Market News and Indices-VRK100-10Oct2011

Market News and Indices

Rama Krishna Vadlamudi, HYDERABAD   10 October 2011
www.ramakrishnavadlamudi.blogspot.com

7 Oct 2011:

Moody’s Investors Service has cut ratings (senior debt and deposit ratings) of Royal Bank of Scotland, Lloyds TSB Bank, Santander UK and nine other British financial entities. Moody’s thinks that the chances of the UK Government extending support to them are less.

Deepak Parekh, Chairman, HDFC, has said that housing finance companies should be allowed to levy pre-payment charges from borrowers as their lenders are charging them pre-payment charges. Last month, RBI has advised banks not to charge pre-payment charges in floating rate loans.

In his new book “Eclipse: Living in the Shadow of China’s Economic Dominance,” Professor Arvind Subramanian argued that Chinese econmy will surpass the US economy by 2030 and China’s renminbi will be premier reserve currency by the end of the decade.

6 Oct 2011:

Moody’s Investor Service downgraded Italy’s credit rating by three notches to A2 from Aa2. (on 19 September 2011, S & P downgraded Italy’s rating by one notch.) Italy is eurozone’s third largest economy. A combination of low growth and high government debt at around 120 per cent of GDP are causing concerns about Italy’s economy.

4 Oct 2011:

Moody’s Investor Services has said India’s fiscal deficit will be 5 per cent of GDP in 2011-12 rather than 4.6 per cent projected as per Union Budget 2011-12. the credit rating agency’s views are as follows:

--- Global slowdown will cause deceleration in exports

--- Tax collections will suffer due to lower economic activity in second half

--- High interest rates will curtail corporate profits

--- High global oil prices and rupee depreciation will increase oil subsidy

--- Interest payments of the Government may go up

--- The Government may not reach its divestment target of Rs 40,000 crore

--- Increased market borrowings of Rs 53,000 crore in second half will push up government debt further

The SEBI has disposed of the case against HDFC Mutual Fund by a consent order after the mutual fund paid a sum of Rs 55 crore to SEBI. SEBI alleged that the mutual fund failed to contain the act of front running by the two of its employees.

The Planning Commission has clarified that the poverty line of Rs 32/day (urban areas) and Rs 26/day (rural areas) per capita expenditure are not caps – saying that entitlements will be delinked from the poverty line.

Fitch Ratings has revised India’s GDP growth projections to 7.5 per cent from 7.7 per cent for 2011-12 on the back of deteriorating global growth prospects.

India’s exports soared by 54 per cent to $ 134.5 billion during April-August 2011, while imports during the same period jumped by 40 per cent to $ 189.4 billion. The trade deficit widened to $ 55 billon during April-August 2011 from $ 47.7 billion in Apr-Aug 2010. The main drivers of export growth this fiscal are readymade garments, electronics, petroleum products, engineering, gems and jewellery; while that of imports are machinery, petroleum products, chemicals, electronics, coal, gold and silver.

3 Oct 2011

India signed Free Trade Agreement (FTA) with Asean. So far, Singapore, Indonesia, Malaysia, Vietnam, Brunei, Laos, Thailand and Myanmar have ratified the treaty. And other countries are yet to ratify the treaty.

27 Sep 2011

Reserve Bank of India has allowed Indian companies in ‘infrastructure’ sector to avail External Commercial Borrowings in Renminbi (Chinese Yuan) under approval route, subject to an annual ceiling of USD 1 billion.

Till now, RBI allowed ECBs in four currencies, dollar, euro, pound sterling and yen.

23 Sep 2011:

India’s planning commission has said that families spending Rs 32 per day in urban areas and Rs 26 per day in rural areas will not be entitled to benefits provided to Below Poverty Line (BPL) families.

SEBI’s new takeover norms have been notified by SEBI. The highlights are:

--- Open offer trigger hiked from 15 per cent to 25 per cent

--- Offer size increased from 20 per cent to 25 per cent

--- Auto-delisting not allowed

--- Voluntary open offer subject to conditions

--- Non-compete fee removed

21 Sep 2011:

S & P has downgraded Italy’s credit rating by one notch.

Important Data:

Indices	Closing		Commodities	Closing
	7-Oct-11			7-Oct-11
Dow Jones	11 103		Nymex Crude ($/barrel)	83
Nasdaq	2 479		Brent Crude ($/barrel)	106
S&P 500	1 155		Gold ($/ounce)	1 651
FTSE 100	5 303		Silver ($/ounce)	32
Dax	5 676
Nikkei 225	8 606		Currencies
Hang Seng	17 707		GBP-USD	1.56
Shanghai composite	2 359		EUR-USD	1.34
Sensex 30	16 233		USD-JPY	76.73
Nifty 50	4 888		USD-RMB	6.38
US dollar index	78.7		USD-INR	49.16