Belying hopes raised by a higher-than-expected GDP growth in the July-September period and expectations of manufacturing growth as PMI figures rose to the highest since March, output of eight core sector industries contracted by 0.6 per cent in October due to poor showing by coal, oil and gas sectors.The decline in output of eight core sector industries — coal, crude oil, natural gas, refinery products, fertilisers, steel, cement, electricity — was especially disappointing as it followed a robust 8 per cent growth in September.According to the data released by the government on Monday (2 December), the output of eight infrastructure industries in April-October was a mere 2.6 per cent against 6.8 per cent in the same period of the last fiscal.The eight core industries have a combined weight of about 38 per cent in the Index for Industrial Production (IIP).The October IIP numbers will be released in the second week of December. Commenting on the data, Crisil's Chief Economist D K Joshi said the performance of the core sector is likely to remain subdued in the coming months as well.Natural gas output contracted by 13.6 per cent in October year-on-year.Coal production declined by 3.9 per cent.Crude oil output was also poor with 0.8 per cent fall in the month under review.Petroleum refinery production declined by 4.8 per cent.Read Also: Manufacturing Returns To Growth In NovAmong those which put up good performance, fertiliser output registered a growth of 4.1 per cent and steel production grew at 3.5 per cent.Cement and power generation sectors posted marginal growth of over 1 per cent each in the month under review. PMI GrowsIndian manufacturing returned to growth last month as a strong rise in orders pushed factories to step up production, a business survey showed on Monday, suggesting a slow economic recovery is on its way.After sluggish growth of the first quarter, the economy had grown at a higher-than-expected 4.8 per cent in the three months through September, helped by an uptick in farm, manufacturing, construction and services sectors.An expansion in manufacturing can only boost optimism after data on Friday showed Asia's third-largest economy grew at a higher-than-expected rate in the three months through September.The HSBC Manufacturing PMI, compiled by Markit, rose to 51.3 in November from October's 49.6.The PMI index is the highest since March and marks its first time above the watershed level of 50 that divides growth from contraction in four months."Manufacturing activity picked up, led by a rise in new domestic orders, which helped pull up output growth," said Leif Eskesen, chief economist for India at survey sponsor HSBC.
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The rupee is trading higher at 62.31/33 from its previous close of 62.44/45 on marginally stronger-than-expected September quarter GDP numbers and stronger Asian FX.Asian currencies are mostly trading firmer.An expansion in farm output and some infrastructure helped India's economy recover slightly in the September quarter, but growth still hovered close to decade lows, tempering hopes of a sustained rebound ahead of elections due next year.RBI's special FX swap windows, which have garnered over $25 billion, closed on November 30, which will remove a key support for the rupee.Foreign funds were buyers of $119.22 million in Indian equities on 29 November, provisional data showed.(Reuters)
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The rupee is higher at 62.30/31 versus Thursday's (28 November) close of 62.41/42 on weakness in the global dollar. India to release September-quarter GDP data with the economy expected to show marginal pick-up in growth.Pair headed for a second week of losses, down 0.9 per cent; however, on a monthly basis, it is up 1.3 per cent. Month-end oil-related dollar demand will keep the pair bid.The central bank's special FX swap windows, which have garnered over $25 billion, will close in end-November, leading to some jitters on flows.The pair may be in a 62-62.50 range during the session. Foreign funds were buyers of $16.5 million in Indian equities on 28 November, provisional data showed.Asian currencies are mostly trading firmer.The euro rose to a five-year high against the yen on 29 November, as the Japanese currency faced heavy pressure on expectations it will be used as the funding currency of choice for carry trades given Japan's commitment to easy monetary policy.(Reuters)
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Government bonds higher on 29 November tracking early gains in the rupee. However, dealers expect some selling ahead of the Rs 14,000 crore bond sale.The yield on the new 10-year bond is flat at 8.72 per cent, after falling to 8.70 per cent. The existing 10-year benchmark bond yield is 2 bps lower at 8.99 per cent.Bond sentiment took a minor hit after Economic Affairs Secretary Arvind Mayaram said the government is in no rush to have India included in global bond indexes.India to release September-quarter GDP data at 1200 GMT. Economic growth probably picked up slightly in the quarter, but weak investment levels have tempered hopes that strong rural demand and a rebound in exports will drive a sustained recovery ahead of elections due early next year.(Reuters)
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The rupee fell in early trades with the unit at 62.31/32 per dollar versus Wednesday's close of 62.14/15. Month-end oil-related dollar demand will keep the UD/INR pair bid.USD/INR bulls need to defend 61.9 levels.RBI's special FX swap windows, which have garnered over $25 billion, will close in end-November, leading to some jitters on flows.The pair may be in the 62.10-62.50 range for the session.Foreign funds were sellers of $7.8 million in Indian equities on 27 November, provisional data showed.Asian currencies are trading mostly weaker.The yen languished at fresh lows against the euro and dollar early in Asia on Thursday on track for one of its worst monthly performance this year, while sterling climbed on more evidence of a stronger economic recovery at home.(Reuters)
