A newly launched index called Consumer Confidence Index (CCI) has shown nationwide pessimism about the future of the economy
A comprehensive index known as the Consumer Confidence Index (CCI) has shown that our consumers are pessimistic about their economic future. In a first of its kind move to measure consumer sentiment in India, the overall score 39.9 was recorded for the month of March 2012. This is markedly higher than the low it recorded in December 2011 (35.8). Since then it has been trending upwards, indicating slightly better prospects, but still in bearish territory.
However, despite poor consumer sentiment (which is very different from investor sentiment), which is usually a big factor in determining the direction of the Indian economy, the stock market has been climbing and is up roughly 12% since January. Ever more so, the Reserve Bank of India (RBI) has simply done a horrific job of containing the aam admi's expectations, and even worsened their present situation.
The CCI Index is designed to measure how consumers are feeling about the economy and their ability and desire to spend across India. The index, created by BluFin, takes into consideration the present as well as the future. These so called Present Situation and Future Expectation indices each are further divided into three sub-indices measuring consumers' opinions on: a) inflation b) spending and c) employment prospects.
The Present Situation index showed a reading of 45.7, which is 0.6% lower than the last month and 2% lower over the last six months, indicating that the situation is worsening. On the other hand, the future expectations sub-index showed a 14% improvement in the sentiment over the last six months climbing to 37.6, showing optimism bias in play. However, it is still lower than the Present Situation index which is a cause of concern for policy makers and the markets.
But the RBI doesn't seem to care about the sentiments of the average Indians, especially the poor, when it catered to the demands of the institutions by adopting a loose money policy by cutting the cash credit ratio (CRR) by 50 basis points. The stock markets have been flying as central banks world over adopted the same policy. It is pertinent to note that majority of the Indians are pessimistic with regard to inflation which is, of course, hampering spending.
North India had a bleak view on inflation showing just 17.2 (whole of India being 23.5), which is extremely pessimistic. South India recorded the highest score of just 28.5. Further, inflation sentiment has worsened not just in the north, but in the east and west, as well. Over the last six months, inflation sentiment has fallen by 49.6%, 33.5% and 15.1% respectively to 17.2, 20.6 and 25.9 respectively.
Despite poor inflation, employment has been relatively stable, at 47.2, which is near neutral territory, with Kochi recording a healthy 65.1. The other side of the spectrum is Japiur- at 29.7.
On an overall basis, out of the 18 cities that were sampled, the only city that was "slightly optimistic" was Mangalore, which showed a reading of 52.6, while the most pessimistic were the residents from the Pink City-Jaipur-which recorded as low as 30.4.
The score is measured on a scale of 0-100, with 100 indicating perfect optimism while 0 is the exact opposite. This is the first time that the Consumer Confidence Index has been put to practice on a monthly basis.
In a first of its kind, Moneylife Foundation conducts an eight-part financial literacy programme spread over two days in Mumbai
The first day of the two-day workshop by Moneylife Foundation to delve into a complete range of issues was conducted today. Today the workshop covered issues such as how not to lose money, how to be safe with your money, responsible borrowing and insuring yourself correctly. The sessions which were attended by savers across categories and were conducted by well-known journalist Sucheta Dalal, trustee of Moneylife Foundation and Raj Pradhan, director-New Initiatives, Moneylife Foundation, who conducted an exclusive session on insurance titled “Are you sensibly insured”. Tomorrow, the day-long session will be conducted by Debashis Basu, trustee of Moneylife Foundation. He will speak on “Essential tools to grow your money”.
The first few highly interactive sessions conducted by Ms Dalal took the audience through the menace of pyramid or chain-money schemes, various Internet-based scams and unregulated schemes, credit card related issues, importance of credit history and maintaining a good credit score. She said that most Indian savers fall for tall claims and many of them fall for tall claims of pyramid schemes. Many have lost huge amounts of money in pyramid schemes such as ‘SpeakAsia’, ‘Gold Quest’, etc. There are various chain marketing schemes which operate at every level in the country and cheat even the poorest of people. Ms Dalal warned that companies like Amway, Tupperware, and Herbalife are also examples of pyramid schemes. She also spoke about the various internet scams that are usually after your money or your identity. In between the sessions Ms Dalal addressed many queries raised by the participants.
In the next session on banking safely, Ms Dalal enthralled the audience by giving real life examples of people who were not cautious and lost huge amounts of money. The examples included that of some who have done well in their careers but had ended up making financial blunders with losses amounting to crores of rupees. She advised the audience to stay away from products that promise extraordinary returns and not to get carried away by well-known personalities like film stars or cricketers who promote a particular product. Just because they promote a product that doesn’t mean they have done their research to check if the product promises what it claims.
Mr Pradhan, in his session, informed the participants on the importance of getting themselves insured. He also identified the needs of different profiles of people. In choosing an insurance policy, he said that term insurance would be the best bet. Mr Pradhan also warned the participants on the mis-selling done by agents. He also highlighted whether one should go for an online or an offline term plan. He also gave the participants an overview on annuity products and child plans and whether one should opt for these products. Mr Pradhan also covered topics relating to health insurance, car insurance, property insurance and travel insurance. He also took the audience through the various intricacies involved in buying insurance and the importance of reading the fine print.
