Breaking News & Stocks

GoM meet to take stock of rising prices

New Delhi, March 18: Amid all-round concerns over price rise, a high-level inter-ministerial group on Tuesday took stock of the issue, especially of essential items.

The group of ministers meeting, chaired by External Affairs Minister Pranab Mukherjee, assumes importance with the wholesale prices-based inflation touching nine-month high of 5.11 per cent during the week ended March 1.

The wholesale prices-based inflation stood above 5 per cent mark, the tolerance level of RBI, for the second week in a row.

The meeting was attended by Finance Minister P Chidambaram, Agriculture Minister Sharad Pawar, Commerce and Industry Minister Kamal Nath among others.

Meanwhile, the government has banned the export of all edible oils for a period of one year, a move considered to boost the domestic supplies and contain rising prices of vegetable oils in the country.

The restriction are effective from March 17 for a period of one year, directorate general of foreign trade said in a notification on its website.

Yesterday, in Rajya Sabha, Chidambaram had blamed the surge in inflation to the continuing rise in global commodity and foodgrain prices and said government will make every effort to contain price rise and ensure that it did not affect the poor.

"We will make every effort to contain prices, especially for the weaker section," he had said while winding up discussions on budget in Rajya Sabha.

Stating that fair prices to farmers would mean higher prices for consumers, he said the interests of the poor will be protected, though it may result in higher subsidy outgo.

Subprime crisis can fuel commodity bubble: UNDP

Mumbai, March 19: The liquidity boost and various macro-economic measures being adopted to fight the sub prime crisis, which has kept the stock and bond markets on tenterhooks across the world, can soon fuel a commodity bubble, a top UNDP official said on Wednesday.

"I will not be surprised that 2-3 years from now, we realise that the liquidity and macro boost generated to fight the sub prime housing crisis ended up fuelling a commodity bubble," UNDP Administrator Kemal Dervis said at an Exim Bank function.

"We may again, then, be faced with fighting the negative consequences of an unforeseen downward adjustment, this time in commodity prices," he said.

He was also critical of strong expansionist us macro policy response to crisis situation saying such policies carry dangers of inflation.

Tracing back the various economic crisis since mid-90s, he said strong us macro policy responses have led to one asset bubble being replaced by another.

After the East Asian currency meltdown in mid-90s, dot com bust came at the turn of the century, which was followed by mortgage-backed securities crisis from 2004 to 2007.

"It may well be the commodities, that are now rising in price at an unreasonable and unsustainable rate," he said.

This is fuelled again by underlying huge investment resources and accompanying liquidity available in Asia because of high savings rate, in the Middle East because of the oil bonanza and in the advanced economies because of significant rise in the share of profits and high incomes in GDP.

Home loan rates declining in last one yr: FM

New Delhi, March 18: Home loans have seen a declining trend during the last one year, with loan rates been slashed for as many as once to three times by several banks, Parliament was informed on Tuesday.

"According to the reports received from public sector banks, the rate of interest on home loans have been reduced by several banks during the last one year," Finance Minister P Chidambaram said in a written reply to a question in Rajya Sabha.

Further, in a reply to a query regarding Regional Rural Banks (RRBs), he said the number of RRBs had reduced to 92 from 196 due to amalgamation of RRBs sponsored by the same bank in a state.

The number of loss making RRBs had reduced to 15 in 2006-07 from 22 in 2005-06. Of these, seven have registered profit during the first half of the current year and the remaining four are likely to post profit by the end of current financial year, he added.

"The performance of RRBs has improved considerably as the percentage of their gross NPAs and net NPAs has reduced...The net worth of RRBs as a whole has increased to Rs 4,545.86 crore as on march 31, 2007 from Rs 3,466.25 crore as online March 31, 2005," he told the upper house.

In another reply, he said the government had no plans to establish any Micro Finance Institution (MFI), though several such institutions in the private sector were operating across the country, providing micro credit services to the weaker sections including artisans, craftsmen etc.

To another query, Minister of State for Finance Pawan Kumar Bansal said although such institutions were not currently regulated in the country, the data received from banks revealed that bank loans amounting to Rs 1,584.48 crore were outstanding against 550 MFIs as on March 31, 2007.

hello brothers, I am still not able to figure out in which direction the market would move???

Will it be further bearish or will it regain its lost glory???

it regain its lost glory for sure.its a matter of some time.a month or so.

