Inflation Hits 13-yrs High

Inflation 12.44% for week ended 2-Aug-08

Inflation Hits 13-yrs High

if u see inflation its due to food ....rasing interest rate wont solve the problem as fopod prices have no correlation with interest rates

INFLATION AT 12.44% V/S 12.01% FOR WEEK ENDED AUG 2

INFLATION AT 12.44% V/S 12.01% FOR WEEK ENDED AUG 2

Inflation likely to touch 13-14% by October, says ABN Amro chief

"Inflation is likely to touch the 13-14 per cent mark by October, but it may soften after that," ABN Amro Bank's India chief Meera Sanyal told reporters in Mumbai on August 12.
Sanyal also said there has been a slight increase in increase in delinquencies in the credit card and personal loan portfolios of banks and attributed it to higher interest rates.
On corporate growth, Sanyal said that in the medium-term, there may be some slowdown, "but in the longer-term, it will remain robust."
She said that despite a slowing down in crude prices, inflation in the country was likely to touch the 13-14 per cent mark by October. "But inflation should come down post-October," she added.
Given the good monsoon expectations, there are already signs of food prices coming down, she said.
On ABN Amro Bank's rebranding into RBS, Sanyal said that the bank was in constant discussions with the Reserve Bank on the matter. "We are in constant touch with the RBI (on the rebranding issue)," she said. The entire process may take up to the middle of next year, she said.

Inflation may touch 13%; growth to slip to 7.7%: Rangarajan

There will be no respite from rising prices in the immediate run, with PM's Economic Advisory Council on Wednesday suggesting that inflation may touch 13 per cent while the GDP growth rate is expected to slide to 7.7 per cent from 9 per cent recorded last year.
"For some more time inflation can increase. It could touch 13 per cent, but by December it will start declining and is likely to moderate to 8-9 per cent by March 2009," said outgoing chairman of the PMEAC C Rangarajan while releasing the Economic Outlook for 2008-09.
Approving the Reserve Bank of India's [Get Quote] tight monetary policy to contain inflation, which has touched the 13-year-high mark of 12 per cent, Rangajaran said, "It (inflation) could be brought down to 8-9 per cent by March 2009 through coordinated policy action."
Inflation, the silent killer: Complete Coverage
As regards the Reserve Bank of India's Monetary Policy, Rangarajan, who is also a former RBI Governor, said: "The tight monetary stance needs to be maintained till the pace of inflation comes down."
Justifying the 7.7 per cent economic growth projection for 2008-09, Rangarajan said, "There is a slowdown in agriculture, industry and services and the global environment is not very conducive to growth. This will affect Indian economy as well."
The agriculture production is likely to grow at a lower pace of 2 per cent in the current year as against the 4.5 per cent in last fiscal, he said adding industrial output is expected to decelerate to 7.5 per cent from 8.5 per cent and services to 9.6 per cent against 10.8 per cent in 2007-08.
The new chairman of the PMEAC, Suresh Tendulkar said 7.7 per cent economic growth rate will not be "unrespectable and would be second highest growth rate by any country."
Another PMEAC member G K Chadha said, 7.7 per cent growth rate would be "very respectable. . . one should not forget that there are business cycles and growth cannot move only in one direction."
Rangarajan attributed the slowing down of the economic growth to factors like rising oil and food prices in international market and global slowdown triggered by sub-prime crisis in the United States.
Adverse global environment, he added, will have implications for the current account deficit which is expected to rise sharply to 3.2 per cent from 1.5 per cent in 2007-08.
Pointing out that the surge in inflation was mostly on account of surging global commodity prices, the EAC said there were serious fiscal risks arising from growing off-budget liabilities, which had been estimated at 5 per cent of GDP.
"Implementation of the rural employment guarantee programme and Sixth Pay Commission's report, we think, will take total deficit to 5 per cent. This is very large fiscal deficit", Rangarajan said.
The PMEAC further said that while the fiscal deficit targets would not be met, the revenue deficit would persist.
The government has already referred the issues concerning accounting of off-budget subsidies to the 13th Finance Commission, he said adding "as long as they are small there is no problem. . . but today off-budget liabilities because of oil bonds and other factors have become significant."

