Another Asian financial crisis.........SOON!!!!!!!!!

Another Asian financial crisis to hit in next 12-18 months, there's no way FM can stop it now
By Swaminathan S Anklesaria Aiyar, ET Bureau | 29 Aug, 2013, 06.30AM IST

Make no mistake, a second Asian Financial Crisis is on its way. This storm will not blow over soon. It originated in the US, when the Fed proposed to taper and end quantitative easing.The frightening thing is that this will happen in stages over the next 12-18 months, and each turn of the liquidity screw can cause a fresh financial storm. Nothing Chidambaram or Raghuram Rajan says can avert the storm.Learning from the 1997-99 experience, allAsian countries (including India) have built up large forex reserves, reduced leverage compared with 1997, and shifted to floating exchange rates. This makes them far more resilient, so they should not collapse as in 1997-99. But they will suffer severe damage regardless.Depreciation raises the price of all items that can be exported or imported. Estimates differ, but a 10% depreciation probably sucks out 1-1.2% of purchasing power through inflation.At Rs 68 to the dollar, currency depreciation is around 25% since May, implying a loss of purchasing power of 2.5-3% of GDP. That is hugely recessionary. It will be reflected in much higher prices of petroleum products, fertilisers, most commodities, and knock-on transport and material costs.Chidambaram wants people to invest, but the coming recession will induce every corporate to postpone investment. A falling rupee keeps making Indian assets cheaper in dollar terms, so foreigners thinking India has good long-run prospects will wait till the Fed's storm ends.
The fall in purchasing power created by a falling rupee cannot be offset by a huge fiscal and monetary stimulus, as in 2008.
Storm will Continue
Chidambaram has sworn to hold fiscal deficit at 4.8% of GDP. With slowing revenues and rising subsidies, only slashing Plan spending can check fiscal deficit.
Money must be kept tight to check inflation. So, the crashing rupee will generate pro-recessionary fiscal and monetary forces. This in turn means corporate earnings will crash, a good reason to dump shares.Corporates with large unhedged dollar borrowings will suffer huge balancesheet losses, jeopardising banks that have financed them. International rating agencies will have good reasons to downgrade India, worsening the climate further.Rohini Malkani of the finance minstry wrote in this newspaper on Tuesday that using a model based on relative inflation with trading partners, India's equilibrium exchange rate should be the July level of Rs 58-60 to the dollar.Many experts say the rupee has overshot and will come back. Really? Remember the same thing was said about the Indonesian rupiah when it depreciated from 2,500 to 3,000 to the dollar in 1997, but it eventually went all the way to 18,000.Estimates based on fundamentals quickly become meaningless because a crisis changes fundamentals hugely. The crashing rupee has already changed the economy's fundamentals. Do not think that the rupee has just temporarily overshot, and will revert soon to Rs 60 per dollar. The storm is going to continue well into 2014.

http://economictimes.indiatimes.com/opinion/columnists/swaminathan-s-a-aiyar/another-asian-financial-crisis-to-hit-in-next-12-18-months-theres-no-way-fm-can-stop-it-now/articleshow/22128202.cms

INDIA-Land Acquisition Bill

Sreelatha Menon  |  New Delhi  August 30, 2013 Last Updated at 00:35 IST

Things you must know about the Land Acquisition Bill

The Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Bill, 2012

The Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Bill, 2012 –

 The Bill will replace the existing Land Acquisition Act, 1894. 

