Dr KC Chakrabarty, deputy governor, RBI, discussed customer related issues in banking services at Moneylife Foundation’s first anniversary function in Mumbai.
But this may be the last leg of the current phase of decline
Concerns about rising inflation and its impact on the economy pulled the market down for the fourth week in a row. While manufacturing output data for January was a tad higher than that in December, food inflation for the week ended 22nd January surged to 17.05%, rekindling fears of the possibility of a further hike in interest rates. Corporates have also toned down their forecasts for the fourth quarter on rising costs.
We were hoping to see a slow rally on Friday, but apparently the bears are not done yet. After staying strong for an hour or so, foreign investors started selling ferociously again. Their selling quickly brought the indices to the levels from where the market started rallying on Thursday. The indices tried to stage a rally in the afternoon, but selling pressure-that too on the last trading day of the week-was just too strong.
The market slipped below the recent lows made on 1st February (Sensex 17,982, Nifty 5,402) to 17,927 and 5,369 respectively. With this, a fresh downturn has started which will possibly take Sensex to 17,600 and the Nifty to 5,270. The advance-decline ratio for stocks on the National Stock Exchange was 434:1,230. The market is clearly in bear territory. But even a bear market is punctuated by rallies. So, don't get too pessimistic. After the current decline is over, a slow and weak rally will start.
The market had opened with a deep cut on Monday, worried that the strife in Egypt could have global repercussions, impacting trade and commerce. It fluctuated in negative terrain as attempts of a recovery were shot down by recurring selling pressure that pulled down the indices lower by the close. Selling continued abated on Tuesday dragging all sectoral indices in the red and the market closed near the day's low.
Strong global cues boosted the market on Wednesday, but the news of the arrest of former telecom minister A Raja and two aides led to a sell-off. However, the market ended in the green, snapping a five-day decline. With no cues from Asian markets, most of which were shut for the Lunar New Year, the Indian bourses rode on their own strength on Thursday. Investors brushed aside higher food inflation numbers and continued to support the market, which closed with a gain of around 2% on the day.
On the last trading day of the week, prime minister Manmohan Singh's concerns about economic growth, on account of rising prices, made investors jittery. Selling pressure in heavy-weights pulled the key indices down nearly 2.5%.
The market lost 2% over the week as the Sensex declined 387.82 points and the Nifty shaved off 116.40 points.
DLF, Hindalco Industries (up 6% each), ONGC (up 5%), BHEL (up 2%) and Bharti Airtel (up 1%) were the top Sensex gainers this week. The major losers were ITC (down 9%), Reliance Communications, NTPC (down 8% each), Hero Honda and HDFC (down 7% each).
On the sectoral front, BSE Metal index and BSE Oil & Gas index (up 1% each) were gainers, while BSE Fast Moving Consumer Goods index (down 6%) and BSE Realty index (down 4%) were losers.
Food inflation rose to 17.05% for the week ended 22nd January, jumping by 1.48 percentage points from 15.57% in the previous week. Food inflation was at 20.56% in the corresponding period a year ago. The government attributed the rise in food inflation to higher prices of vegetables, fruits and eggs. Finance minister Pranab Mukherjee has expressed "grave concern" over the situation and has assured steps to moderate inflation.
The HSBC Markit Purchase Managers' Index (PMI) was a touch higher at 56.8 in January from 56.7 in December 2010. The PMI is a survey of executives in over 500 manufacturing companies. The January reading of 56.8 is the 22nd consecutive month that manufacturing in India has been above 50 (a reading below 50 implies contraction). It implies that new businesses received by Indian manufacturers increased substantially during the month under review.
India's exports in December rose by 36.4% to $22.5 billion, up from $16.4 billion in the previous corresponding period. The December export figure is the highest in the last 33 months. However, imports contracted by 11.1% to $25.13 billion over the period last year, resulting in a narrow trade deficit of $2.6 billion.
Output of the six core infrastructure industries grew by a healthy 6.6% in December 2010, an indicator that the Indian economy is on a firm wicket. The six core sectors-crude oil, petroleum refinery products, coal, electricity, cement and finished steel-expanded by 6.2% in the year ago period.
The 6.6% growth in December is more than double the 3% expansion recorded in the previous month and is expected to lift the Index of Industrial Production (IIP) numbers for December, which data is expected next week.
On the corporate front, Posco, the world's third largest steelmaker, was given a conditional clearance by the environment ministry for a greenfield plant in Orissa that has been delayed due to criticism that it would disrupt the livelihood of thousands of local people.
The South Korean steelmaker proposes to invest Rs52,000 crore for a 12 million tonne per annum capacity plant in Orissa's Jagatsinghpur district. This makes it the largest foreign investment in the country so far.
This decision by the ministry of environment will raise hopes of some other global steel makers who have been eager to tap the growing Indian market.
Looking ahead, economic indicators not just in India but across the world are looking better than ever since the financial crisis. For India, the Union budget may have some incentives, but that is still some way off. Just now, the sudden spurt in crude prices due to the turmoil in Egypt threatens to spoil the party all over again, increasing input costs for industry and prices for the common man. This is worrying investors across markets and will determine the way markets behave.
Special CBI judge feels hearing of Subramanian Swamy’s petition should be put on hold after the arrest of A Raja
New Delhi: A Delhi court today issued notice to the Central Bureau of Investigation (CBI), asking it to file a detailed report on whether its probe in the 2G spectrum case covers the aspect of national security, as raised by Janata Party chief Subramanian Swamy in his private complaint seeking the prosecution of former telecom minister A Raja.
"Issue notice to the CBI to file its detailed report of the investigation being carried out by it and whether it covers the aspect of national security as raised by Subramanian Swamy in the present case," Special CBI judge Pradeep Chaddah said.
The court also asked whether it could yet proceed in the case after the arrest of Mr Raja by the CBI. "I am of the opinion that this court should not proceed for the time being with this matter," the judge said. The judge has sought the response of the CBI in the matter and posted the next hearing on 23rd February, reports PTI.
Mr Swamy, meanwhile, submitted to the court that he is intending to petition the court to implead some other persons in this matter, including Tamil Nadu chief minister M Karunanidhi, as other accused in this complaint.
The Comptroller and Auditor General, Vinod Rai, who was summoned by the court to appear as witness on Swamy's complaint, has filed a certified copy of his entire report on the matter through advocate Sandeep Sethi.
On 22nd January, the special CBI judge had sought the presence of Mr Rai and CAG director RP Singh in court today, to depose as witnesses on the complaint by Swamy, seeking registration of a criminal case against Mr Raja for his alleged role in the scam. According to the CAG the preferential allotement of 2G licences and spectrum to telecom companies had caused a presumptive loss of Rs1.76 lakh crore to the public exchequer.
The court had on 7th January held Mr Swamy's private complaint as "maintainable". In his three-point prayer, Mr Swamy asked that his complaint be taken cognizance of and that Mr Raja be summoned to take the case to its logical conclusion. As per the second prayer, Mr Swamy wanted the court to appoint him "as a deemed public prosecutor under the provisions of the Prevention of Corruption Act."
Mr Swamy also asked the court to direct agencies like the CBI and the Enforcement Directorate (ED) to assist him in conducting the prosecution and in the further investigations into the scam. Quoting from the CAG report, Mr Swamy had alleged that Mr Raja committed fraud by adopting a first-come-first-served basis for allocating spectrum to ineligible companies.