Inflation has shot up to 12.44 per cent!

Inflation has shot up to 12.44 per cent!

Despite the government's efforts to control prices, inflation continues to rise and is now at its highest in over thirteen years, as prices of pulses, spices, eggs, fish and meat among other things continued to rise.
The government on Thursday put the inflation for the week ended August 2 at 12.44 per cent, a rise of 0.43 per cent increase over that recorded in the previous week, even as the finance ministry said that the rate of price rise was "stable" on a week-on-week basis and that the Sixth Pay Commission recommendations will not affect inflation further.
As per the data released today, prices of most of food articles went up, although some items like fruits showed downward trend, said official figures released.
In its statement, the ministry said out of a total 98 primary articles, prices of 18 have declined as compared to the previous week.
Finance Minister P Chidambaram had said at a meeting of Congress spokespersons that government was open to bringing more commodities under the futures trading ban. Eight farm commodities, including rice and wheat, are already banned for the purpose of forward trading.
Meanwhile, prices of iron and steel remained unchanged but cement prices marginally increased. For the corresponding week, inflation stood at 4.70 per cent a year ago.

Source - rediff.com

Inflation 12.33%

INDIA INFLATION COMES @ 12.44 % VS 12.01 %

Wise words from Chandrakant Sampat

Dear Investors
Wise words from an experienced investor. I always value people who have seen it all over 50 years, their perspective is polished and they can catch long term patterns that endure.....Nowadays people only follow Shankar Sharma technical outlook rather than looking at hardcore investors
Chandrakant Sampat, Stock Investor - "Social awareness lacking"
He quit his family business in 1955 and started investing in the stockmarket. Today, at 80, he is one of the oldest investors in Indian equities. He shares his views on investing...
How have the markets changed in the last 43 years that you have been an investor?

Markets are totally different now. I went to the market in 1955. Earlier, the Controller of Capital Issues decided the price at which a public issue could be priced. Secondly, it was compulsory for any foreign company to get into India to offer at least a portion of its total issue to the public. It was very economical to go to the market then. All you needed was a cheque book and a slip book and, most importantly, merchant bankers did not have a say on what the price of a public issue would be.
In 1979, Hindustan Lever [Get Quote] went public. The shares were offered at Rs 16 each and the total distribution of dividend was Rs 32 crore - that was Rs 2 per share. This means that we were offered a share at 11 or 12 per cent yield. Today, the index yield is 0.85. The only question then was how do you choose which company to invest in.
This was great not only for the Indian shareholders but also for the Indian society. Institutions like LIC (Life Insurance Corporation) could afford to build a substantial amount of corpus on their retirement funds. Think of Reliance Power now.
Rupees ten became Rs 450 in six months and the public bid at Rs 900. For a company that will go into production in 2016. If this instrument lies on the balance sheet of institutions that provide retirement funds and pension money, can they ever make up the loss? The capital market has lost its social awareness.
Has your stock selection process changed over the years?
No, it has not. I have a four-fold process of stock selection. First of all, it must be a business that I am able to understand. If it is an industry that I have no idea about, then I will not look at the company. Secondly, it should have zero or very little debt. Third, it must be earning 30 per cent on the capital employed. And it should be available at a price-earning ratio of 13-14 times the current year's earning. Ideally, it should be at 3.5-4 per cent yield.
There are very few such opportunities left, but whenever they come, I like to participate.
Are you optimistic about the future of the Indian capital markets?
I cannot say I am. Machiavelli said that if the law permits anyone to do anything they want, society will be destroyed. This capital market permits anyone to do anything. The result of this freedom will destroy this society. I am 80, I am not worried. But what about younger people? What will happen when you retire?
Today, mutual fund managers are rewarded on the basis of their performance and not on the basis of value. This triggers them to chase momentum and not value. Chasing momentum is nothing but gambling. You must remember that a history of good dividends is more valuable than how quickly the share price has gone up in the last few months.
There are no profits, there are only accrued costs not incurred. I don't have any accrued cost not incurred. Younger people have tremendous accrued cost not incurred. Are you saving enough to take care of this? If you are not, you are not getting any remuneration, you are losing, and so is society.
What is your advice to today's retail investors?
The big issue today is inflation. In my view, frugality can beat all inflation. I still don't own a car, I don't have a mobile. Ours is now an economy based on waste. If you change that, other factors will correct themselves. I am now only 30 per cent in equity, the remaining is in liquid instruments.
Happy InvestingPadmanabhanWealthbull-A Value Investing Theme & Team

