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The Week That Was

India Infoline News Service | Mumbai |

The run-up to the budget may see sector-specific movement depending on the expectations being built in by the market.

Top Stories

Iraqi unrest and Ukranian gas supply cut is Spoiler for Indian oil & gas sector

Two recent geopolitical developments that are likely to have significant impact on energy prices globally are the violent unrest in Iraq and the gas supply cut by Russia to Ukraine. Iraq is a major oil producing country in the world with crude oil production of about 3.3 million barrels per day making it the second largest crude oil producer among the OPEC countries and accounting for about 4% of the global oil consumption. However most of the crude oil production in Iraq is from fields located in the southern part of the country, south of the capital city Baghdad, of which a large proportion is from the Basra which is located on the southernmost tip of the country. As per media reports, most of the unrest is currently concentrated in Northern Iraq, and the Southern part of the country is relatively unaffected. Accordingly the insurgency in Iraq is yet to impact oil production and exports. Nevertheless crude oil prices have climbed to levels of $112-113/barrel from levels of $ 107-108/barrel in April beginning; but in case the insurgency impacts crude oil production or if there were to be military intervention by other friendly countries, the rise in crude oil prices could be sharper.

Besides the Iraqi unrest, the Russian gas giant Gazprom has recently stopped gas supplies to Ukraine over large unpaid dues by the latter. While the Ukranian leadership has condemned the move by the Russian company as being politically motivated, Gazprom maintains that the dispute is strictly commercial. Ukraine meets a large proportion of its gas requirement from gas sourced from Russia. Besides, it is a transit point for pipeline gas supplies to European countries and hence in case the dispute persists the affected countries would have to scout for gas from other sources. The latter could add substantial new demand to the gas markets and this situation would get aggravated once winter approaches and gas demand escalates. With the large additional demand of natural gas from Ukraine and Europe, the demand supply dynamics of liquefied natural gas are bound to get impacted resulting in significant increase in LNG prices. Moreover, tensions in Ukraine could also impact oil prices through high geo political risk premium...Read More

May WPI spikes 5-month high; Double digit fuel inflation

The commerce ministry announced the data on inflation based on the wholesale price index (WPI) for May 2014. The May WPI inflation increased to 6.01% from 5.2% in April, while the March WPI is revised to 6%. The WPI for the month of May is highest since December. All the components of WPI has shown a rise. The WPI is the price of a representative basket of wholesale goods. The purpose of the WPI is to monitor price movements that reflect supply and demand in industry, manufacturing and construction.

The food inflation for the month of May stood at 9.5% as against 8.64% in April. The May fuel & power recorded doubled digit number at 10.53% compared to 8.9 in April. May primary articles inflation was at 8.58% vs 7.1% in April and May manufactured products stood at 3.55% as against 3.2% in April. The manufacturing inflation was near one-year high. The official Wholesale Price Index for All Commodities (Base: 2004-05 = 100) for the month of May, 2014 rose by 0.8% to 181.7 (provisional) from 180.2 (provisional) for the previous month.

Inflation

The annual rate of inflation, based on monthly WPI, stood at 6.01% (provisional) for the month of May, 2014 (over May,2013) as compared to 5.20% (provisional) for the previous month and 4.58% during the corresponding month of the previous year. Build up inflation rate in the financial year so far was 0.78% compared to a build up rate of 0.76% in the corresponding period of the previous year...Read More

Reliance: An enduring growth Saga

Chairman Mukesh Ambanis Statement on Fortieth Annual General Meeting (Thirty Seventh since Reliance became a listed company) Wednesday, June 18, 2014

My Dear Shareowners,

Avery warm good morning to each and every one of you. It gives me great pleasure to welcome you to the Annual General Meeting of Reliance Industries Limited. The Company's accounts for the year ended March 31, 2014, along with the Directors' and Auditors' report, a Letter to the Shareholders, and Management's Discussions and Analysis, have already been circulated to you. With your permission, I would like to take them as read.

