Record foodgrain output, but need to produce more: PM

The prime minister noted that foodgrains demand is projected at about 280 MT by 2020-21 and to meet this requirement, the foodgrains output needs to grow by 2% annually, which he termed as an 'enormous task'

New Delhi: Announcing a record foodgrain production at 241 million tonnes (MT) in 2010-11, prime minister Manmohan Singh today said the country still needs to produce more to meet the rising demand, besides controlling high food prices, reports PTI.

The overall growth of agriculture is likely to be 3% during the 11th Five year Plan (2007-2012), which is less than the targeted 4%, he said.

"Although foodgrain production has since (after 2006-07) regained the requisite momentum and the agriculture sector as a whole is set to grow at 3% per annum during the 11th Plan, we cannot be complacent.

"We must note that this is less than the targeted 4% and a consequence in recent years has been unacceptable levels of food price inflation. I expect the 12th Plan to contain all measures that are required to accelerate our agricultural growth rate," he said, while delivering foundation day lecture of Indian Council of Agricultural Research (ICAR).

The foodgrain production in 2010-11 crop year (July-June) at 241 MT is higher by 5 MT than the forecast made in April and 23 MT more as compared to the previous year.

"An estimated production of 241 MT was achieved because of record production of wheat, maize and pulses," Mr Singh said

He, however, said the challenges that the agriculture sector faces in the coming years 'remain large'.

Pointing out that the country is still facing problem of under-nutrition and is dependent on imports of pulses and edible oils, Mr Singh said: "We clearly need a second Green Revolution that is broad-based, inclusive and sustainable. We need to produce more."

The prime minister noted that foodgrains demand is projected at about 280 MT by 2020-21 and to meet this requirement, the foodgrains output needs to grow by 2% annually, which he termed as an 'enormous task'.

"The enormity of the task ahead is indicated by the fact that during the 10-year period (1997-98 to 2006-07), our foodgrain production grew at an average annual rate of only 1%," Mr Singh said.

Expressing concern over stagnated crop yields over the years, he stressed that 12th Plan should contain all measures to accelerate the farm sector growth.

Mr Singh emphasised that there is need to step up spending in agriculture research, increase irrigation facilities and promote biotechnology carefully to boost crop productivity and enhance farmers' income.

"India currently spends about 0.6% of its agricultural GDP on agricultural R&D. This needs to be enhanced at least 2 to 3 times by 2020, since a substantial portion of our agricultural growth would come through the application of new technologies," he said.

He further said India's agriculture is largely dependent on the monsoon and there is an urgent need to improve the efficiency of irrigation facilities from the existing 30% to 50%.

Mr Singh also pointed out that the climate change has emerged as a major challenge for the agriculture sector in the country and there is a need to develop climate resilient crop varieties, cropping patterns and management practices.

In order to bridge the gap in farm yields, the prime minister told agri-scientists, "...your main client is the farmer. You must get your research questions primarily from the farmers. This is perhaps the most difficult of the challenges that you must overcome in the years ahead."

Mr Singh awarded five states-Punjab, Uttar Pradesh, Orissa, Assam, and Tripura-with 'Krishi Karman' award for achieving high foodgrain output in 2010-11.


In a range: Weekly Market Report

Market to move sideways till Nifty reaches 5,520

The market ended in the red this week after three weeks of gains. The decline was mainly due to global factors and lower expectations on first quarter results. Lower industrial output for May weighed down by the manufacturing and mining sectors was also contributed to the decline.

The market closed lower for the first two days on weak global sentiments. Institutional buying support and firm Asian markets helped the indices close in the positive on Wednesday. Poor inflation numbers led to a flat close on Thursday. While the market opened in the green on Friday, it lost direction and ended lower, as investors were concerned that rising inflation will prompt the Reserve Bank of India (RBI) to hike rates at its review meeting at the end of the month.

Overall, the Sensex fell 2% (down 296 points) to close the week at 18,561 and the Nifty shed 1% (down 56 points) to 5,581. We expect the market to move sideways in the days to come until the Nifty reaches 5,520.

BSE Healthcare and BSE Oil and Gas (up 1% each) were the top sectoral gainers, while BSE IT (down 6%) and BSE TECk (down 5%) were the major sectoral losers.

The main gainers on the Sensex were Reliance Industries (up 2%), ONGC and ITC (up 1% each). Infosys (down 8%), Hindalco Industries (down 6%), Jaiprakash Associates, Hero Honda and Wipro (down 4% each) were the top losers in the index.

The major gainers on the Nifty were IDFC, Dr Reddy's, Sesa Goa (up 3% each), Reliance Industries and Kotak Mahindra Bank (up 2% each). On the negative side, Infosys (down 8%), Hindalco (down 6%), SAIL, Jaiprakash Associates and Hero Honda (down 4% each) ended at the bottom of the index.

The country's industrial growth fell to 5.6% in May, the slowest in nine months, from 8.5% in the corresponding period a year ago, mainly due to poor performance of the manufacturing and mining sectors. The latest data is further confirmation that high inflation and a tight monetary policy by the RBI are putting the brakes on economic growth.

With inflation hovering at about 9%, it is widely expected that the central bank will hike rates further this month, which if implemented would be the 11th increase since March 2010. The recent rise in fuel prices is also expected to push inflation up further.