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Pandurang Ghorpade has the weather to thank as he hands out celebratory sweets to neighbours eager for a ride on his prized new possession, a gleaming red tractor bought in anticipation of a bumper harvest."Unlike last year, there wasn't any shortage of water this year," Ghorpade said. "My earnings are likely to rise from sugarcane and ginger crops that have grown vigorously."The best monsoon in six years means similar scenes to the one in Shirdhon southeast of Mumbai are being played out across much of rural India, home to two-thirds of the 1.2 billion population. It also means sales of tractors and motorbikes are surging, raising hopes this pick up in activity will spread and feed a wider revival in an economy that has slumped to its worst growth in a decade.But the benefits may be fleeting because rural growth alone will not be enough to pull India's economy out of the doldrums longer term. The countryside produces only a third of India's gross domestic product and in the urban areas that drive growth, business in showrooms and shopping malls is still shrinking."As we sit in mid-November, we have not seen signs to suggest that there is a significant increase in output," Tushar Poddar, chief India economist at Goldman Sachs, said in a conference call last week.The economy is battling to recover from a significant slump. Growth slid in the fiscal year to March 2013 to just 5 per cent, the lowest pace since 2002/03, as a stalled reform agenda prompted investors to flee. A vulnerable current account swelled to a record deficit, knocking the rupee to a record low.Since then, rural demand and other encouraging signs - a revival in exports and a narrowing of the current account deficit - have given India's policymakers reason to think the worst of the two-year slump may be over.Tractor sales in India rose nearly 29 per cent in October from a year earlier, reaching a record high of 94,227 units. Sales of motorbikes, bought when farmers graduate from bicycles, jumped 18 per cent in the same month.Consumer goods companies like Hindustan Unilever and natural health care firm Dabur are trying to boost rural sales. Helped by the boon, Dabur's net profit jumped by 23 per cent in the September quarter from a year earlier."We are seeing demand from rural India outpacing the urban markets," Dabur said in its earnings release late last month.Finance Minister P. Chidambaram also sees the rural rebound and exports revival as encouraging, suggesting they would help the economy recover in the second half of the fiscal year ending on 31 March.But by the government's own estimates, expansion for the full fiscal year could be as low as the 5 per cent recorded last year, a far cry from the 8-9 per cent growth rates the government of Prime Minister Manmohan Singh has aspired to in recent years.Some economists, such as Poddar, argue even 5 per cent may be ambitious. High inflation is impinging on urban demand and businesses are holding back investment until they can see the shape of a new Indian government due to be elected by May 2014.The central bank under new governor Raghuram Rajan has already raised its policy interest rates twice to counter inflation, adding to borrowing costs.The competing pressures on the economy are expected to be reflected in a report on Friday on India's GDP for July to September. Although annual growth is seen rising to 4.6 per cent, a little better than the previous quarter, the data will likely show the economy is not firing in all areas.That is familiar to India's largest utility vehicle maker Mahindra and Mahindra.While the company's tractor sales jumped 21 per cent as the monsoon rains fell between July and September, sales of passenger vehicles including SUVs, mostly bought in the cities, slumped 25 per cent.Bright SpotsExports have gained sharply from the competitive boost from India's weak currency, which is now above its record low but still near historically weak levels.Overseas sales generate nearly a quarter of GDP and merchandise exports have been posting double-digit growth since July, the best run in nearly two years.Textiles, in particular, have made the most of a weak rupee. Exports from the sector have grown an annual 12 per cent this year compared with a 9 per cent fall last year. Most garment exporters are either running at full capacity or have outsourced manufacturing jobs to meet rising overseas demand.But the good times have so far not encouraged other industries to make the kinds of investment in adding production capacity that would help kickstart wider economic growth - partly because domestic demand remains depressed.India's iron and steel industry, for example, is relying on its idle capacity to sustain double-digit growth in overseas sales that it recorded between April and September.Seshagiri Rao, joint managing director of JSW Steel, blamed subdued domestic demand from major steel consuming industries such as real estate, infrastructure and autos."This will have to come back again only then we will see steel consumption growth in India," he said.Weak investment lies at the heart of India's economic malaise. Capital investments crawled at a decade-low of 1.7 per cent last fiscal year. Goldman Sachs expects investment growth to slow further to 1.2 per cent this fiscal year, dragging down overall economic growth to 4.3 per cent.To lift the sagging investment rate, the government has expedited clearances for big ticket infrastructure projects. But the impact on the ground has yet to be felt."Do I see a significant improvement in (investment) activity over the next three to four months? I would say we have not seen evidence to suggest that," Poddar said. (Reuters)
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The rupee opened higher on corporate dollar inflows, with the pair at 62.28/29 versus its previous close of 62.50/51. Dealers speculate inflows relate to Mylan Inc's purchase of a unit of Strides Arcolab Ltd. The deal was valued at around $1.6 billion when announced in February."The deal-related flow has been hitting the market for the past few days," says dealer.Month-end oil-related dollar demand will keep the pair bid.Foreign funds were sellers of $54.27 million in Indian equities on 27 November, provisional data showed.Asian currencies trading lower. SeeThe dollar wallowed at one-week lows against a basket of major currencies on Wednesday, undermined by lower Treasury yields after a batch of data failed to sway markets one way or the other over when the Federal Reserve will scale back stimulus.(Reuters)