Strategic Perspective

Dear Shareowners,

This is the 40th AGM of Reliance Industries Limited. But it is only 37 years since Reliance became a listed company. In these 37 years, with every investment and with every new business, Reliance has become a larger part of the economic and social fabric of India and has made the lives of India's 1.25 billion people better. This was the dream of our Founder Chairman and my father Shri Dhirubhai Ambani and I am happy to say that we are pursuing that dream even more strongly today. With each passing year, Reliance is becoming more intrinsic and meaningful to the Indian economy. The foundation of our success over the past 37 years has been the growing aspirations of the Indian small businesses and consumers and the resolute entrepreneurial mind-set and dedication of our thousands of employees...Read More

RIL aims to maximise production at existing KG-D6 fields: Mukesh Ambani

RIL has been larger creator of assets in past 20 years: Mukesh Ambani

Mukesh Ambani's three Ts for Indias development

Nita Ambani Joins RIL Board

Shareholders of Reliance Industries Limited approved the appointment of Nita M. Ambani, Chairperson of Reliance Foundation (RF), as Director on the Board of Reliance Industries Limited in the AGM held. Welcoming Nita Ambani on behalf of the board, RIL Chairman Mukesh Ambani said, "Nita has been engaged in several initiatives that have strengthened Reliance, right from building the world-class township and the ecological development at Jamnagar, next-generation office campuses, designing customer touch points of Reliance Retail, healthcare initiatives, successfully setting up and running institutions such as Dhirubhai Ambani International School and Mumbai Indians to, most importantly, managing Reliance Foundation. We are delighted to welcome her to the Board of Reliance Industries as an accomplished individual who will add significant value to Reliances journey of growth."...Read More

What is exposing the Indian economy to shocks?

Moody's report titled, "Frequently Asked Questions on India's Fiscal Position and the Forthcoming Budget" outlines the reasons behind India's high fiscal deficits, provides a comparison between recent fiscal developments in India and in other similarly rated countries, explains how fiscal policy has affected growth, balance of payments and exchange rate trends and addresses the possible credit implications of the newly elected government's forthcoming budget. Moody's Investors Service says that India's government budget deficits, which are higher than those in most similarly rated countries, increase macro-economic imbalances and thus expose the economy to shocks. India's high budget deficits are partly due to a large population and low per capita income levels. Low income levels limit the government's tax revenue base and at the same time drive socio-political pressure to increase government spending on subsidies and economic development. However, Moody's notes that other countries with low per capita incomes have avoided deficits as large as India's. This suggests that fiscal discipline can improve budget outcomes despite structural challenges. The report notes that wide budget deficits have kept India's inflation high and contributed to a widening current account deficit between 2011 and 2013 which heightened exchange rate volatility and resulted in higher domestic interest rates. These trends have exacerbated the slowdown in GDP growth since 2011...Read More

ECONOMICS FOR EVERYONE: FOREX FABLE- PART 1

India broadband market continues to enjoy encouraging growth: IDC

According to International Data Corporation (IDC) Asia/Pacific Semiannual Telecom Services Tracker, the Asia/Pacific excluding Japan (APeJ) fixed broadband* market reached a value of US$20.3bn in first half of 2013 (1H2013), showing a Half-on-Half (HoH) growth of 5.2%. The APeJ broadband market will continue to grow at a Compounded Annual Growth Rate (CAGR) of 12.1% for the next five years, powered by the fast growing bandwidth demand and the government-driven broadband projects. The difference between broadband subscriber number and revenue growth shows continuous Average Revenue Per User (ARPU) decline in India. One reason is the high price pressure and fierce competition in India telecom market. Also the growth in mobile broadband is starting to slow down the demand for fixed broadband services, especially on the low-bandwidth side. On the other hand, the mobile-only household is on the rise. While operators are spending more on network upgrades to satisfy market demand, the revenues and ultimately the return on investment are being squeezed by Over the Top Players (OTTPs). OTTPs offer rich-media applications which are bandwidth and latency-sensitive, as well as voice services which are chipping away at the heart of many operators revenue streams. Sustaining revenue growth and profitability will be challenging...Read More

Railway passenger fare hiked by 14.2%; freight charges by 6.5%

The government has increased the Railway passenger fare by 14.2 percent and freight charges by 6.5 percent with effect from today, according to media reports.

