With exports languishing, higher oil prices, a weakening trend in invisibles and continued supply-side constraints, India’s current account deficit is expected to remain at around 5% of GDP in FY14, says Nomura in its Asia Chart Alert
In Q1 2013, India’s trade deficit is set to improve to $47 billion from $59 billion in Q4 2012. This improvement is, however, largely seasonal, as exports improve during the final month of the financial year. On a seasonally adjusted basis, the trade deficit is estimated at $53 billion in Q1 versus $57 billion in Q4, suggesting that around 70% of the expected improvement is due to seasonal factors, according to Nomura in its Asia Chart Alert.
Nomura believes that the true test of whether the trade deficit is sustainably improving will be the trend beyond March 2013, rather than in the month of March. With exports languishing, higher oil prices, a weakening trend in invisibles and continued supply-side constraints, Nomura remains sceptical and expects the current account deficit to remain at around 5% of gross domestic product in FY14 (year ending March 2014) from an estimated 5.2% in FY13.
The trade balance is expected to improve in March (data due 10-15 April 2013). This is shown in the figure below:
According to the Commerce Minister, the trade deficit in FY13 may be around $192-196 billion. This implies a deficit of $10-14 billion in March 2-13, much smaller than the deficit of $15 billion in February 2013 and $20 billion in January 2013.
Nifty may drop further to reach a level of 5,505
US stocks fell on Wednesday, following lower-than-expected readings on the US non-manufacturing sector and poor private-sector jobs growth. Back home, both the Sensex and the Nifty opened lower, at 18,731 and 5,641, respectively. Yesterday, we mentioned that the Nifty has to make a higher high and stay above yesterday’s low or else, it may move to the level of 5,545. Today, the Nifty made a lower high and a lower low and almost reached the level of 5,545. From here we may see the index declining further and may reach a level of 5,505. The National Stock Exchange (NSE) saw a volume of 58.66 crore shares.
Throughout the morning session, the indices were in a range after the sharp opening decline. With the beginning of the noon session, the indices started falling rapidly.
At the close of the session, the indices crashed to hit a low of 18,474 and 5,566. This low on the Sensex is the lowest since 26 November 2012, while that on the Nifty is the lowest since 22 November 2012. Both the Sensex and the Nifty closed near the day’s low and which is also below the 200-day moving average, which many investors see as a level that separates the bull from the bear market. Sensex closed lower, at 18,510 (down 292 points; 1.55%) while Nifty closed lower at 5,575 (down 98 points; 1.73%).
Among the broader indices, the BSE Mid-cap index dropped 1.84% and the BSE Small-cap index fell 2.08%.
All the sectoral indices closed in the negative. The top losers were BSE Realty (down 3.39%); BSE IT (down 2.45%); BSE Teck (down 2.44%); BSE Consumer Durables (down 2.05%) and BSE Bankex (down 1.89%).
Six of the 30 stocks on the Sensex closed in the positive. The gainers were Dr Reddy's Lab (up 3.03%); Coal India (up 2.56%); HUL (up 1.91%); Maruti Suzuki (up 1.06%) and Mahindra & Mahindra (up 0.26%). The chief losers were Jindal Steel (down 4.32%); Tata Steel (down 3.97%); Sterlite Industries (down 3.09%); Infosys (down 2.74%) and Hero MotoCorp (down 2.67%).
The top two A Group gainers on the BSE were Dr Reddy's Lab (up 3.03%) and MMTC (up 2.60%).
The top two A Group losers on the BSE were Jain Irrigation (down 6.94%) and Jaiprakash Associates (down 6.45%).
The top two B Group gainers on the BSE were Kirloskar Brothers Investments (up 20%) and Indian Terrain (up 19.95%).
The top two B Group losers on the BSE were Ram Informatics (down 19.83%) and Oswal Spinning (down 15.17%).
Of the 50 stocks on the Nifty, seven ended in the green. The key gainers were Dr Reddy's Lab (up 3%); Coal India (up 2.70%); HUL (up 1.82%); Maruti Suzuki (up 1.27%) and Tata Motors (up 0.49%). The major losers were UltraTech Cement (down 6.45%); Jaiprakash Associates (down 6.37%); Jindal Steel (down 5.12%); HCL Technologies (down 4.49%) and Reliance Infrastructure (down 4.12%).
