Market Outlook: With the liquidity flow continuing relentlessly, indices have no other way but to look up. The truncated week could see some wild swings though. The left out feeling is there in some quarters and a few are wary of the sudden rise and may prefer to sell into the strength. The week will give some opportunities to get in as the global macro factors could cause a temporary cooling anytime.
Among the global factors to watch out for there is Greece which is showing signs of pressure as the country faces a March 20 bond redemption totaling 14.5 billion euros ($19 billion). While the nation’s political leaders have signed up for fiscal retrenchment and detailed 325 million euros in new budget cuts for this year, euro-area governments have yet to approve a second bailout of 130 billion euros
Also, ECB's second tranche of the LTRO is due at the end of February and many see at least a similar take-up of funds as was seen in December. It may be recalled that more than 500 banks across Europe borrowed €489bn from the ECB at 1% in December
On the domestic front, the Govt will announce GDP data for the fiscal third quarter.
The F&O expiry on Thursday will ensure that the week sees the indices swinging in and out of negative zone. Ride with caution.
PM takes steps to address coal supply issues for power projects
On 18th January, 2012, a delegation of industrialists representing the majority of power producers in the country met the Prime Minister under the aegis of Association of Power Producers. They brought to the notice of the Prime Minister key issues affecting the power sector. They informed that the most important and immediate problem is inadequate supply of fuel, especially coal to power plants. They informed that Coal India Limited has been insisting on signing sign fuel supply agreements (FSAs) with assurance of only 50% of the required quantity with the result that no FSAs have been signed since April 2009. The Prime Minister assured the delegation that PMO will work out a road map to deal with the problems relating to power sector and, to this end, a Secretary level Committee headed by Principal Secretary to Prime Minister will deliberate on the issues with a view to finding out pragmatic solutions. The Committee would first focus on the short-term issues and suggest, within a month, the immediate steps to be taken.
As instructed by the Prime Minister, the Committee headed by the Principal Secretary to the Prime Minister met on 1st February 2012. During the meeting it was agreed that Coal India Limited will sign FSAs with power plants that have entered into long-term PPAs with power distribution companies and have been commissioned/ would get commissioned on or before 31st March 2015. For power plants that have been commissioned up to 31st December 2011, FSAs will be signed before 31st March 2012. The FSAs will be signed for full quantity of coal mentioned in the Letters of Assurance (LoAs) for a period of 20 years with trigger level of 80% for levy of disincentive and 90% for levy of incentive. In case of any shortfall in fulfilling its commitment under the FSAs from its own production, Coal India Limited will arrange for supply of coal through imports or through arrangement with State/Central PSUs who have been allotted coal blocks. The proposed course of action has been approved by the Prime Minister...Read More
Private power firms' shares rise on PM's coal supply initiative
Coal India slides on PMO diktat on FSAs
Inflation falls below 7% in January
India's annual inflation fell sharply in January from the previous month, data released by the Government showed on Tuesday. The headline WPI inflation for January fell below 7%, raising hope of more easing in the RBI's hawkish monetary policy going forward. Inflation, as measured by the wholesale price index (WPI), was at 6.55% in January as against 7.47% in December, the Union Commerce & Industry Minister said. The January inflation print came more or less in line with expectations. Inflation for November was revised to 9.46% as against the preliminary estimate of 9.11% earlier while the revised WPI for that month now stands at 157.4 as compared to 156.9 earlier. The annual inflation rate was at 9.47% during the corresponding month of the previous year. The official WPI for ‘All Commodities’ for January rose by 0.5% to 157.7 from 156.9 in the preceding month. Build up inflation in the financial year so far was 5.48% compared to a build up of 8.58% in the corresponding period of the previous year.
Onions turned cheaper by ~75.5% in the month under consideration, Vegetable prices were down ~43% on an annual basis. Fruits turned costlier by ~6.4% year over year, while Milk prices increased ~12%. Egg, Meat & Fish became costlier by ~18.6% compared to the year-ago period. Potato prices were down ~23% on an annual basis while Cereal prices went up by ~2.4% year over year. Prices of Pulses rose by ~11.4%. Annual inflation in Rice stood at ~1.35% while Wheat prices were down ~3.5%. In the Non-Food category, prices of Oilseeds rose by ~12.6% from a year ago while that of Fibres fell by ~14.5. Mineral prices climbed 24.8% from last year. In Fuel & Power category, LPG prices were up ~14.3%, petrol by ~15.02% and diesel by ~9.2%. In Manufactured Products category, Food Products prices rose by 5.5%, Edible Oils ~9.5%, Beverages, Tobacco & Tobacco Product 13.2%, and Cotton Textiles 9.4%. Price of Wood & Wood Products increased by ~8.5%, while that of Leather & Leather Products increased 6.5%. Chemicals & Chemical Products' prices jumped by over 9% while that of Non-Metallic Mineral Products rose by 8.3%, Cement & Lime 8.1%, Basic Metals Alloys & Metal Products ~12% and Iron & Semis by 18.5%...Read More
Inflationary pressures in India continued to ease in January: Moody's
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