State still holds crucial strings The first steps towards drafting a new Bill that includes relief and rehabilitation (R&R) began under the NDA government a decade earlier. The government fell after readying the R&R policy. The first UPA government introduced two proposed laws in the Lok Sabha in 2007. But these were redrafted after Jairam Ramesh took over as minister for rural development. The present version — The Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Bill, 2012 — underlines the government's stated focus on fair compensation rather than fast acquisitionWhen land can be acquired: For private projects, public-private partnerships (PPPs) and for government projects, provided it is for a public purposeWhat is public purpose for land acquisition: Strategic use by the armed forces, paramilitary, state police; for national security; for infrastructure projects, including activities listed under the department of economic affairs (infrastructure section), excluding private hospitals, private education institutions and private hotels; projects related to industrial corridors, mining, national investment and manufacturing zone, sports, healthcare, tourism and space programmes; housing projects for income groups specified by government, projects planned for development of village sites, residential areas for lower income groups in urban areas; projects involving agro-processing, warehousing, cold storage, marketing infrastructure, dairy, fisheries and meat processing cooperativesPre-condition for acquiring: For a private entity or a PPP project, state has to conduct a social impact assessment (SIA) and an environmental impact assessment (EIA), to identify the families who would be affected if land was acquired. The private entity seeking land must then get the consent of 80 per cent of the affected families before it gets the government to acquire land for it. In the case of PPPs, the entity has to secure consent of 70 per cent of affected families. The third condition for getting possession of land acquired through state intervention is payment of compensation and fulfilling of R&R requirementsCompensation package: Up to four times the market value in rural areas and twice the market value in urban areas; the Bill provides compensation to those dependent on the land for livelihood; where acquired land is sold to a third party for a higher price, 40 per cent of the appreciated land value (or profit) will be shared with the original owners. This would be exempt from tax and stamp dutyR&R package: The definition of affected family includes farm labourers, tenants, sharecroppers and workers in the area for three years prior to acquisition. The compensation would be Rs 5 lakh or a job, if available, to the affected family; subsistence allowance of Rs 3,000 a month for one year; miscellaneous allowances of up to Rs 1.25 lakh for each familyDispute authority: A Land Acquisition and Rehabilitation and Resettlement Authority to be establishedRetrospective clause: Applicable on cases where no land acquisition award made. In cases where land was acquired five years ago but no compensation has been paid or no possession happened, the acquisition process to start againLease option: The Bill allows industry to take land on lease, instead of buying. But the decision rests with the state rather than the landownerWhy industry is upset: Make the land acquisition process slower; compensation would raise costs of projects fivefold; retrospective application clause not favourableMulticrop farmland: Irrigated farmland out of acquisition ambit for non-farm uses. But state can decide to what extent farmland should be protected. The farmer does not have any say in the matterProblematic clauses: No guarantee of jobs in R&R package; compensation calculated according to circle rates much less than market prices; no protection to farmland; state government to decide if unused acquired-land should be returned to the farmer or added to its land bank. This applies even if owners return the compensation

http://www.business-standard.com/article/economy-policy/things-you-must-know-about-the-land-acquisition-bill-113082900824_1.html

