Cheery Quarter Ahead

Cheery Quarter Ahead: RBI

Our Banking Bureau / Mumbai July 25, 2006



The Reserve Bank of India’s (RBI) latest industry outlook survey, released today as a part of the central bank’s first-quarter review of macroeconomic and monetary developments, ahead of its monetary policy review, suggested a further improvement in the overall business environment, including profit margins, during July-September 2006.

Painting a bullish picture of the economy, the RBI said its survey respondents expected the financial situation to show an improvement during July-September, amid corporates increasingly availing of working capital finance.

The central bank said industry production maintained its momentum during April-May 2006, with a growth figure of 9.8 per cent. The manufacturing sector, with double-digit growth of 10.9 per cent, remained the key driver of industrial activity, contributing almost 92.5 per cent of growth in the industry.

The buoyancy in manufacturing and services sectors, and the positive business confidence suggested that the recent growth momentum in the Indian economy was likely to be maintained in 2006-07. The RBI has projected a GDP growth rate of 7.5-8.0 per cent for 2006-07.

The buoyancy is reflected in the growth in bank credit to the commercial sector. The growth of 32.9 per cent in credit during 2006-07 (up to July 7, 2006) was on a base as high as 31 per cent a year earlier.

On inflation, the RBI said pre-emptive monetary and fiscal measures had helped in containing inflationary expectations in the April-June quarter.

“Inflation movements continued to be driven by supply shocks in the first quarter of 2006-07,” it said.


Ahmed

wasnt this article in the Business Standard today?

ya its from business standard.
I want to share this thats why placed here. I know sentiment is bearish so searching good news. If i found more i will send here.

Ahmed

Ahmed,
Thanks ... we need all the good news that we can get. Keep mining!

Thanks kuldeep,


RBI Rate Hike: Uncertainties cleared:Yes Bk MD

Our Banking Bureau / Mumbai July 25, 2006

Commenting on the 25 basis points hike in repo and reverse repo rates by the Reserve Bank in the Credit Policy Review today, Rana Kapoor, MD & CEO, YES Bank, said: "In view of the continued demand pressures building up in the economy, we fully appreciate Governor Reddy's decision to raise the reverse repo rate by 25 bps to 6%. While the RBI has aptly acknowledged that in Q1 FY07, inflation has primarily been driven up by supply-side factors, it has also cautioned against high credit and money supply growth exerting upward
pressure on prices, especially when impacted by oil shocks."

"As per the governor's assessment of the economy, another year of impressive GDP growth is on the anvil. In particular, investment activity remains strong in an environment of rising capital expenditures of corporates, with investment and capital formation remaining high. This is reflected in the impressive growth in bank credit, which is currently at 32.0 per cent y-o-y, despite last year's high base. In this context, the governor continues to reinforce the need to focus on credit quality in order to maintain financial stability," Kapoor said.

"Global cues also continue to point towards greater tightening in G3 economies. We believe that the market might just be reading too much softness into Chairman Bernanke's statement, presented last week. While the US might be approaching the end of its tightening campaign, nowhere in Bernanke's Testimony has he indicated a pause in the near-term. He has been
emphasising that further rate decisions would be essentially data-dependent. There is a large possibility that data might emerge stronger than expected, leading the Fed to act accordingly. Evidence from the data so far is very clear: Q2 is estimated to be one of the highest inflation quarters since 1991, whilst GDP growth remains firm," Kapoor said.

"To conclude, with the announcement of a rate hike, the RBI Governor has done well in removing uncertainty from the markets, whilst at the same time curtailing inflationary expectations and ensuring a steady economic pathway to sustained growth," Kapoor said.

Ahmed

RBI Rate Hike:No impact on growth:Rothschild MD

Our Banking Bureau / Mumbai July 25, 2006



Commenting on the 25 basis points hike in repo and reverse repo rates by the Reserve Bank in the Credit Policy Review today, Sanjay Bhandarkar, MD & head of investment banking, Rothschild India, said: The Reserve Bank of India's monetary tightening today is a pre-emptive measure aimed at checking excessive growth in credit and rising prices. The economy is growing at a very healthy pace for a fourth straight year and the demand for credit is clearly very robust, across sectors. While India's economic fundamentals are strong in terms of rising productivity and strong demand from home and abroad for goods and services, there is a need to check excessive enthusiasm to borrow, spend or invest. Unfortunately the central bank's mandate is to temper the enthusiasm at critical times. A build up of excess capacity and over reliance on debt will only come to haunt the economy at a later stage.