The big news of the day was the Bank of Japan announcement of additional easing measures at the first meeting under newly appointed Gov. Haruhiko Kuroda. The central bank pledged to achieve a 2% inflation target in about two years, while increasing Japanese government bond (JGB) holdings at an annual pace of ¥50 trillion ($530 billion), with JGB holdings to double in two years. The bank will terminate its asset-purchase programme, with asset purchases to be absorbed with JGB purchases, under its new easing scheme called ’Quantitative and Qualitative Monetary Easing.’ Nikkei, which was down by 286 points at one time during the day, rose 558 points intraday and closed 272 points or 2.2% higher. Seoul Composite was the worst performer today apart from the Indian markets, down 1.20%.
Economic news continues to be negative. The euro-zone service sector contracted at its fastest pace since late last year in March, the Markit purchasing managers' index for the sector confirmed Thursday. Services PMI fell to 46.4 from 47.9 in February and came in slightly below a preliminary reading of 46.5. A figure below 50 indicates a contraction in activity. The composite PMI, which combines services and manufacturing data, came in at 46.5, matching a preliminary estimate and down from 47.9 in February for the weakest reading since November.
However, the HSBC Emerging Market Index survey, which collects data from purchasing managers at about 7,500 firms in 16 emerging markets, showed on Thursday that strong manufacturing output from China helped boost growth in neighboring south-east Asian economies including Korea, Taiwan, Indonesia and Vietnam. HSBC's composite manufacturing and services PMI for the world's second-largest economy increased in March to 53.7 from 51.4 the previous month. That helped lift the HSBC EMI index to 52.6, from 52.4 the previous month.
The European indices were mostly in the green while the US Futures were trading higher.
Mahindra Lifespace has allotted 5,000 secured, listed, rated, redeemable 10.78% yield to maturity (YTM), non-convertible debentures (NCDs) with a face value of Rs.10 lakh each for cash at par, aggregating Rs.500 crore vide series I, series II, and series III on private placement basis. The stock rose 0.24% to close at Rs392.90 on the NSE.
Dr Reddy's Laboratories has announced that it has launched Zoledronic Acid Injection in the strength of 5mg/100 mL, a therapeutic equivalent generic version of Reclast (Zoledronic Acid) Injection 5mg/100 ml in the US market, following the approval by the United States Food & Drug Administration of the company's ANDA for the product. As per IMS Health data, the Reclast brand had total US sales of around $355 million for the most recent twelve months ended February 2013. The stock rose 3% to close at Rs1,893 on the NSE.
The arbitrator will now be selected from a centre-wise common pool through an automated process and all parties will be sent a system-generated text message or email
Market regulator Securities and Exchange Board of India (SEBI), starting 1st April, has automated the process of selecting an arbitrator from a centre-wise common pool.
SEBI had asked all stock exchanges with nation-wide trading terminals to create a common pool of arbitrators according to the centre instead of having exchange-wise pools.
”The selection of arbitrators by stock exchanges as done currently is now replaced by an 'automatic process'. In order to bring more transparency and fairness, the 'automatic process' entails a randomized, computer-generated selection of arbitrator, from the list of arbitrators in the 'common pool'. The 'automatic process' sends a system generated SMS or email to all entities involved in the particular case," SEBI said in a release.
Currently, arbitration facilities at stock exchanges with nation-wide trading terminals are available at eight centres, in Ahmedabad, Chennai, Delhi, Hyderabad, Indore, Kanpur, Kolkata and Mumbai.
Arbitration process generally refers to resolving disputes through an out-of-court settlement. Last year, SEBI exempted investors seeking arbitration reference for claims of up to Rs10 lakh from deposits with the stock exchanges and said expenses on such applications would be borne by the bourses.
Already, investors complain that stock exchanges routinely hustle investors into filing arbitration, instead of resolving through mediation and conciliation. Investors are always at a disadvantage in arbitration proceedings, because they struggle to understand the rules, while the broker is easily able to handle arbitration, is usually present with qualified staff and lawyers, and maintains a friendly equation with stock exchange officials and often the arbitrators themselves.
Moneylife has repeatedly pointed out that it is such unthinking policies that are largely responsible for India's investor population shrinking from around 20 million when India started its economic liberalisation programme to a mere 8 million today (Swarup Committee report).
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