Nestle India: A Future In Milk-Motilal Oswal

Nestle India’s 1HCY08 performance reaffirms our strong belief in the company’s growth potential. Its business strategy is in line with the parent's and we believe that its focus on innovation and renovation would help it to maintain leadership. Maggi noodles enabled 19.3% domestic volume growth in 1HCY08 Nestle has reported robust volume growth of 19.3% in domestic business in 1HCY08. Volumes of Prepared Dishes (noodles and culinary products) have grown 30% while Chocolate & Confectionary volumes have grown 20%. Dairy Products volumes have increased 10% while domestic Beverages volumes have grown in single digits. The company has been able to hold its leadership position in infant foods, noodles, ketchup, white chocolates, wafers, and coffee. Contribution of new products has grown 5x since CY03 Nestlé’s renewed focus on innovation and renovation has resulted in a 5x increase in sales of products/variants launched in the last three years. The company has entered functional foods and has launched NIDO (milk powder for children above two years), Milkmaid Funshake (flavored milk in five variants), MILO Smartplus (Rs88/500gm), Nesvita Multigrain breakfast cereal and Nesvita Pro Heart milk (with omega-3). It aims to achieve product differentiation based on cutting-edge research and speed of innovation which should ensure sustained competitive advantage and healthy profit margins. Management confident of maintaining margins Nestlé’s gross margins for 1HCY08 were flat despite a sharp run-up in input costs (prices of oils, green coffee, milk solids and wheat have increased by 23.5%, 21.7%, 10% and 5.4%, respectively). 9-10% increase in finished goods prices, 60bp gains from Pantnagar facility and sourcing advantages in liquid milk have enabled 60bp margin expansion in 1HCY08. The management is confident of maintaining margins. Best placed to tap processed foods opportunity; maintain Buy The management foresees huge growth potential, as consumers are indulging in choice-driven consumption for the first time and are more willing to experiment. Nutrition and wellness are becoming more relevant to top-end consumers; this should fuel the demand for functional foods. Nestle is well placed to tap incremental demand from the low end segment (MRP less than Rs10/SKU), which has grown at a CAGR of 20% since CY03. We believe that Nestle India's goals and strategies are in sync with the parent which will enable faster technology and new product knowhow transfer, making it best play in the processed food sector in India. The stock trades at 28.2x CY08E EPS of Rs59.6 and 22.2x CY09E EPS of Rs75.9. We maintain Buy with a target price of Rs1,900 – an upside of 13%.
Safe Harbor Statement:
Some forward looking statements on projections, estimates, expectations & outlook are included to enable a better comprehension of the Company prospects. Actual results may, however, differ materially from those stated on account of factors such as changes in government regulations, tax regimes, economic developments within India and the countries within which the Company conducts its business, exchange rate and interest rate movements, impact of competing products and their pricing, product demand and supply constraints. Nothing in this article is, or should be construed as, investment advice.

Old Pine, Traxis and Helios Bet On India

Lone Pine Capital LLC, run by Stephen Mandel, and Traxis Partners LLC are among56 overseas funds that registered to buy shares in India in July, the most in six months, betting on a recovery in stocks. Helios Capital Management Pte and StonewaterCapital LLC also won approval from the nation's regulator, nine months after authorities forced hedge funds to register.

