QE2 for dummies

Quantitative easing made simple.  

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Thursday’s Market Preview: Global cues indicate flat-to-positive opening

The Indian market, which resumes trading after a day’s holiday, is likely to witness a flat-to-positive opening today on fairly supportive global cues. The weekly food inflation data is expected to give further direction to the local bourses. The US markets closed steady on Wednesday with a mixed bias on economic concerns giving rise to speculations that the Federal Reserve will continue to support the economy. Markets in Asia were mostly higher on Thursday, recovering from recent losses as the European worries eased, however, investors were keeping an eye on the Chinese government’s next move. The SGX Nifty was up 3 points at 5,997 from its previous close of 5,994.

The Indian market opened with modest gains on Tuesday, defying the regional trend, but slipped into the red soon after touching the day's high. A feeble recovery attempt was seen in the mid-morning session, but an across-the-board sell-off by institutional investors pulled the indices deeper into negative terrain. However, sharp cuts in the Chinese market dragged the domestic indices to close below their crucial levels at the close. The Sensex closed 444.55 points (2.19%) down at 19,865, while the Nifty closed below the 6,000-mark at 5,988, down 132.90 points (2.17%).

The US market witnessed a flat close overnight as the day’s economic data fuelled speculations that the Fed would continue to prop the sagging economy. The consumer-price index rose 0.2% in October after a 0.1% rise the previous month, the Labor Department said in Washington. Excluding food and fuel, core costs increased 0.6% from October 2009, the smallest gain on record. A separate report showed housing starts fell to a 519,000 annual rate, the fewest since a record low reached in April 2009 and down 12% from a revised 588,000 in September that was less than previously estimated.

The Dow shaved 15.62 points (0.14%) to 11,008. The S&P 500 added 0.25 point (0.02%) at 1,178. The Nasdaq gained 6.17 points (0.25%) to 2,476.

Markets in Asia were trading mostly higher on Thursday as investors resorted to bargain-hunting after the recent losses in various markets. Besides, easing of debt concerns in Europe also brought some relief, however, economic concerns still remain.

The Shanghai Composite was up 0.42%, the Hang Seng surged 0.83%, the Nikkei 225 advanced 0.61%, Seoul Composite was up 0.74% and the Taiwan Weighted added 0.06%. On the other hand, the Jakarta Composite was down 0.10%, KLSE Composite fell 0.68% and Straits Times declined 0.25% in early trade. The SGX Nifty was up 3 points at 5,997 from its previous close of 5,994 on Wednesday

Private sector lender Axis Bank on Wednesday announced acquisition of investment banking arm of Enam Securities for Rs2,067 crore. The deal comprises investment banking unit, corporate advisory services and equity distribution arm of Enam Securities. Asset management company and insurance broking arm are not part of the deal.

Meanwhile, post independence, India lost a staggering $462 billion in illicit financial flows due to tax evasion, crime and corruption, a research and advocacy group said in a report on Wednesday.

The report, “The Drivers and Dynamics of Illicit Financial Flows from India: 1948-2008', released by Washington-based Global Financial Integrity (GFI) found that the faster rates of economic growth since economic reform started in 1991 led to a deterioration of income distribution which led to more illicit flows from the country.

According to the primary findings of the report from 1948 through 2008, India lost a total of $213 billion in illicit financial flows (or illegal capital flight).

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Maharashtra, NCR account for over 50% FDI during Apr-Aug

New Delhi: Maharashtra and the National Capital Region (NCR) accounted for over half the foreign direct investment inflows into the country during April-August this fiscal, reports PTI quoting the industry ministry's latest data.

Maharashtra attracted the highest FDI at $2.43 billion (Rs11,154 crore), accounting for 35% of the inflow in the country, during the first five months of the current fiscal.

NCR, including parts of Uttar Pradesh and Haryana, received $1.85 billion (Rs8,476 crore) in FDI during the period. The region accounted for 20% of the total FDI.

During April-August 2010-11, India received $8.88 billion in FDI, the data said.

According to an expert, the main reasons for the maximum inflows in Maharashtra and NCR are substantial improvements in infrastructure and pro-active approach of the governments.

"Infrastructure in these areas has improved considerably and that is making them attractive destination for FDI in India," said Rakesh Joshi, an international trade expert at Indian Institute of Foreign Trade.

Karnataka attracted the third highest FDI inflows worth $936 million during the period, followed by Andhra Pradesh ($451 million), Tamil Nadu ($316 million), Goa ($291 million) and Gujarat ($230 million).

Sectors that attracted high levels of FDI include services, telecom, metallurgical industries, power, computer hardware and software, and construction activities.

The highest FDI of $2.92 billion came from Mauritius, followed by Singapore ($1.08 billion), USA ($636 million), Japan ($515 million) and the Netherlands ($481 million) in April-August 2010-11.

The government is making sustained efforts to make the FDI policy regime more attractive and investor friendly. It is considering liberalising FDI in multi-brand retail and the defence sector.

FDI inflow during 2009-10 was $25.88 billion, 5% lower than $27.33 billion in the previous fiscal.

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