Market News For Week Ended 09Sep2011-VRK100

Market News For The Week Ended 09Sep2011

International:

--- The US President , Barack Obama, has announced a $447-billion jobs package. It has to be later approved by the US Congress.

--- The total number of jobs created in the US in August was zero. The US businesses are adversely impacted by lack of demand.

--- Swiss central bank has pegged its national currency to Euro. It said it would not allow the Swiss Franc to go below 1.20 against the Euro.

Indian Industry

--- Bharti Airtel has got licenses to operate 2G and 3G mobile services in Rwanda

--- Car sales have fallen in August for the second consecutive month, but, sales of commercial vehicles and two-wheelers have gone up substantially

--- Tata Motors’ CEO Carl-Peter Forster has resigned

--- ICICI Bank will recruit 6,000 people during 2011-12, said its CEO Chanda Kochhar

--- Reserve Bank of India has penalized Credit Agricole and Karnataka Bank to the tune of Rs 10 lakh and Rs 5 lakh respectively for violation of derivatives norms

--- Dr D Subbarao, Governor of Reserve Bank of India, has said that there is a need to bring down Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR) in a gradual manner so that banks will have more funds to lend. But he has not given any time frame for their reduction.

Indian Stock Indices

--- Heavy last-minute selling pushed down Sensex on 09 September 2011 with the benchmark index ending at 16,867 for the day

India’s Macro Picture

--- India had shown resilience during the 2007/2008 global financial crisis and as such it is expected that the chances of India proving its mettle once again are better under the current uncertain global environment. India’s strengths include high savings and investment ratios, young population boosting domestic consumption, strong balance sheets of Indian corporates and rising fortunes from export-oriented industries. Good monsoon and NREGS are expected to boost rural incomes. However, the challenges for the Indian economy are stubborn inflation, rising interest rates stunting growth and moderation in exports. Everybody is expecting that interest rate cycle will peak in the next few months. This optimism is reflected partly in the Sensex raising by more than 1,000 points in the past two weeks. However, Sensex performance is not a barometer for the economy.

--- Gross Direct Tax Collections for April-August 2011 are at Rs 1.54 lakh crore, a growth of 25.9 per cent over the corresponding period of last year. However, net direct tax collections are at Rs 0.97 lakh crore, down 3.4 per cent, due to higher refunds.

--- India’s exports grew by 44 per cent to touch $24.3 billion and imports by 42 per cent to touch $38.4 billion in August. For April-August 2011, exports are at $134.5 billion and imports are at $189.4 billion.

--- It is reported in the media that mobile tariffs would go up soon. It is also reported that airfares too will go up as some airline companies are planning for fare hikes during the coming festival season. Car companies too are contemplating price hikes. If manufactures and service providers are increasing the prices/fares, will it not fuel manufacturing inflation?

--- In a first-page story, ET has reported that Indians’ love for gold is stunting India’s growth story

Indian Rupee weakens

--- The Indian rupee (INR) has touched 15-month low on 09Sep2011 quoting at 46.56 against the US dollar (USD) due to heavy demand from oil companies and last-minute fall in Sensex on Friday. Since 05 August 2011 when S&P downgraded US credit rating, INR has lost 4.1 per cent against the US dollar. When the US lost its AAA rating, it was expected that US dollar would weaken and INR would appreciate. The movement of the INR against USD is contrary to expectations. Surprisingly, US dollar index (USDX – an index indicating the strength/weakness of USD against six major currencies, like, Euro, pound sterling, etc.) has gained 3.5 per cent since 05 August 2011, the day when US lost its AAA rating.

Important Data

Indices	Closing		Commodities	Closing
	9-Sep-11			9-Sep-11
Dow Jones	10 992		Nymex Crude ($/barrel)	87
Nasdaq	2 468		Brent Crude ($/barrel)	113
S&P 500	1 154		Gold ($/ounce)	1 859
FTSE 100	5 215		Silver ($/ounce)	41
Dax	5 190
Nikkei 225	8 738		Currencies
Hang Seng	19 867		GBP-USD	1.59
Shanghai composite	2 498		EUR-USD	1.37
Sensex 30	16 867		USD-JPY	77.6
Nifty 50	5 059		USD-RMB	6.39
US dollar index	77.2		USD-INR	46.56

Compiled by: Rama Krishna Vadlamudi, Hyderabad

Read articles on financial markets at: www.ramakrishnavadlamudi.blogspot.com