India Infoline Weekly Newsletter - May 31, 2013

With inflation falling below the 5% mark in April, rate cut expectations appears to have risen. But the RBI governor was quick to dismiss it citing high CPI inflation and upside risks to it. He went on to add that some growth sacrifice is inevitable to rein in inflation.

May 31, 2013 6:56 IST | India Infoline News Service

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Friday fright; Sensex crashes 450 points

If you had to term today’s market session in one word, ‘terrifying’ would be the word of choice. The indices wiped out all weekly gains due to a sudden bout of selling pressure.  The Nifty and Sensex plummeted over 2% in trade today, marking their biggest single day percentage fall since March last year. The Sensex slipped 450 points to close below the psychological 20,000 mark. The decline was led by index heavyweights like ICICI Bank, SBI, Reliance Industries, ITC and Bharti Airtel. The sell-off in the market didn’t come in as a surprise as the omens at the start of trade hinted. On Thursday, the Reserve Bank Governor D Subbarao warned of an upside risk to inflation and high current account deficit, thus denting hopes of a rate cut. The rally from the lows of April was fuelled by hopes of easing interest rates. But Thursday's inflation warning by the RBI governor was all it took for the rally to fizzle out.

The rupee hit an 11-month low against the dollar which further precipitated the fall. It has recovered since then and is now trading at 56.53 to the dollar.  The big event lined up today was the March-quarter and FY13 GDP data, which made a ‘small splash’. March-quarter GDP growth at 4.8% came in line with market expectations. This was a tad faster than the upwardly revised 4.7% growth in the December quarter. However, it was the lowest in 15 quarters. FY13 GDP growth stood at 5% which is above the street's estimate of 4.8%. Amar Ambani, Head of Research at IIFL, feels it is still premature to say that growth has bottomed out. "The Q4 FY13 growth mix slightly surprised with sharp deceleration in services and a slight better-than-expected manufacturing growth. This hints that economy is moving to consumption-led downturn from an investment-led downturn." The Sensex closed down 455 points at 19,760 while the Nifty ended at 5,986, down 138 points over Thursday’s close.

Q4 GDP growth at 4.8%, FY13 GDP at 5%

The advance estimates of national income for the year 2012-13 were released on 7th February, 2013. These estimates have now been revised incorporating latest estimates of agricultural production, index of industrial production and performance of key sectors like, railways, transport other than railways, communication, banking and insurance and government expenditure.

The salient features of these estimates are detailed below:

(a) Estimates at constant (2004-05) prices

Gross Domestic Product

GDP at factor cost at constant (2004-05) prices in the year 2012-13 is now estimated at Rs. 55,05, 437 crore (as against Rs. 55,03,476 crore estimated earlier on 7th February, 2013), showing a growth rate of 5.0 percent over the First Revised Estimates of GDP for the year 2011-12 of Rs. 52, 43,582 crore, released on 31th January 2013. In the agriculture sector, the third advance estimates of crop production released by the Ministry of Agriculture showed a slight upward revision as compared to their second advance estimates in the production of rice (104.22 million Tonnes from 101.80 million Tonnes), wheat (93.62 million Tonnes from 92.30 million Tonnes) and sugarcane (336.15 million Tonnes from 334.5 million Tonnes) for the year 2012-13. Due to this revision in the production, ‘agriculture, forestry and fishing’ sector in 2012-13 has shown a growth rate of 1.9 percent, as against the growth rate of 1.8 percent in the Advance Estimates...Read More

FY13 fiscal deficit at 4.89%

According to reports, FY13 fiscal deficit stood at 4.89% as against 5.2% budget estimate. FY13 fiscal gap seen lower on lower non-plan spend, Govt reported. Govenment has reportedly said that its cash position is very good, comfortable.

2G scam: CBI to quiz Anil, Tina Ambani on Swan Telecom

The Central Bureau of Investigation (CBI) has asked the special court carrying out the 2G trial to summon Reliance Communications Chairman Anil Ambani, his wife Tina Ambani and 15 others as witnesses in the ‘interest of justice,’ an Economic Times report stated. CBI prosecutor UU Lalit in his filed petition said Anil and Tina Ambani's testimonies were necessary to pin ‘who was responsible for incorporation of shelf companies, including Swan Telecom, Tiger Traders, Zebra Consultants, Parrot Consultants, Giraffe Consultancy Services and their inter-locking equity structures.’ The Ambanis may be able to indicate people behind the ‘decision to apply for a Unified Access Service Licence on behalf of Swan Telecom,’ the report stated. Defence counsel Vijay Aggarwal, who represents several of the 2G scam accused, said the prosecution’s move was an attempt by the CBI to strengthen its case as it knew it was on weak ground.

Who will be next Infosys CEO?

According to reports, Infosys board has begun to identify next CEO. The board may also rope in a search firm which will help short-list external candidates, says report. There are reports that the list of candidates include BG Srinivas, Ashok Vemuri and V Balakrishnan, who are already on the company's board, report says.

Infosys CEO SD Shibulal's term ends in March 2015. The board will have a clear picture in the next 12 months, says media reports. The stock is currently trading at Rs2363, up Rs21.80. The stock has hit a high of Rs3101 and a low of Rs2101.

Petrol prices may be hiked by Re 1/litre by Sunday

Petrol prices may be hiked by up to Re 1 a litre this week, according to reports. Reports said that this will be the first price-hike in three months. Petrol prices were last increased on March 1

Rupee hits 11-month low recovers to close at Rs.56.50/$

The rupee opened at an 11-month low of 56.42 per dollar on Friday as compared to its previous close against the greenback. It closed the at Rs. 56.50. The rupee had lost 21 paise to end a new 10-month low of 56.38 against the dollar yesterday. Disha Bhatt, Currency manager - IIFL sees Indian Rupee (INR) moving in the range of Rs. 56.50 - Rs. 57.30 within next week two weeks. She says Rupee could slide further owing to US policy review on Quantitative Easing on June 16. Indian Rupee touched a life time high of 73.60 on the bourses today.

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