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India's economic growth likely picked up slightly in the July-September quarter as improved manufacturing activity steered it from a four-year low in the previous three months, a Reuters poll showed on 26 November.Any improvement would be welcome news for the government as a string of opinion polls forecast a poor performance for the ruling party in general elections which must be held by next May.Economic growth virtually halved in two years to 5 per cent in the last fiscal year - the lowest level in a decade - and most economists surveyed by Reuters last month expect 2013/14 to be worse.The consensus of 40 economists showed gross domestic product expanded 4.6 per cent year-on-year in the last quarter, better than the 4.4 per cent in the previous three months, which was the lowest since the global financial crisis."It is only a marginal improvement with much of the support from a slight recovery in manufacturing sector," said Upasna Bhardwaj, an economist at ING Vysya Bank.A moderate recovery in Indian factories and exports were probably the main drivers for an increase in overall growth in the quarter through September. Annual industrial output picked up 2 per cent in September, driven by an uptick in export and domestic orders.Stronger global demand for India's exports also led to an increase in production, with exports growing 11.15 per cent annually in September.Also, a good monsoon should have boosted rural income and perked up flagging consumer demand.However, a dearth of investment lies at the heart of India's economic malaise.Little improvement is expected ahead of the general election, with investors doubting whether Prime Minister Manmohan Singh's minority government can force through any bold actions between now and then.Radhika Rao, an economist at DBS in Singapore, said euphoria surrounding Singh's earlier reform plans had eased after they failed to materialise."It is not surprising that the private sector keeps expansion plans on ice," Rao added.With wholesale price inflation moving back above the Reserve Bank of India's perceived comfort level of 5 per cent and consumer inflation quickening to more than 10 per cent, there is little expectation the central bank will act to ease policy boost growth.In face, new RBI chief Raghuram Rajan has hiked interest rates twice in as many months since September, tackling rising prices head on.(Reuters)
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An Indian court on Monday found a dentist couple guilty of murdering their 14-year-old daughter and a servant five years ago, in a dramatic finale to a case that transfixed the country and tapped unease on both sides of the rich-poor divide.Aarushi Talwar was found with her throat slit at the family home in Noida, an affluent town of new shopping malls and offices near Delhi, in 2008. A day later, the body of the family servant, Hemraj, was discovered.Rajesh and Nupur Talwar were convicted in a local court in Ghaziabad, near Noida, and remanded in custody ahead of sentencing on Tuesday, 26 November.Naresh Yadav, a lawyer present in court, told reporters waiting outside that the couple and members of their family broke down in tears when the verdict was read out.Early in the investigation, police alleged Rajesh had murdered his daughter and servant in a rage after finding them in a compromising situation - the kind of crime more often associated with rural, conservative parts of India where "honour killings" are not uncommon.Both parents were later charged, but the Talwars always denied the murder and blamed sensational media coverage for demonising them and damaging their defence.They also described a Kafkaesque trail of botched police operations, arrests, "truth serum" tests and contradictory rulings by different investigative bodies.Much has been made in the media of the fact that the Central Bureau of Investigation (CBI), India's federal detective agency, relied on circumstantial evidence to pursue the Talwars.R.K. Saini, representing the CBI, defended the prosecution."There were so many circumstances that proved that no one could have committed the murder other than the two accused," he said. "The court has convicted them after going through the chain of circumstantial evidence."Rebecca John, one of the lawyers representing the Talwars, said they would appeal the ruling in a higher court."We are deeply disappointed, hurt and anguished for being convicted for a crime that we have not committed," the Talwars said in a statement. "We refuse to feel defeated and will continue to fight for justice."Horrific crime stories are common in India and many involve caste or class.But the Aarushi case, in which police named Hemraj as the murder suspect before his body was found, resonated with the rapidly expanding number of well-off families who fret that their wealth makes them vulnerable to violence.Dipankar Gupta, a sociologist at Shiv Nadar University in Uttar Pradesh - the state where Noida is located - said the case highlighted how domestic staff were frequently abused by employers in India."But at least now there is some progress and people are talking about it," he said.Newspapers this month reported the case of a wife of a member of parliament who allegedly tortured a maid to death at her home in Delhi.Security footage last week of a machete attack on a bank employee withdrawing cash from an ATM in Bangalore to pay for her child's birthday party was played repeatedly on news channels. She was partly paralysed and the attacker is at large. (Reuters)
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Compiled by Joe C. MathewGraphic by Prashant Chaudhary(This story was published in BW | Businessworld Issue Dated 16-12-2013)
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