FIIs - RELENTLESS SELLING

Akash Prakash  |  New Delhi  August 29, 2013 Last Updated at 21:50 IST
Why are FIIs selling?
The catalyst is the run on emerging market equities, but many investors are just tired of waiting for India to get its act togetherSelling by foreign institutional investors (FIIs) has clearly accelerated. Almost $4 billion (Rs 24,000 crore) exited India's equity markets in the past three months. In the last two days alone, global investors sold equities worth over $400 million (Rs 2,400 crore). It is no longer just hedge funds shorting stocks or even selling based on exchange-traded funds. We are now seeing large, long-term capital providers selling down their holdings in India, as evidenced by the price damage in stocks like the HDFC twins, ITC and Sun Pharma.
Why are FIIs giving up on India? Why are they willing to exit now, even though the markets are down over 30 per cent in dollars for the year? It is not because it is hot money, prone to running at the first sign of stress. Instead, investors now finally seem to be throwing in the towel. They are unable to deal with India's volatilityor the need to constantly defend the country internally to an investment committee. Investors fear that a crisis is brewing, thanks to Indian policy makers' inability to bring the situation under control.
First of all, there is great fear surrounding the fiscal deficit given the fact that, in rupee terms, the Indian oil basket (for imports) is at an all-time high. It is inconceivable that Finance Minister P Chidambaram could have any chance of meeting his 4.8 per cent fiscal target. Oil and fertiliser subsidies have multiplied. The projected revenue targets seem unrealistic (tax revenue is already down to single-digit growth) and the revenues projected from disinvestment and spectrum sale are nowhere in sight. Moreover, the food security Bill will only add to the burden.
Yet, the finance minister will have to deliver on the fiscal target to avoid a ratings downgrade. The road to a ratings downgrade is a path no one wants to even contemplate. The only route open to him to meet the deficit target is to once again savagely chop all Plan expenditure, as he did in 2012-13. Yet, if he slashes Plan expenditure, how will we get the push to kick-start investment? There is absolutely no confidence, balance sheet strength or willingness on the part of the private sector to make fresh investments in the country. So the investment cycle can only be kick-started by the government. But if we are going to slash Plan expenditure, this push to investment cannot happen. The skewed mix of growth (consumption at the cost of investment) will also remain unchanged, and surely there are limits to how long this growth imbalance can continue. India's problem is more supply-side than demand-side, and a savage cutting of Plan expenditure will do nothing to remedy the supply-side issues. Without a push from the public sector, we will remain stuck at five per cent growth.
Investors also worry about inflation. Any attempt to cut fuel subsidies will lead to a spike in inflation, as we align diesel prices to global levels. Besides, rising prices of imported coal will also cascade through the system. And what if China starts recovering and commodity prices move up in tandem? Imported inflation is going to be a major issue; it seriously reduces any space the central bank may have to cut rates. Again, without rate cuts, how will we get the economy moving again?
The banking system is a huge pain point. Financial stocks were over-owned and have got battered in the last three weeks. None of the banks had expected the reversal in interest rates and the tightening of short-term liquidity (to defend the rupee) engineered by the Reserve Bank of India (RBI). Consequently, we have huge marked-to-market losses of almost Rs 40,000 crore on the portfolio of government securities the banking system holds. Add to these the losses on corporate bond portfolios. Asset quality continues to deteriorate. Also, now that the rupee is near 70, more than a few large groups are in stress on their unhedged foreign currency borrowings. The RBI has already given some dispensation and will have to give more to allow banks to not report these large marked-to-market bond losses. One should also expect the RBI to be lenient on restructuring and recognising non-performing assets. "Extend and pretend" will have to be the mantra, so that there is no loss of confidence in the banking system. Banks' net interest margins are also under pressure since wholesale funding costs have moved to 10.5 to 11 per cent. System credit growth is, at best, going to be 12 to 13 per cent. Investors are beginning to look through all the regulatory dispensation and focus on economic earnings, which do not look pretty.
The government lacks credibility in the eyes of investors. The finance minister, in trying to get the economy out of its funk, continues to cut a lonely figure. No one else in government seems to have any sense of urgency as to how close to the edge we are.
It is amazing that no public sector undertaking has yet tapped global capital markets. What are we waiting for? If the rupee keeps sliding, the markets may shut for Indian paper. We cannot wait for weeks for boards to meet - the Indian government is the majority owner, and it should act. Why are we delaying putting in place swap lines and non-resident Indian bonds? To stabilise the rupee in the short term, we need to rebuild confidence. The markets are still open for India to access capital, but this can change quickly.
On politics, it is amazing that the only thing to have come out of the monsoon session of Parliament so far is the food security Bill. Political parties cannot agree on the goods and services tax; coal block auctions; pension and insurance reforms; environmental issues or foreign direct investment; and judicial, police and governance reforms. There is, however, unanimity on the food security Bill. The Bharatiya Janata Party and Narendra Modi even wanted to universalise the legislation and raise the amount of grain to the poor to 35 kilogrammes. Investors are questioning the political class' priorities and the willingness to appear populist at any cost. What about jobs and income growth? Are these factors not politically relevant? No one seems capable of looking beyond populism and hand-outs, let alone improving governance and carrying out structural reforms to regain growth. The political system in India seems either incapable or uninterested when it comes to taking tough decisions. Why invest in a country where the entire political system seems to be in denial?
Investors are beginning to lose hope and give up on the country. Redemptions out of the emerging market equity asset class are the catalyst, but many are just tired of waiting for India to get its act together. With zero returns in dollars over a five-year period, many are asking how much longer they are expected to wait to see positive numbers.
Nothing they see inspires confidence. Growth is slowing; inflation and the fiscal deficit remain high; the government lacks co-ordination; and there seems to be no end to India's currency woes. We should maybe hope for another crisis in the West. That could perhaps give us the breathing space to continue.

http://www.business-standard.com/article/opinion/why-are-fiis-selling-113082901166_1.html

INVESTORS LOSE OVER $100 BILLION ....

