Economy
India receives normal rainfall

Industry and farmers can heave a sigh of relief as India has received rainfall in line with the long period average (LPA) during the period 1 June to 27 July 2016. The month of July has witnessed an overall monsoon surplus up to 8% up to now. There is cheer for the East and Northeast as they received heavy rainfall in the last week. This has led to a reduction in the cumulative rainfall deficit to 12% from 17% one week back in this region. The India Meteorological Department (IMD) has continued with the prediction of ‘above normal’ monsoon at 106% of benchmark Long Term Average (LPA). 

 
In the week up to now, around 30% of the country’s area has got excess rainfall, 50% received normal’ rainfall, while 20% received deficient rainfall. Coming to individual states, major deficit was seen in Gujarat, which has received rainfall which is 50% lesser than long period average (LPA). Kerala, Himachal Pradesh, Odisha, Jharkhand and parts of the North-east also saw deficient rainfall. Deficient rainfall has been defined as rainfall which is 90% less than long term average. Nearly all the districts in Maharashtra have received either excess rains or normal rains. 
 
Good rainfall in the first two weeks of July aided a pick-up in kharif sowing, with the area sown up by 3.3% year-on-year (y-o-y) as on 22 July as against a 5.9% decline by 8 July. According to a Religare report, a record 9 million hectares were cultivated for kharif pulses by 22 July, which is significantly 39.4% higher as compared to the previous year. The area sown for cereal and oilseeds too rose marginally by 1.7% and 4.3% y-o-y respectively. 
 
Coming to water reservoirs, the Religare report further stated that the levels increased drastically to 38% of the total storage capacity as on 28 July from merely 15.2% in June-end. However, the overall storage position is less than the average storage of the last ten years during the corresponding period. Also, it is less than the corresponding period in the last year. The water levels in Central India are significantly higher as compared to the long term average. However, the water reservoir levels in both North and South India are far lesser as compared to their 10-year average.
 

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Bank strike success today: AIBEA
All India Bank Employees Association (AIBEA) has claimed that today’s bank strike against retrograde banking reform measures has been a total success. Banking services were affected throughout the country. The strike was called by United Forum of Bank Unions consisting of 9 trade unions of bank employees and bank officers. 
 
Some of the demands included not privatising banks, refraining from increasing private capital in public sector banks, recovery of bank loans through stringent measures and not consolidating and merging banks.  Other demands included not giving license to private hands to open small banks and payment banks and not to encourage Foreign Direct Investment (FDI) in banking sector. AIBEA cautioned that privatization will result in monopolizing of bank credit by big businesses which will deprive common people of accessing bank credit. They brought into attention the problem of bad loans amounting to more than Rs 13 lakh crore, majority of which are due from corporates, industrial and business enterprises.  They said that privatisation will not help solve this problem. “Privatisation may actually result in handing over our banks to some loan defaulter,” according to AIBEA.
 
There are 8,167 willful defaulters, who owe banks a cumulative amount of Rs. 76,685 crore.  AIBEA recommended that willful defaulters be dealt with more sternly and should take criminal action against these deliberate defaulters. The said, “But Govt. is showing velvet treatment to them by writing off their loans.  It is open loot of public savings.  This should be immediately stopped.” The recovery of these loans will enable banks to reduce service charges to customers, increase interest rate on deposits and extend loan to poor people at lesser rate of interest. Hence, recovery of these loans is essential especially in the current scenario where big corporate houses are being giving concessions, while students who cannot repay education loans if they don’t get jobs are being harassed. 
 
AIBEA said that the total deposits in the banks amounting to more than Rs116 lakh crore, included precious savings of the common people at large, which is social capital of the country. They further added that since public sector banks cater to priorities including agriculture, health and infrastructure, lending to these sectors will be affected if they are privatized. They called the banking reforms of the government ‘retrograde and anti-people’.
 
They concluded that the strike was to safeguard public sector banking and people’s savings. AIBEA and All India Bank Officers Association (AIBOA) are meeting in Hyderabad on 4 August and 5 August 2016 in order to chalk out further campaign and struggle programmes. 

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COMMENTS

Param

4 months ago

"Some of the demands included not privatising banks" - yet private banks also joined the strike. This is hilarious.
Interestingly, in Kolkata office of StanChart Securities was also closed, though it is not part of the StanChart bank.