Railways, which is losing Rs 30 crore a day, was hoping to get Rs. 8000 crore through the increase in passenger fares and freight charges last month.

The cross-subsidy on passenger fares has touched Rs 26,000 crore.

Weekly: Sensex, Nifty ends flat

The market had its fair share of volatility with series of events influencing traders minds. The ongoing concerns of oil supply disruption due to violence in Iraq and rising international oil prices restricted the upside in the index. As a result, the rupee depreciated against the US dollar. It traded above the 60 per dollar mark and hit a low of 60.53 during the week. Also, the May WPI inflation increased to 6.01% from 5.2% in April, while the March WPI was revised to 6%. The WPI for the month of May is highest since December.

Oil stocks have seen heavy selling in the past couple of days as crude oil prices have surged on the Iraq geo political issue as well as sharp rupee depreciation. Both these factors are expected to result in higher gross under recoveries putting a threat to the reforms that are anticipated in the sector. To add to the woes, media reports suggested that the gas price hike might be available only for the incremental production from current levels.

Another cause of concern is below normal rainfall as predicted by India Meteorological Department. The Agro meteorological department, under the guidance of Ministry of Agriculture is preparing a contingency plan to ensure that agriculture production is not hampered even if country gets below average rainfall. Global developments and F&O expiry on Thursday will keep the market volatile in the coming week.

For the week, BSE Sensex closed at 25, 105 down 0.5% while the NSE Nifty closed at 7, 511 down 0.4%...Read More

News Infocus

Personal interaction still trumps technology in India: TimesJobs.com

Today, organizations use technology extensively for the screening process, but, as a TimesJobs.com survey revealed, in the overall hiring process it is still just an enabler. 55% organisations claim to use online job portals to source candidates and a similar number use personality profiling tests to assess the candidates. However, when it comes to making the final decision, 82% organizations still rely on face-to-face interviews. Organisations believe that though technology has made an impact on the global hiring landscape, some traditional methods like personal interaction with the candidates still hold a lot of significance in hiring the best.

Hiring on face-value

Hiring managers are certainly open to new age techniques in hiring and interviewing but only at a nascent stage. Most organizations indicated that a telephonic or video interview is always followed up by an in-depth face-to-face interview. According to the TimesJobs.com survey, nearly 15% organisations indicated that while they use telephonic or video interview techniques they are followed by face-to-face interactions. Only 3% reported using just video interviews for selecting a candidate reveals the TimesJobs.com study...Read More

How aviation will be crucial to the 2014 World Cup

2014 FIFA World Cup in Brazil, travel to and within Brazil is top of mind for travelers, airlines and governments. Not only will Brazil host and accommodate travel for an estimated 600,000 visitors, roughly a 38% increase compared to the 2010 World Cup, but 3 million of its own citizens will travel for the games as well. Brazils dedication to football has led to one of the most ambitious World Cup events ever with 32 nations participating in 64 matches taking place across a record-breaking 12 cities. The country is so large, that it could fit 1.1 million football pitches within its borders, and the shortest distance between soccer venues is 250 miles. For these reasons alone, Brazil will need to rely on air travel more than ever to transport fans. Domestic and international demand is set to outpace airport capacity, but efficient air traffic management may be the key to providing World Cup travelers with a safer and more convenient travel experience...Read More