India's stock market recovered its $1 trillion in market value last month, helped by the biggest drop in commodity prices in 28 years. The new funds may help reverserecord sales of stocks by overseas investors that led to the biggest first-half slump in the Sensitive Index since its 1979 creation.
``India is one of the bigger beneficiaries of commodity and oil weakness as money flows from commodity-producer countries to consumers,'' said Samir Arora, who oversees $1billion at Helios Capital Management in Singapore and received regulatory approvalon July 21. ``Foreign institutional-investor selling has normally marked a bottom, it will be the same again.''
Investments in emerging markets including India may help revive returns in the $1.9 trillion hedge fund industry that's heading for its worst year in two decades after bets on U.S.financial stocks backfired. Banks and brokerages have written down $493 billion and raised $353 billion in capital since the start of 2007 as the U.S. subprime-mortgage market collapsed.Halted TradingProposals by the regulator in October to curb offshore investment vehicles used by hedge funds triggered a panic among investors that halted trading on Mumbai exchangesfor an hour and wiped out $100 billion of value in a day.
The funds were ordered to register in India to buy stocks, or given 18 months to sell their holdings. The tighter rules helped spark a sell-off of shares by investors based outside India, which have sold $6.4 billion of equities this year. Last year, global investors bought a record$17.2 billion of stocks, according to the regulator.
Caxton Associates LLC, an $11 billion fund started by Bruce Kovner, and Daniel Loeb's Third Point LLC are among 293 funds approved to buy shares in India this year, according the regulator's Web site. That's 20 percent of all registrations since the market was opened to foreign investment 15 years ago, according to calculations by Bloomberg News.
Middle East investors including the Brunei Investment Agency, the Abu Dhabi Investment Council and Qatar Insurance Co. can also buy equities in India for the first time as they seek greater returns on their oil earnings. The Gulf Cooperation Council states, whichtogether pump about one-fifth of the world's crude, earn more than $1.2 billion a day from oil sales.The following table is a list of funds registered with the Securities & Exchange Board of India since January 2008

Goldman gives the shove to Sesa Goa, Blackstone knocks off Zee News

13/8/2008
500295
SESA GOA LTD
GOLDMAN SACHS INVESTMENTS MAURITIUS I LTD
S
374000
175.42
12/8/2008
500295
SESA GOA LTD
GOLDMAN SACHS INVESTMENTS MAURITIUS I LTD
S
281282
178.04
13/8/2008
532794
ZEE NEWS
BLACKSTONE ASIA ADVISORS LLC AC THE INDIA FUND INC
S
2020000
40.17
Safe Harbor Statement:
Some forward looking statements on projections, estimates, expectations & outlook are included to enable a better comprehension of the Company prospects. Actual results may, however, differ materially from those stated on account of factors such as changes in government regulations, tax regimes, economic developments within India and the countries within which the Company conducts its business, exchange rate and interest rate movements, impact of competing products and their pricing, product demand and supply constraints.

Nothing in this article is, or should be construed as, investment advice.

Aug 13 2008: FIIs Sock Bombay Just Before The Independence Day

FII trading activity on NSE and BSE on Capital Market SegmentThe following is combined FII trading data across NSE and BSE collated on the basis of trades executed by FIIs on 13-Aug-2008.
FII trading activity on NSE and BSE in Capital Market Segment(In Rs. Crores)
Category
Date
Buy Value
Sell Value
Net Value
FII
13-Aug-2008
1712.37
2627.95
-915.58
Safe Harbor Statement:
Some forward looking statements on projections, estimates, expectations & outlook are included to enable a better comprehension of the Company prospects. Actual results may, however, differ materially from those stated on account of factors such as changes in government regulations, tax regimes, economic developments within India and the countries within which the Company conducts its business, exchange rate and interest rate movements, impact of competing products and their pricing, product demand and supply constraints.

Nothing in this article is, or should be construed as, investment advice.

