2.2 per cent in October and 2.6 per cent a year ago. The largest negative contributions came from 'food', wherein inflation eased from 4.3 per cent in October to 3.0 per cent in November. Within food, inflation in fruits decelerated from 10.2 per cent to 4.2 per cent. As per the household survey, the unemployment rate edged lower to a five year low of 7.0 per cent in November, from 7.3 per cent in October. an increase of 185K. Total job additions for September and October were revised to 163K and 200K respectively, taking the 2013 monthly average to 187K vs. 182K in 2012.

Meanwhile, the labour force participation rate was broadly unchanged at 63 per cent in November. The total number of long-term unemployed (jobless for 27 weeks or more) was unchanged at 4.1mn in November. These individuals accounted for 37.3 per

US
Non-farm payrolls (NFP) increased by 203K in

cent of the unemployed. November, much higher than market expectations of

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