Fall in market may give opportunity to buy good stocks: Kela

Mumbai, March 19: Maintaining a bullish stance despite the meltdown in the stock market, renowned fund manger Madhusudan Kela today said the current fall gives great opportunity to buy good stocks.

"Market will be in consolidation mode for the next 4-6 months. Investors should start buying into high conviction ideas," Madhusudan Kela, head of equities at Reliance Mutual Fund, said in an interview to a private news channel.

India continues to be an investment-led story and the markets are in an intermediate downturn, Kela said.

Asked about the cash pile the fund house was sitting on, Kela said "we had about Rs 8,000 crore in cash a month ago, which we are gradually deploying in the market. We have invested Rs 4,000 crore from January and we will deploy the cash further at the right time and in the right opportunities we get in good stocks".

On the sectoral front, for the next 2-3 months bank stocks may not see any great news and the amount of derivative losses is yet to be measured, Kela said.

While mines and minerals sector would continue to do well and even if there is a recession, the stocks from the sector would be the last to fall.

Soon after the current downslide in the local stock market begun in mid-January, Kela had said that Indian bourses command a premium to global markets but are still linked and cannot operate in isolation.

He had advised investors to rein in their expectations from return on investments in equities and said that they should adopt a long-term strategy to buy good companies at proper valuations.

3,084 Indian firms set up shops in Singapore in 2007

Mumbai, March 19: With growing appetite for investments abroad, the number of Indian companies setting up units in Singapore has grown three-fold in six years to 3,084 in 2007.

Indicating this Singapore's Economic Development Board (EDB) assistant managing director for Asia Pacific Tan Choon Shian told reporters that since Comprehensive Economic Co-operation Agreement (CECA) came into being in 2005 between India and Singapore, such numbers are more pronounced as it doubled from 1,644 to 3,084 in just two years.

He, however, said that the quantum of investment from India was still not large as it would be a few million dollars of the total 16 billion Singapore dollars of investments that the island country has attracted in 2007.

But, of late, some large investments are pouring in and the most recent one is 110-million Singapore dollar investment by Tamil Nadu Petro Products for setting up a petrochemical plant in Singapore in collaboration with Kuwait finance house.

Wipro technologies is also setting up an R&D centre in Singapore, Tan said, adding that there are few other companies which would shortly be firming up investments in Singapore which includes Tatas as well.

EDB is mainly interested with the task of attracting investments from abroad and Singapore is overwhelmed by the growth story of India and China, which are real. The two Asian countries have enormous potential in the coming years, but the US and Europe dominate foreign investments in the island country.

Situation not favourable for cut in interest rates: Rangarajan

New Delhi, March 19: Pointing out that inflation rate is a little beyond comfort zone, the Prime Minister's economic advisory council on Wednesday said the current situation is not favourable for a cut in interest rates.

"Inflation taken by itself is not favourbale towards doing that (reducing interest rates,)" EAC Chairman C Rangarajan said to the reporters.

The inflation rate stood at 5.11 per cent for the week ended March 1. It was for the second week in a row that the rate was over five per cent.

The Reserve Bank of India aims to limit average rate of inflation for the current fiscal at five per cent.

"When the inflation rate is rising, it is always critical to bring down the rates, but the stand on interest rates is determined by a variety of factors," he said.

"We would have liked the inflation rate stay somewhere between 4-5 per cent, preferably at 4 per cent level." He said.

Blaming it on raising global food prices, he said now the food prices are rising abroad and therefore the option of importing food grain is not available for bringing down rising prices.

In the given domestic situation, there is a need for moderation of money supply, he said.

He suggested, "we need to do both supply management as well as demand management."

Annual inflation at 5.92% on March 8

New Delhi, March 20: India's wholesale price index rose 5.92 percent in the 12 months to March 8, higher than the previous week's rise of 5.11 percent, government data showed on Thursday.

The rate was way above a median forecast of 5.21 percent in a Reuters poll of analysts, and is the highest reading since April 28, 2007, when inflation was 6.01 percent.

The annual inflation rate was 6.51 percent during the corresponding week of the previous year.

The wholesale price index is more closely watched than the consumer price index, which is published monthly, because it covers a higher number of products and is published weekly.

Foreign cos eyeing India`s USD 90 bn food market

Mumbai, March 19: When Kellogg launched breakfast cereal in India 14 years ago, it underestimated the stranglehold of traditional cooked breakfasts. Cartons of cornflakes sat unsold on shop shelves.

