by admin | May 25, 2021 | Banking, Economy, Markets, News
By Porisma P. Gogoi,
Mumbai : Prospects of normal monsoon rains, lower inflation and a positive growth outlook boosted the key Indian equity indices during the just concluded trade week.
The northward progression of the market was supported by the Reserve Bank of India’s lower inflation forecast and a positive growth outlook for the fiscal.
Along with the forecast, healthy auto sales data for March led the key indices — the BSE Sensex and the NSE Nifty50 — to their second consecutive week of gains.
However, “constantly lingering fear due to ongoing trade war-like” scenario between the US and China capped the weekly gains.
On a weekly basis, the barometer 30-scrip Sensitive Index (Sensex) of the BSE gained a massive 658.29 points or almost 2 per cent to close at 33,626.97 points.
The wider Nifty50 of the National Stock Exchange (NSE) closed trade at 10,331.60 points — up 217.9 points or 2.15 per cent from its previous week’s close.
“Markets rallied strongly this week despite a sharp sell-off seen on Wednesday. It was the second consecutive week of gains for the Nifty,” Deepak Jasani, Head – Retail Research, HDFC Securities, told IANS.
“The top sectoral gainers were auto, pharma, PSU banks and realty indices. There were no losers,” Jasani added.
Rahul Sharma, Senior research analyst at Equity99, said: “Unexpected ‘dovish’ monetary policy announced by the RBI, improving macro-economic scenario and expectations of normal monsoon have been the main triggers for the second consecutive week of gains.”
On Thursday, the central bank in its first bi-monthly monetary policy review of 2018-19 lowered its inflation forecast for the first-half of the fiscal to between 4.7 per cent and 5.1 per cent, and 4.4 per cent for the second-half.
The forecast led the two key indices to their biggest intra-day gains since March 12. The BSE Sensex soared by over 500 points, while the NSE Nifty50 rose by almost 200 points.
On the currency front, the rupee strengthened by 21 paise to close at 64.97 against the dollar from its previous week’s close at 65.18.
D.K. Aggarwal, Chairman and Managing Director of SMC Investments and Advisors, said markets across the globe rebounded during the week gone by on hopes that the US and China could open negotiations and avert a global trade war, turning the focus to upcoming earnings.
“However, on Friday, the sentiments of the market participants’ get spooked after US President Donald Trump proposed additional tariffs on China,” Aggarwal told IANS.
On the investment front, provisional figures from the stock exchanges showed that foreign institutional investors sold scrips worth Rs 1,363.95 crore, while the domestic institutional investors purchased stocks worth Rs 2,660.52 crore during April 2-6.
The top weekly Sensex gainers were: Tata Motors (DVR) (up 12.23 per cent at Rs 206.40); Tata Motors (up 11.12 per cent at Rs 363.85); Kotak Bank (up 6.72 per cent at Rs 1,119.10); Hero MotoCorp (up 6.68 per cent at Rs 3,782.40); and Adani Ports (up 6.67 per cent at Rs 378.30).
The losers were: Bharti Airtel (down 3.38 per cent at Rs 385.40); Coal India (down 2.84 per cent at Rs 275.45); Axis Bank (down 1.71 per cent at Rs 500.70); ONGC (down 0.51 per cent at Rs 176.90); and Infosys (down 0.45 per cent at Rs 1,129.30).
(Porisma P. Gogoi can be contacted at porisma.g@ians.in)
—IANS
by admin | May 25, 2021 | Opinions
By Amit Kapoor,
Our chief economic advisor very succinctly put it recently that India is both a story of revival and risks. It was further noted that although the level is still below potential, the economy seems to be picking up resiliently in terms of direction.
Now, echoing on similar lines, India has again become the world’s fastest-growing large economy as the latest trends from the CSO data have reported a GDP growth of 7.2 per cent in Q3 of the current fiscal year. No less than an opportunity, this has patently presented all of us with a sense of euphoria while taking our economy to reclaim the “fastest-growing” mantle from China. However, sadly it cannot be for long that one can hold up to all the zest surrounding the Indian economy: Our performance in the global prosperity order is the case in question here.