Sensex crash: Market loses over $100 billion in four days
By PTI | 21 Aug, 2013, 04.58PM IST
MUMBAI: The four-day carnage in stock markets has left investors poorer by over $100 billion, while they suffered a loss of more than Rs one lakh crore in today's trade itself. Measured in terms of total market capitalisation of all listed companies, the investor wealth in Indian stocks today fell to Rs 58,60,000 crore -- registering a loss of close to Rs 1,09,000 crore from yesterday's level. The stock market benchmark Sensex today lost another 340 points to close below the 18,000 level -- taking its total fall in last four trading sessions to over 1,400 points. During the same period, the total market capitalisation has plunged by more than Rs 4.35 lakh crore. However, the loss in terms of US dollar is much sharper, given a depreciation of about five per cent in rupee value in the past four trading days, beginning August 16. The rupee today hit a new bottom below Rs 64.5 level against the US dollar, from a level of Rs 61.43 on August 14. In the US dollar terms, the total market capitalisation has fallen from $ 1,025 billion to little over $ 900 billion in the past four days. India was recently edged out of the elite global league of stock markets with a trillion-dollar market capitalisation and its valuation continues to slip further below with persisting weakness in stocks and rupee values. The market benchmark Sensex today closed at 17,905.91 points -- almost the same level that it was at a year ago (17885.26 points on August 21, 2012). In the past one month, the Sensex has fallen by over 11 per cent, while it has dropped by more than seven per cent in the last seven days. The markets were showing signs of strong revival early this year and the investors' wealth had topped Rs 70 lakh crore level, while moving closer to the record high level of about Rs 72 lakh crore scaled in January 2008. After remaining mostly range-bound in the first five months of 2013, the markets started losing ground and the weakness continues amid concerns about domestic economy and adverse global cues.http://economictimes.indiatimes.com/markets/stocks/market/news/Sensex-crash-Market-loses-over-100-billion-in-four-days/articleshow/21956300.cms