Headline inflation rose to 9.44% in June due to rising prices of fuel and manufactured products. Inflation, as measured by the Wholesale Price Index, stood at 9.06% in May and was 10.25% in June 2010. The rise in inflation can partly be attributed to the hike in prices of diesel, cooking gas and kerosene announced by the government on 24th May.

Snapping a two-week declining trend, food inflation for the week ended 2nd July rose to 8.31% on the back of soaring prices of protein-based items, cereals and vegetables. Food inflation rose by 0.70 percentage points during the week under review from 7.61% in the previous week ended 25th June.

Among corporates, Infosys on Tuesday announced a 15.72% increase in consolidated net profit to Rs1,722 crore for the first quarter ended 30 June 2011, over the Rs1,488 crore in the previous corresponding period. The company maintained its full-year dollar revenue forecast of 18%-20%, which was lower than analysts' expectations. The company's performance has been hurt by wage hikes and intense competition from rivals such as Tata Consultancy Services, IBM and Accenture. This highlights the prevailing global economic uncertainty and concerns about top management changes the company has been undertaking recently.

Tata Consultancy Services (TCS) on Thursday posted a 26.7% rise in its net profit at Rs2,415 crore for the first quarter of FY11-12. Revenue grew by 31.4% to Rs10,797 crore for the period under review, the company said. However, sequentially the profit has declined from the Rs2,623 crore profit in the last quarter of the previous fiscal.

On the global front, a top official of Standard & Poor's on Thursday expressed concern that the US faces the risk of losing its AAA credit rating in the next three months, even if lawmakers reach an agreement to raise the country's debt ceiling later this month. The House of Representatives is to vote next week on a plan to raise the debt ceiling with equal cuts. Five rounds of talks this week still produced no agreement, with the talks likely to resume over the weekend.

Eight banks, including two Greek banks, five Spanish banks and one Austrian bank have failed the European Banking Authority's (EBA) stress tests. The market's expectations for the stress tests were low, with many investors and analysts saying that unless they proved to be very strict, they would fail to boost confidence in the European policy response to the crisis, and could cause the sovereign crisis to spill over into a banking one.

In a related development, Italy's parliament on Friday gave definitive approval to a 48 billion euro austerity package aimed at averting a full-scale financial crisis, but there were growing questions about the government's capacity for further reforms.


The 5,400 level is holding, but the Nifty has to cross the trendline resistance at 5,655 for further upside

The Bears are trying to fight back, but as long as this correction does not break the 5,400 level on a weekend close, the Bulls hold the edge. It is to be seen whether they will capitalise on it

S&P Nifty close: 5581.10

Market trend

SHORT term: Sideways         MEDIUM term: Sideways    LONG term: Up

With the Nifty failing to hold above 5,670 points (which we mentioned last week) the market dipped in the first half of the week to between the 38.2%-50% retracement (5,468-5,532 points) levels of the rise from 5,195-5,740 points. The Nifty managed to recover some of its losses, but ended the week 79 points (-1.41%) lower. Volumes were significantly lower during the week. The sectoral indices which led the decline were BSE IT (-5.53%), BSE Teck (-4.51%), BSE Metal (-2.36%) and BSE Realty (-1.89%), while the BSE Health (+1.26%), BSE Oil & Gas (+1.12%) and BSE PSU (-0.18%) outperformed.

The sustained rise of the last few weeks has resulted in the Histogram MACD moving above the median line, implying that the intermediate term bias has turned sideways if not up, at this moment. The Nifty seems to be retracing either the fall from 6,181 or the entire decline from 6,338 points, which gives upside targets of 5,767 (50% of 6,338-5,195 came very close to this), 5,804 (61.8% of 6,181-5,195) and 5,902 (61.8% of 6,338-5,195).

We saw the Nifty close marginally below the 20wema pegged at 5,587 points this week as a result of which the Bulls have to take immediate action to push it above this as well as above the resistance line (in purple pegged around 5,655 points) for further upsides, otherwise the efforts of the last few weeks will come to naught.

The Fibonacci retracement levels of the recent rise from 5,195-5,740 are 5,532 (38.2%), 5,468 (50%) and 5,403 (61.8%) and these are also the support levels to watch out for in corrections. The trendline support (depicted in black in the weekly chart above) is pegged around 5,428 points this week. A breach of this could see the Nifty fall to the 5,300-5,320 range at a fast clip.

Here are some key levels to watch out for this week.

  •  As long as the S&P Nifty remains above 5,577 points (pivot) the Bulls will breathe easy.
  •  Support levels are pegged at 5,501 and 5,420 points.
  •  If the S&P Nifty sustains above the 5,577 level in close, it could reach 5,658 or 5,734 points. In a highly optimistic scenario, 5,804 points could be hit if it crosses the trendline resistance.

The Bears are trying to fight back, but as long as this correction does not break the 5,400 points level on a weekend close, the Bulls hold the edge and the Nifty should try to attempt the 5,804 or 5,902 levels in the weeks ahead. For this to materialize the Bulls have to push the Nifty above the resistance line (in purple) on significantly higher volumes.

In a nutshell, the range seems to have contracted further between the 5,428 (trendline support) and 5,655 (resistance line in purple) and a break-out from this range would provide some impetus in the direction of the break. Its advantage Bulls at the moment, but it is to be seen whether they will capitalise on it.

(Vidur Pendharkar is a consultant technical analyst and chief strategist at


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