India has made a ripping progress over the last few decades, with its presence now also being felt at the world level, but when we look at the per capita real GDP figures, the country stands far lower on the economic spectrum compared to the rest of the world: $1,861.5 at 2010 prices for 2016 (World Bank data).
Keeping its economic peers in mind in going by this measure of prosperity, a quintessential question that besets us is why is India where it is today in terms of standard of living for its citizens? Is there a “magic sword” that some countries swing in their favour and maintain decent levels of living standards? Well, differences in GDP per capita across countries have abstracted much of growth and development economics amongst economists which continues even today. However, no less than a magical sword or a master key, the answer lies in looking at the competitiveness of India’s national economy.
Conventional definitions of competitiveness would normally involve discussions about the availability of cheap abundant labour and natural resources, interest rates, exchange rates, the state policies in action and the management practices adopted. But an idea which is single-handedly much more eloquent to the theme of competitiveness is productivity. In its simplest form, productivity is the value of output per unit of input used. National competitiveness, then, is defined as the productivity of the factors of production (labour, land and capital) employed during production processes.
This explanation of productivity being the most meaningful concept of competitiveness is sufficient by itself to demonstrate that there tends to be more broad and complex forces at work than ones that have been traditionally talked about.
Since it is an overriding goal for a nation to produce a high and rising standard of living for its citizens, its ability to be able to deliver on this front depends entirely on the productivity of some of the principal factors of production. Depending on the quality as well as the features of the product, productivity is concerned with the efficiency with which this product is produced.
Being the root cause of national per capita income, productivity, however, must not be mistaken with higher participation of the labour force although it is productivity which determines the rate of return that a factor can earn for itself. This is because it is possible for the overall output to rise even though the per worker per hour productivity goes down. Hence, sustained standards of living and productivity growth require that an economy continually upgrade itself.
An economy that is made up of companies and a set of industry segments must incessantly work towards improving productivity by boosting production efficiency through added quality and features. In the process that is unleashed, capabilities must be developed to compete in more advanced segments as well in entirely newer sections. Because no nation can be productive in everything it does, the ideal is to position the limited pool of resources into uses that are the most productive ones. The search then is for the unwavering quality of a country that can allow its industries and companies to create sustained competitive advantage in selected fields, not only locally but also globally.
Therefore, policymakers seeking to unravel higher levels of living standards must first fully understand the determinants of productivity and its growth. It is incontestably about how and why that underpins the process of achieving and upgrading a nation’s productivity. To find answers to some of the basic caveats, the economy then must not be studied as a whole but in terms of specific defining industries and segments where companies in the modern international competition set-up compete with global strategies involving both trade and foreign investment. This approach has the capability to provide for an understanding why a nation like India can build up a home base for its companies that compete on a global level.
The home base here which is to be built over time is nothing but the nation itself where essential competitive advantages are created and hence sustained.
(Amit Kapoor is chair, Institute for Competitiveness. The views expressed are personal. He can be contacted at amit.kapoor@competitiveness.in and tweets @kautiliya. Bhawna Kakkar, researcher, Institute for Competitiveness, contributed to the article)
—IANS
by admin | May 25, 2021 | Banking, Economy, Markets, News
By Porisma P. Gogoi,
Mumbai : The Indian equity market, which will resume trade on Monday after a four-day-long break, will track domestic events like the central bank’s first bi-monthly monetary policy review for the 2018-19 financial year, along with the release of macro-economic and automobile sales data, for direction in the upcoming week.
Along with domestic factors, global market sentiment, as well as crude oil prices and the course of foreign and domestic funds are also expected to influence investors’ risk-taking appetite during the week ahead.