10 Stocks-- MANY LOSERS NOT LISTED.....!!!

10 stocks that destroyed Rs 6,86,559 crore
By Babar Zaidi & Sameer Bhardwaj, ET Bureau | 19 Aug, 2013, 08.00AM IST
If you are fretting that your stocks have not yielded any gains since the 2008 crash, here's some cold comfort. A study by ET Wealth shows that the 10 biggest wealth destroyers have lost 75-98% of their value since January 2008. Their combined marketcapitalisation, or the value of the total number of shares, dropped 87% from Rs7,89,597 crore on 8 January 2008 to Rs1,03,038 crore on 8 August 2013.These 10 stocks are not obscure, smallcap scrips, but widely held large- and midcap companies. At least three of them—DLF, Bhel and JP Associates—are constituents of the 50-share benchmark, Nifty. Others find a place in broader market indices or sectoral benchmarks. The losses have been mindboggling. After the dotcom bubble burst, the market capitalisation of all the companies listed on the BSE declined by Rs 5,88,402 crore, dropping from Rs 10,45,965 crore in February 2000 to Rs 4,57,563 crore in September 2001. However, these 10 stocks alone have exceeded that figure, losing Rs 6,86,559 crore since January 2008.
The usual suspectsMost of these wealth destroyers are from the real estate, infrastructure and capital goods sectors. All three sectors have been battered in the past five years. The CNX Real Estate index fell 85%, while the CNX Infrastructure index dropped 66% between 8 January 2008 and 8 August 2013.
Real estate developer DLFBSE 3.67 % has been the biggest wealth destroyer, with a drop of Rs 1,71,590 crore in its market capitalisation. This loss is more than the total market capitalisation of software giant, InfosysBSE 0.05 %. The drop in the value of Reliance CommunicationsBSE 0.63 % surpasses the total market capitalisation of its biggest rival,Bharti AirtelBSE 0.43 %. The combined losses of Bhel and UnitechBSE 8.64 % are big enough to buy the five biggest PSU banks, including the SBIBSE 1.51 %, Bank of BarodaBSE 0.30 %, PNBBSE -0.36 %, Canara BankBSE 3.26 % and Bank of India.
However, many investors have not reacted to this wealth erosion because it has happened gradually over five painful years. In the interim, shares must have changed hands, and very few of the investors who owned these shares in January 2008 would still be holding them. For some, there was an opportunity to exit in 2010, when the markets were upbeat, and again, early this year.
Given this massive decline, should you buy these stocks? As our cover story argues, just because a stock is trading at a historical low does not make it a good buy.
Promoters the biggest losersTo be fair, individual investors did not bear the brunt of this huge erosion in value. The company promoters, who controlled the largest chunk of the equity, were the biggest losers. Tata Communications, for instance, saw its capitalisation drop by Rs 15,235 crore, but the loss to individual investors was only Rs 341 crore. However, in the case of some other companies, such as IVRCL, which is not in the top 10 wealth destroyers, the promoters held less than 10% of the total equity.
The company lost Rs 6,658 crore of market capitalisation, but the bulk of this loss (Rs 5,516 crore) was borne by institutional investors, including FIIs, mutual funds, insurance companies and banks. They accounted for 22% of the total loss of market capitalisation, while individual investors lost around 5.5%. However, some of the losses of institutional investors are actually those of small investors in mutual funds, Ulips and pension plans.
Avoiding lossesCould these losses have been avoided? While the promoters had little option, individual investors could have taken steps to minimise them. For one, it is always advisable to set a limit to the loss you are willing to take. Small investors tend to sell their winners too early, but hold on to losers for far too long. This is what happened in case of realty stocks, where investors clung on to their investments in the vain hope that they would recoup their losses some day. However, the real estate stocks just kept plunging to new depths and the losses kept piling. The lesson for investors is not to get emotionally attached to a certain price level. Learn to cut your losses and exit if the tide has turned.
A bigger learning is to stay away from momentum stocks. At the height of the irrational exuberance of 2007, infrastructure was a buzzword for mega gains. Investors were blindly putting money in infrastructure stocks without assessing the sector's potential or checking valuations. This herd mentality should be avoided at all cost. Don't buy a stock just because everyone else is doing so. Invest only after careful research and evaluation of the company's financials. The real estate sector is a prime example of how valuations can be easily inflated.
Diversify your investments, not only across sectors and stocks, but also across time. Equity mutual funds are a readymade solution for such diversification. They invest in a basket of 25-30 stocks across 7-8 sectors, cushioning the investment against a possible downturn in a stock or sector. The SIP is a diversification across time and should be used to bring down the average purchase price.
http://economictimes.indiatimes.com/markets/stocks/stocks-in-news/10-stocks-that-destroyed-rs-686559-crore/articleshow/21877464.cms?curpg=2

ENJOY THE MARKET FALL...!!!!!!!!!

THE NIFTY IS DIVED FROM 6080 TO 5485 LEVEL, BUT COULD CREEP TO 5750 LEVEL. YETERDAY NOSE DIVED TO 5490 LEVEL. THE EROSION OF NIFTY LEVEL IS MASSIVE FOR A DAY TRADER WHERE AS THE OVER ALL PRAGMATIC VIEW PROVIDES A BUYING OPPORTUNITY TO LONG TERM INVESTORS. THE NIFTY HAS EXCELLENT SUPPORT AT 5250-5285 LEVEL. SO I PERSONALLY CONSIDER THET THE NIFTY FLOATING ABOVE 5335 LEVEL IS FAVING BULLS TO ACCUMULATE.

THE NIFTY HAS CORRECTED ONLY BECAUSE OF CAD AND BANKS FUTURE NPA PROBLEMS. THE INSTITUTIONAL INVESTORS WITH A GOOD LONG TERM VIEW CANNOT AFFORD TO SELL RELIANCE BELOW 809 LEVEL BECAUSE THE PRICE REVISION FOR THE GAS HAS DOBLED AND THE PROFITS SOAR FROM APRIL-2014. THE TCS AND INFY ARE FOR THAT MATTER THE TECHS WILL ENJOY THE WINDFALL GAINS AND THE LONGTERM CONTRACTS OF SOFTWARE SERVICES DUE TO RUPEE DEPRECIATION. SO IS THE CASE WITHEMERGING PHARMA LOTS. THE MINING EXPORTERS AND STEEL EXPORTERS ALSO ENJOY THE RUPEE FALL.