Those who ventured to buy cereal ate it with hot milk, another ritual as until recently milk was rarely pasteurised in India, and they were put off by the soggy consistency with none of the crackle and pop promised by the advertisements.

Kellogg fought back with a massive educational campaign and introduced products to suit local tastes such as Basmati rice flakes and mango-flavoured cereal for sweet-toothed Indians.

It also made small packs for 10 rupees (USD 0.25) to encourage trial. "It would be foolhardy for me to say Kellogg has replaced cooked breakfast ... I don't think we can ever hope for that," said Anupam Dutta, managing director of Kellogg India.

"But we've become a part of the consideration set for breakfast in many Indian homes, and that's a tipping point," he said. Getting a foothold in India's processed foods market, estimated to be worth USD 90 billion, requires persistence and a willingness to adapt products to suit culinary and cultural preferences, experts say.

Rising incomes, more working women, modern stores and greater culinary adaptation are helping food giants such as Pepsico, Nestle, Unilever, McDonald's and Yum Brands get a piece of the market. "Every company that wants a share has to invest heavily, localise extensively and be very patient," said Jayanta Roy, at consultancy Frost & Sullivan, which estimates that only a third of the processed foods market is in the hands of large Indian and multinational firms. The rest is controlled by regional firms.

Mass or Niche

Culinary adaptation appears to be key. Pepsi has had a big hit with ethnic salty snacks and also sells "aam panna", or green mango nectar, along with its colas. Nestle pushed its Milkmaid condensed milk as being ideal for traditional Indian sweets. But it tasted more success with Maggi noodles, a bold step in a nation divided between eaters of rice and "roti" (flat wheat bread). Maggi soon became a staple in school lunch boxes, helped by the ethnic "masala" (mixed spices) flavour.

Nestle recently launched packaged yogurt, taking on another time-honoured tradition, while French rival Danone, along with Yakult Honsha, launched yogurt probiotic drinks. A few years back, Indian and foreign firms struggled to push packaged foods. But these days it's much easier to break into the market thanks to a younger population, higher incomes, new technologies and a growing middle class, estimated at some 50 million households.

"We have a young population with higher disposable incomes, living away from the large joint families and seeking greater convenience," said Hemant Kalbag, head of consultancy AT Kearney's retail practice. He estimates processed foods will grow at about 15 percent annually over the next four years. Large Indian firms are also muscling their way to the table.

Top cigarette maker ITC Ltd is adding to its range of instant ethnic foods and pasta, cookies and salty snacks. "Increasingly, Indian consumption patterns are mirroring global trends such as a preference for protein and for functional foods," said Pankaj Gupta, head of consumer and retail practice at consultancy Tata Strategic Management Group. "So companies can choose to go after the mass market or focus on niche segments which are also viable now," he said.

McDelivery

Foreign fast-food chains McDonald's and Domino's Pizza are addding more vegetarian and ethnic options. McDonald's, which is doubling its outlets in India to nearly 300 this year, does not sell beef products in keeping with the sensitivity of the dominant Hindu population.

Half its menu is vegetarian, with best-sellers like the McAloo Tikki (potato patty) Burger. It also has more sit-down eateries for large Indian families and home delivery, a first.

Domino's also has a dine-in option in several locations. Nimble Indian firms are imitating these fast food giants to attract youngsters, who make up about half of India's billion-plus population. Jumbo King, a Mumbai-based eatery is mass producing "vada pav", a spiced potato patty in a bun, using modified cookie dough machines and temperature-controlled stoves, a far cry from the hand-assembled snack sold by street hawkers.

"We wanted to give the vada pav a modern look," said Dheeraj Gupta, head of Jumbo King, which also has a whole-wheat option. "Our inspiration is clearly McDonald's and Subway," he said. Despite the opportunity, challenges remain: cumbersome tax rules give smaller local firms an edge. An inadequate cold chain and storage facilities result in wastage of nearly 40 percent of all fresh produce.

"We need stronger legislation on food safety, more robust supply chains and improvements in the cold chain," Kalbag said. The government as well as modern retailers are addressing these issues, with new laws on packaging and labelling, as well as greater investments in the supply chain.

Changing lifestyles and rising prosperity are also driving the move to processed foods and Indian taste buds are becoming more adventurous. So products such as Unilever's 'Make a Meal' in a range of flavours including one with a Chinese bent are filling supermarket trolleys alongside traditional favourites such as packages of tender coconut water and spiced buttermilk.

"The market's constantly evolving and creating demand for products that you never thought would have had a chance," said Kellogg's Dutta.