“Next week will be the commencement of the new financial year after the long weekend and markets would look forward to the PMI (Purchasing Managers’ Index) numbers. The Reserve Bank of India (RBI) monetary policy committee meeting is scheduled on Thursday,” Devendra Nevgi, Founder and Principal Partner, Delta Global Partners, told IANS.
According to Nevgi, markets are not expecting any action from RBI in terms of changes in policy rate, but the language would be scrutinised closely to ascertain its stance.
Macro-data scheduled to be released next week include the Nikkei India PMI data for the manufacturing sector on Monday and for services sector on Wednesday.
“The response of banks to the commencement of India’s borrowing programme remains the key for interest rates. The global sentiments, especially towards technology stocks in the US, remain important. The fall in interest rates in the US (10 year) as well as in India should help the sentiment,” he added.
Last week, the Central government’s decision to borrow only Rs 2.88 lakh crore through its benchmark bond scheme in the first half of FY19 — 47.5 per cent of the total budgeted amount — as against 60-65 per cent share in this period in previous years, had lifted investors’ sentiments.
Also, positive global cues on the back of trade war fears easing between major world economies had pulled the key Indian equity indices from their five-month lows to close with substantial gains.
On a weekly basis, the barometer 30-scrip Sensitive Index (Sensex) of the Bombay Stock Exchange (BSE) closed at 32,968.68 points — gaining 372.14 points or 1.14 per cent — while the wider Nifty50 of the National Stock Exchange (NSE) closed trade at 10,113.70 points — up 115.65 points or 1.16 per cent from its previous week’s close.
D.K. Aggarwal, Chairman and Managing Director of SMC Investments and Advisors, said that, apart from the outcome of the RBI monetary policy meet and macro-economic data, the trend in the global markets will also set the course for the domestic bourses next week.
“The trend in the global markets, investment by foreign portfolio investors (FPIs) and domestic institutional investors (DIIs), the movement of the rupee against the dollar and crude oil price movement will dictate the trend of the market,” Aggarwal told IANS.
Last week, the Indian rupee weakened by 17 paise to close at 65.18 against the US dollar from its previous week’s close at 65.01.
Provisional figures from the stock exchanges showed that foreign institutional investors (FIIs) sold scrips worth Rs 868.62 crore, while the DIIs purchased stocks worth Rs 6,151.53 crore during the truncated trade week.
Figures from the National Securities Depository revealed that FPIs invested in equities worth Rs 3,214.27 crore, or $494.08 million, during March 26-28.
In the upcoming week, initial sentiments in market trading will be driven by global clues and the on-going ICICI Bank crisis, said Gaurav Jain, Director at Hem Securities.
“Eventually, all focus will shift to the RBI policy. We will also see some stock-specific action on account of a rejig in the Nifty50 index. Bajaj Finserv, Grasim Industries and Titan Company will replace Ambuja Cements, Aurobindo Pharma and Bosch in the Nifty50 index from Monday,” said Jain.
“Beside the RBI policy, auto stocks will be in focus as the auto companies start announcing monthly sales numbers for March 2018 starting from April 1,” he added.
Deepak Jasani, Head of Retail Research for HDFC Securities, maintained that on technical levels, the Nifty50 remained in a downtrend for the week ahead.
“Technically, the Nifty remains in downtrend and further downsides are likely early next week once the immediate support of 9,958 is broken,” Jasani told IANS.
“Immediate resistance is now at 10,228,” he added.
(Porisma P. Gogoi can be contacted at porisma.g@ians.in)
—IANS
by admin | May 25, 2021 | Opinions
By Shruti Sharma,
Like most Indian states, Uttar Pradesh’s discoms have the twin challenge of universal household electrification while also ensuring revenue matches the cost of supply. But growing demands for electrification and subsidies, combined with a lack of revenue recovery from those consumers, conflicts with the discoms’ ability to cover their costs. This has resulted in an increasing revenue gap that peaked at Rs 21,486 crore in FY 2016.