36% Indians predict Brazil will win 2014 FIFA World Cup: Ipsos

15% of Diabetics in India now below 40yrs: Lifespan

Gone are the days when a particular disease would afflict only a particular class of people or particular age-group or particular gender. This is all myth, so revealed the Lifespan, Indias leading diabetic medical diagnostic service provider. Lifespans data and statistics would send shivers down ones spine. Lifespan is armed with the countrys largest sample size data about diabetics (4000 persons). The data meticulously collected by Lifespans dedicated battery of highly trained personnel sheds light on the dreaded disease of diabetes and its complications. It is appalling that nearly 15% diabetics (1.5 crore diabetics) in India are below the age of 40 years. This staggering number is really alarming and is a warning bell for the development of appropriate diabetes and metabolic disorders, for such kind of young-onset type 2 diabetes...Read More

India is 3rd most affected country by online banking malware: Trend Micro

As revealed in the Trend Micro Q1, 2014 Threat Round Up, India has made it to the top 3 most affected countries by online banking malware. India slowly rose to the top 3 due to a spike in the number of online bankers in the country, which could be attributed to a vastly improved banking industry. "The number of online bankers in the India has improved the overall industry but has resulted in significant rise in malicious activities. The mobile banking transaction volume grew along with the number of online money transfers-a-top-ranking secondary means of making inward remittances in India in Q1, 2014," said Dhanya Thakkar, Managing Director, Trend Micro (India & SEA). Online banking malware creators updated their portfolios yet again with the addition of new routines to their usual weapons of choice. Case in point: We found a ZeuS/ZBOT variant that had a 64-bit version, used Tor to hide C&C communications, and evaded anti-malware detection. We also saw a ZeuS/ZBOT spam attachment run only on a specific date but crashed on any other. On the Control Panel (CPL) front, we unmasked a BANLOAD variant that only affected Latin Americans who have been identified as such through their security software plug-ins. Another variant, meanwhile, used a non existing WhatsApp desktop client as lure to spread. Even worse, when executed, it downloaded a BANKER variant as well onto an already-infected computer...Read More

Mumbais BKC and Nariman Point also among Top 50 costliest Global Office markets

At more than US$150 per sq. ft. per annum, Delhis traditional central business district (CBD) of Connaught Place was ranked as the eighth most expensive office market in the world, according to CBRE Global Research and Consultings semi-annual Global Prime Office Occupancy Costs survey. Mumbais alternative business district of the BandraKurla Complex (BKC) was ranked sixteenth, and its CBD of Nariman Point came in thirty-second on the Top 50 list for prime office properties. Londons West End remained the worlds highest-priced office market followed by Hong Kong (Central) and Beijing (Finance Street). The latest survey provides data on office rents and occupancy costs as of March 31, 2014. Despite a drop in rankings by one spot over the previous survey, Connaught Place remains highly sought after by corporate office occupiers, because of its central location and connectivity to the rest of the city. During the review period, vacancy rates dropped marginally amid strong leasing activityparticularly from the aviation and banking and financial services sectors...Read More

Money Matters: How can women manage their own finances

Women are excellent at multitasking. On the one hand while they can handle all the household tasks with ease, they are also able to achieve efficiency at work. However, when it comes to handling money, not all women are comfortable with the idea and majority of them prefer the male members in the family to take the lead. Take an example of 31-year old Veena, married, who works for a corporate firm in Mumbai. Veena often juggles between family and work. This leaves her with very little time to manage her finances. While she brings home a decent package, she is often in a dilemma on some of the basic things like how to save, where can she save, how can she grow her money and so on. Her money is lying idle in her savings bank account, fetching her a four percent savings rate, when inflation numbers have already touched the eight percent mark. Veena prefers her husband to take the lead when it comes to managing money. As the financial world is getting increasingly dynamic and complex, with constant fluctuations in market conditions and product specifications, financial experts are of the view that the best way for women to become more responsible and take the right financial decisions is through self education or getting advised by a trusted expert on basic money concepts and financial decisions...Read More

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