Nifty, Sensex overbought, but no sign of weakness yet – Weekly closing report
We had mentioned in the last week’s closing report that Nifty, Sensex were in a bullish mode still. The major indices of the Indian stock markets were bullish on most trading days of the week and scaled some recent highs. The trends of the major indices in the course of the week are given in the table below:
 
 
Short covering, coupled with expectations of major economic legislation getting parliament's approval, buoyed the Indian equity markets on Monday. The benchmark indices closed the day's trade with substantial gains as healthy buying was witnessed in banking, automobile and consumer durables stocks. On the NSE, there were 1,001 advances, 469 declines and 63 unchanged. On the BSE, there were 1,724 advances, 990 declines and unchanged 197.
 
On Monday, initially, the benchmark indices opened on a flat-to-positive note, in sync with their Asian peers. Besides, the equity markets were pushed up by higher European indices, healthy quarterly earnings and above average monsoon rain falls. In addition, hopes on the passage of the GST (Goods and Services Tax) Bill during parliament's ongoing monsoon session supported prices. Further, investors' expected US Fed to maintain its key lending rates during the upcoming FOMC (Federal Open Market Committee) meet.  
 
On Tuesday, the benchmark indices opened on a flat-to-positive note in sync with their Asian peers. However, negative Japanese indices, lower crude oil prices and a weak rupee dented sentiments. Besides, investors were seen cautious ahead of Finance Minister Arun Jaitley's meeting with his counterparts from the states to discuss proposed amendments to the GST (Goods and Services Tax) Bill. The pan-India tax reform has been passed by the Lok Sabha but is stuck in the Rajya Sabha, where the government lacks a majority. It is widely expected that the bill will be listed for discussion in the Rajya Sabha following Jaitley's consultations with the Empowered Committee of State Finance Ministers. Nevertheless, a logjam in parliament has spooked investors over the prospects of the bill getting passed. In addition, volatility was flared by the start of the US Fed's FOMC (Federal Open Market Committee) meet. 
 
On Wednesday, profit booking, combined with caution ahead of derivatives expiry, and a key announcement over the US interest rates, made the Sensex oscillate in a 300-point range. Sensex had earlier receded during the mid-afternoon trade session after touching new intra-day highs for the last 11 months. The BSE market breadth was slightly tilted in favour of the bears -- with 1,341 declines and 1,317 advances. On the NSE advances, there were 787 advances, 798 declines and 78 unchanged.
 
The Indian equity markets on Thursday closed at new highs in almost a year, riding on short covering and expectations of a major economic legislation getting parliament's approval. On a closing basis, the wider 51-scrip Nifty of the National Stock Exchange (NSE) touched a new 52-week high. The 30-scrip sensitive index (Sensex) of the BSE also reached its highest closing levels in 11 months. Healthy buying was witnessed in consumer durables, automobiles and FMCG (fast moving consumer goods) stocks. On the NSE, there were 818 advances, 638 declines and 62 unchanged. The BSE market breadth was slightly tilted in favour of the bulls -- with 1,486 advances and 1,164 declines.
 
US Federal Reserve on Wednesday (India’s trading day of Thursday) kept federal funds rate unchanged, reiterating that it continues to closely monitor inflation indicators and global economic and financial developments. "Near-term risks to the economic outlook have diminished," said the Fed in a statement after concluding two-day monetary policy meeting. This new expression might indicate that conditions are getting more favourable for further interest rate hikes in the future. Fed officials gave more upbeat description of the economy. There was some increase in labour utilisation in recent months, pointing to a healthy labour market despite the slowdown in April and May. Household spending have grown "strongly." Inflation continues to run below the Fed's 2% target, a major concern for Fed officials. But they expected inflation to rise to the target over the medium term as the transitory effects of past declines in energy and import prices dissipate and the labour market strengthens further. The policy to keep interest rates unchanged is good news for emerging markets like India, as it attracts foreign institutional investors.
 
On Friday, Indian equity markets traded in the red as selling pressure was witnessed in banking, consumer durables, and capital goods stocks. The indices closed lower by around 0.50% over Thursday’s close.

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