Part of the reason for poor revenue generation is the inability of discoms to charge consumers the true cost of electricity. Other reasons include high aggregate technical and commercial (AT&C) losses, low metering and poor billing efficiency. A closer examination of these can assist state governments in achieving universal household electrification in a financially sustainable manner.
Electricity tariff revisions are approved by the Uttar Pradesh Electricity Regulatory Commission (UPERC), the state’s highest authority on electricity. Other agencies, like the state government, the energy department or political parties, with no formal role, can influence tariffs. Since 2002, ruling parties have typically adopted populist measures, leaving the implementation of reforms as a problem for succeeding governments. For example, before state elections, consumer tariffs are often frozen or delayed. This was seen before the 2002, 2012 and 2017 elections.
State governments need to exercise caution on setting new subsidies as this can set a precedent that continues for electoral gains. For example, the power loom weavers subsidy initiated by the Samajwadi Party in 2007 continues till today. Uttar Pradesh, like most states in India, has a system of cross-subsidies, where households and farmers receive net subsidies; while commerce and industry pay a net surcharge, which helps to cover the cost of the low rates charged to households and farmers.
A detailed study on consumer perceptions towards tariff reform by the International Institute for Sustainable Development (IISD) and Global Subsidies Initiative (GSI) found that households and farmers have no generalised sense of entitlement to free electricity. These two groups, along with industrial and commercial consumers, have a strong consensus that poor households should receive free electricity.
This indicates that better targeting of subsidies to poor households and greater communication of that strategy may be well-received by all consumer groups. Households are also willing to pay marginal tariff hikes against a range of conditions like increasing hours of supply and immediate address of grievances. This suggests discoms can pass through tariff hikes if they focus their communication not on their financial health but on what is important to consumers — evidence of improvement in services.
Poor metering and billing are also responsible for discoms’ losses. The IISD-GSI study found that 75 per cent of rural households are unmetered, and of those with electricity meters, only 40 per cent of bills were based on the meter. The UPERC, in its latest tariff order, has penalised unmetered households and replaced their flat rate tariffs with high tariff rates, incentivising households to obtain a meter.
AT&C losses, a term for measuring both energy and revenue loss, are largely caused by power thefts and increasing arrears. In 2017, data from UDAY (Ujwal Discom Assurance Yojana, a financial support scheme for discoms) shows that Dakshin Vidyut Vitran Nigam Ltd had the lowest AT&C losses at 26 per cent while Purvanchal Vidyut Vitran Nigam Ltd had the highest at 39 per cent. These losses are much higher than the national average, making Uttar Pradesh among the top states with the highest AT&C losses.
Discoms can improve their financial viability to meet the state’s energy access needs through both tariff reforms and meeting UDAY targets. Monitoring UDAY progress and using consumer preferences as guidance for planning tariff adjustments can help discoms design acceptable tariffs.
(Shruti Sharma is an Energy Specialist at IISD. The views expressed are those of IISD. She can be contacted at shruti.sharma@iisd.ne)
—IANS
by admin | May 25, 2021 | Economy, News, Politics
New Delhi : India is set to become a $5 trillion economy by 2025, Economic Affairs Secretary Subhash Chandra Garg said on Monday.
“We expect to grow at about 7 to 8 per cent in real terms and 9 to 10 per cent in nominal terms.
“I think it’s very reasonable to expect that we can achieve the five trillion economy mark. It’s a reasonably set goal,” Garg said during a panel discussion on ‘Shifting role of associations for attaining $5 trillion GDP by 2025’.
He said that India was enjoying macroeconomic stability and exports, after declining for the last couple of years, had started to pick up.
He added the government was also on the path to keep inflation within two per cent range of its four per cent target.
Garg said that in order to capitalise on this macroeconomic environment and achieve the $5 trillion goal, India needed to improve its share in the global trade pie.
“As the global trade grows, we have to have a good part of it,” Garg said.
He added that apart from a robust growth in the traditional sectors like textiles, India also needed to concentrate on services sector in an increasingly competitive global economy.
—IANS