Participants of the financial literacy course would receive certificates and free e-books on relevant issues.
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Nifty has to break the range of 5,230 and 5,340 decisively for further direction. The break may come soon
The market, which was flat for the entire morning session, witnessed a sharp plunge in post-noon trade pulled down by institutional pressures. Snapping a four-day gaining streak, the benchmarks settled off the lows today. Yesterday we had mentioned that the Nifty has to close above the level of 5,380 for the uptrend to gain further momentum. Yesterday's low was to be looked at for support. Today the index broke this level but settled at 5,291 itself. We may now see the benchmark moving in a narrow range of 5,230 and 5,315. The National Stock Exchange (NSE) saw a volume of 57.40 crore shares.
The market witnessed a marginal gap down opening on the back of weak global cues. US markets were down for the second day last night on disappointing economic data and concerns of a French downgrade. The development led the Asian markets lower in morning trade. Back home, the Nifty opened 18 points down at 5,314 and the Sensex was down 44 points at 17,460 at the opening bell.
Profit booking after four days of gains kept the market fluctuating in the negative terrain for the entire morning session. A small bout of buying in noon trade managed to push the indices into the green, enabling them to hit their intraday highs. At this point, the Nifty touched 5,336 and the Sensex 17,520.
The benchmarks couldn't sustain the gains and soon slipped lower again. A sharp slide in post-noon trade on apprehensions of the proposed tax on FII investments saw the market tanking over 1% and tumbling to the day's lows. At the lows, the Nifty fell to 5,245 and the Sensex dropped to 17,231.
A marginal recovery helped the indices pare some of the losses in late trade. However, the market snapped its four-day gaining streak and settled lower today. The Nifty closed 42 points down 42 points at 5,291 and the Sensex lost 130 points to 17,374.
The advance-decline ratio on the NSE was negative at 616:1110.
Among the broader markets, the BSE Mid-cap index declined 0.98% and the BSE Small-cap index fell by 0.47%.
Barring the BSE Fast Moving Consumer Goods (up 0.11%) and BSE Auto (up 0.08%) all other sectoral gauges settled lower. They were led by BSE Capital Goods (down 1.84%); BSE Power (down 1.72%); BSE Realty (down 1.68%); BSE Oil & Gas (down 1.30%) and BSE Bankex (down 1.07%).
The top Sensex stocks were Mahindra & Mahindra (up 2.89%); Wipro (up 0.75%); Tata Steel (up 0.73%), Cipla (up 0.64%) and Coal India (up 0.35%). The main losers were Hindalco Industries (down 2.46%); Tata Power (down 2.28%); ONGC (down 2.24%); BHEL (down 2.05%) and Larsen & Toubro (down 2.02%).
M&M (up 2.69%); ITC (up 0.86%); Wipro (up 0.80%); GAIL India (up 0.78%) and Tata Steel (up 0.73%) emerged as the key gainers on the Nifty. The stocks which dragged the index lower were IDFC (down 3.15%); Jaiprakash Associates (down 2.87%); Jindal Steel (down 2.62%); Hindalco Ind (down 2.50%) and ONGC (down 2.48%).
The Asian pack settled mostly lower on concerns about the global growth on the back of dismal economic data from the US and fresh about the European debt crisis.
The KLSE Composite fell by 0.30%; the Nikkei 225 declined 0.28%; the Straits Times dropped 0.46%; the Seoul Composite slipped 1.26% and the Taiwan Weighted tanked 1.52%. On the other hand, the Shanghai Composite surged 1.19%; the Hang Seng added 0.07% and the Jakarta Composite gained 0.42%. At the time of writing, the key European indices had recovered from their initial losses and were trading in the green and the US stocks futures were in the positive.
Back home, foreign institutional investors were net sellers of equities totalling Rs102.46 crore on Thursday while domestic institutional investors were net buyers of shares amounting to Rs101 crore.
Engineers India (EIL) has signed a memorandum of agreement with Oil India (OIL) for providing consultancy services to the latter for its various upcoming and revamp projects involving construction of surface facilities in oil and gas fields including pipeline projects spread throughout the country. EIL closed at Rs252.15 on the NSE, down 2% from its previous close.
Procter & Gamble Hygiene and Health Care, the world's largest consumer goods company, will build its largest manufacturing plant in the Indian sub-continent in Hyderabad with an investment of Rs345 crore. The plant, to be spread across 170 acres in Mahbubnagar district, will make products across categories such as laundry, personal and baby care. The stock finished 1.14% lower at Rs2,155.10 on the NSE.
Essar Shipping has received an order from New Sino Oil Company to drill five wells in Brunei. Essar Oilfield Services India (EOSIL), a wholly-owned subsidiary of Essar Shipping, will execute the drilling of these wells. The stock gained 1.66% to close at Rs30.70 on the NSE.