The tightening will also help check the demand-pull part of the current price spiral. To the extent a large part of domestic inflation is being fed by the global spiral in commodity prices--and especially of crude prices-monetary policy can't do much, but some moderation in the growth impulses will certainly slow down the India component of the rising global
demand for such commodities. Thus, in a roundabout way, this could lead to much more stable growth impulses in the medium term. In fact, the Chinese authorities are also doing their bit to contain the domestic growth rate, Bhandarkar said.

Growth, however, is unlikely to be impacted at this point in a significant way. It is not like the economy will shudder and sputter, though critics will quote the dovish stance of the US Fed to yell wolf just because of a 25 basis point hike. Domestic growth in the past two years is being driven by investment spending, and is likely to remain so in the near term. This
component is less sensitive to interest rate trends than say consumer spending. So the Fed's stance is justified in light of their economic circumstance, as a hike is justified in the Indian case, Bhandarkar said.

ahmed

Ahmed,
US Markets ended higher on strong earnings & rising consumer confidence. Crude prices retreated on renewed efforts at Mid-East cease fire. Nikkei has opened higher. Emerging markets closed firm. NSE F&O OI was up Rs. 711 crores. Bullish day ahead?
Cheers
Kuldeep

Japanese investors to stay invested in India: Daiwa

Our Markets Bureau / Mumbai July 26, 2006



Correction or not, the Japanese are here to stay and Indian companies can take advantage of it, according to representatives of Daiwa Securities SMBC - one of Japan's biggest investment bankers.

The firm, which officially inaugurated its first Indian office at Mumbai today, has based its business plan on continued strong inflows of capital from Japan to India despite the recent slowdown and hopes to open a new way for Indian companies looking to raise capital.

"Japan has a very, very big economy but the growth is slow. In India, it is the opposite - there are companies which are growing very fast, the population is young, the economy itself is growing at 7-8%, the prospects are good. Unlike many other groups of investors, Japanese investors are very long-term ones with horizons stretching to even decades. By establishing our presence here directly, we hope we will be able to meet both group's requirements effectively,” Kenjiro Noda, deputy president of Daiwa Securities.

While companies have started placing some of their equity with institutional investors in Japan through individual deals, companies are yet to start looking at the Yen-economy as a primary base for raising capital unlike Chinese companies that have raised billions of dollars over the last year. Japanese investors, on the other hand, have till now been forced
to buy Indian shares indirectly by subscribing to American or Global Depository Receipts (ADRs or GDRs) issued by Indian companies in Europe or America. "There is a strong investment demand from Japanese investors where the economy is growing at around 2 to 3 per cent and compared to India, it is very slow. The population there is aging faster than here. As a result, there is strong interest among Japanese investors to invest in India," Noda pointed out. "For Indian companies, an exposure to the the Yen would also bring diversification of financial resources for Indian companies, besides the price advantages of raising money from Japan," he added.

Dow gains 119pts, Infy up 3%

Our Web Bureau / Mumbai July 29, 2006



Both the major Wall Street indices finished with sharp gains on Friday as investors expect better Q2 numbers based on inflation numbers released by the commerce department.

While the Dow added 119 points to 11,220, the Nasdaq Composite Index gained 40 points to 2094.

Indian ADRs, too, largely finished with gains. Infosys zoomed over 3% to $41.61. Satyam, Wipro, WNS, HDFC Bank and ICICI Bank also closed with gains.


From Business Standard

Fitch Upgrading India Rating To Investment Grade Would Be A Positive Sign To Markets And Already India Is One Country In Asia Which Got Positive Fiis Flow For The Month Of July ( Exclude Japan) And After Upgrade More Flows Can Come In.