Tesco broadcasts global ambitions with move to supply Indian stores

Tesco is to supply thousands of India's smallest shopkeepers withsuper-market products after Britain's biggest retailer revealed plansfor its first foray into one of the world's fastest-growingeconomies.
Tesco ended months of speculation yesterday by announcing plans toopen a wholesale cash-and-carry business in India and to work withTata to develop the Indian conglomerate's hypermarket chain.
Tesco's first cash-and-carry will open in Bombay at the end of nextyear and the group will spend an initial £60 million on the ventureover the next two years. Tata will pay Tesco an undisclosed fee forthe supermarket giant's advice and expertise as it rolls itshypermarket chain - Star Bazaar - across India.
Sir Terry Leahy, chief executive of Tesco, said: “This is anotherexciting development for Tesco. It complements our entries into Chinaand the United States, giving us access to another of the mostimportant economies in the world.”
Tesco has been eyeing India for the past decade. Talks with BhartiEnterprises over a potential joint venture in the country broke downtwo years ago. Under Indian law, foreign retailers must partner Indianrivals when setting up a store network, but they can retain 100 percent control of a wholesale business.
Tesco's decision to launch a cash-and-carry chain means that itsinitial success will depend on the type of small shopkeepers that havebeen squeezed out in Britain by the unrelenting march of thesupermarket.
India's £185 billion grocery sector is still dominated by 12 millionkiranas, mom-and-pop-style family-owned shops, which are protected bythe country's strict legislation on foreign direct investment.
Modern hypermarket formats have only a 4 per cent share of the marketbut their sales are growing at about 30 per cent a year as the rapidgrowth of the Indian economy fuels greater wealth among the middleclasses. Tata operates four Star Bazaar hyper-markets but plans toincrease the number to 50 over the next five years.
Phil Clarke, Tesco's international and IT director, said he wasconfident that the company's Indian venture would be a success. “Themarket is so underdeveloped and growing so fast that it has got a hugepotential for a business like Tesco that focuses on customers,” hesaid.
“The kirana stores will judge us, not by what we say, but what we do,and hopefully they will become loyal customers of ours. We will getout there, give them prices they don't expect and quality they cannotbelieve.”
Tesco will supply a range of fresh produce and non-food items,including clothing and electricals, through the cash-and-carryoutlets. Some will bear the Tesco label.
Mr Clarke said there were no plans to stock ready-made meals,including curries. He said that it could take 18 months for the firstsignificant revenues to flow, but did not think this would place Tescoat too much of a disadvantage to Wal-Mart, which struck a deal withBharti a year ago.
He added: “We have handed the advantage to Wal-Mart. It would havebeen nice to have been there before, but you cannot have everything.”
The TimesOnline

India Eco: Major Slowdown in Investment Cycle Ahead

Investment cycle peaked in F2008:
Based on the trend in fundraising activity, it appears this capex could have increased to 37% of GDP in F2008 from 35.9% in F2007. The key driver of this improvement is the sharp pick up in private corporate sector investments to 16.1% of GDP in F2008 from the bottom of 5.2% in F2001.

Clear signs of slowdown over the last few months:
A number of indicators show that investments growth has decelerated over the last six months. Capital goods output growth has slowed to 6.8% during the three months ending June 2008, from the peak of 24.2% for the three months ending October 2007. Similarly, the trend for aggregate corporate fund raising has also suffered over the last six months.

Macro environment remains challenging:
We believe the combined impact of slowing domestic consumption, higher domestic cost of capital and reduced capital access from international capital markets will result in further major slowdown in investment cycle over the next 12 months.

Recovery unlikely until 2010:
We believe that even if some banks start to cut lending rates in the next six months, the overall borrowing costs will remain high until last quarter of 2009. Similarly, we do not see a quick revival in capital inflows over the next 18 months. We expect the aggregate investment to GDP ratio will decline to 32% in F2010 from 37% in F2008.

Repeat of mid-1990s cycle?
In the 1990s, the private corporate capex to GDP ratio increased to a peak of 10.4% in F1996 from 6.1% in F1994, but later declined gradually to 5.2% in F2001. We believe the current macro economic trend has many similarities to the 1990s cycle, but the duration of the down cycle will depend on the global macro environment particularly for emerging markets.

Hotels to hike tariffs from September by 50%

MUMBAI: Come September and major hotels across cities like New Delhi, Bangalore and Hyderabad will hike tariffs by 10-50%. Thanks to a steady tourist inflow, most hotels have decided to go ahead with a rate revision next month when their financial year begins. According to government estimates, foreign tourist arrivals rose 7.4% in July over the last year. With domestic tourism also generating good business, industry feels that major hotels are trying to cash in on the supply-demand mismatch. "Occupany rates have gone up since last September and is expected to continue this year.

SEBI & Brokers

Brokers will be levying SEBI Fees @ 0.0002% on the value of sale and purchase of securities in NSE CM and F&O segments with effect from August 18