BY THE WAY….WHO IS BUYING INFOSYS, TCS AND TECHMAHINDRA, ANY WAY…???. THE DEEP POCKETED HNI AND INSTITUTIONAL INVESTORS WHO ARE MORE CONCERNED ABOUT THE SUSTAINED GROWTH AND DEVIDEND. THE CAPITAL SAFETY AND INREMENTAL GROWTH ARE ASSURED TO THOSE INVESTORS.

THE TATAMOTORS HAS NOW BECOME AN EXPORT ORIENTED COMPANY DUE TO JLR SALES. THE MAHINDRA CASE IS FAVOUABLE DUE TO TRACTOR SALES AND THEIR NEW PRODUCT LAUNCEHES. THE OTHER AUTO STOCKS LIKE HERO AND BAJAJ ARE FAVOURED DUE TO THEIR EXPORT PERFORMANCE AND NEW LAUNCHES.THE ONGC ENJOYS PRICE AT THE IMPORT PRICE OF OIL IN DOLLAR TERMS. THE OTHER STOCKS ARE NUETRAL.

NOW THE CHALLENGE IS COMING FROM THE BANKING SECTOR. THE HDFC AND HDFC BANK ARE NOE PARTICIPATING IN THE FALL. I BELIEVE THESE CAN ADD TO FALL BUT THE RECOVERY WILL BE SHARP DUE TO THEIR HIGH LEVEL OF PATRONAGE FROM FIIs. THE ICICI IS A NUTRAL CANDIDATE FAVOURS BOTH THE BULLS AND BEARS.

THE REAL PROBLEM COMING FROM SBI, PNB, BANK BARODA AND OTHER PSU BANKING LOTS. WHERE THE BLAME GAME ALREADY STARTED AMONG THE 3-SUBBARAO, CHIDAMABRAM AND PM-SING. THIS WILL NOW ADD PRESSURE ON THE NEW RBI CHIEF, FORCE HIM TO DANCE TO THEIR TUNES. THE FIIs ARE ALSO TAKING THE ADVANTAGE OF HAMMERING THE MARKETS TO GET DUE FAVOURS AT AN ERALY DATE. THE PRESSURE GAME IS ON….AS A MATTER OF FACT IT IS ALWAYS THERE AND WILL BE THERE.

SO THE CONCLUSION IS SO LONG RELIANCE TRADES ABOVE 793 LEVEL THE MARKETS ARE IN BULL GRIP. FOR AN INVESTOR IT IS AN OPPORTUNITY BUT FOR A TRADER ANYTHING IS OK…ENJOY THE MARKET FALL WITH A VIEW LIKE AN INVESTOR AND AS A TRADER BY STAYING WITH THE TREND…..

...GOING IS BAD...!!! BLAME ON.....??????????

Prime Minister Manmohan Singh, D Subbarao spar over RBI's policies

By TNN & Agencies | 18 Aug, 2013, 02.59AM IST

NEW DELHI: Tensions between the government and outgoing RBI governor D Subbarao came out in the open on Saturday as Prime Minister Manmohan Singh called for "fresh thinking" on macroeconomic policy and suggested the central bank narrow its focus. The PM on Saturday seemed to throw his weight behind finance minister P Chidambaram who has been insisting that RBI must not interpret its mandate solely in terms of inflation control and needs to be more attentive to the government's growth priorities. "I would venture to think the time has come when we should revisit the possibilities and limitations of monetary policy in a globalized economy, in a fiscally constrained economy," Singh said at a function to release a history of the RBI, where the governor was in audience. Interestingly, Subbarao used the occasion to stoutly rebut criticism of being insensitive to growth, saying it is "inaccurate and unfair" to contend RBI was "obsessed with inflation, oblivious to growth concerns". TAMING INFLATION Subbarao argued that the RBI was focused on taming inflation precisely because it was bothered about growth. "There is any amount of evidence to show an environment of low and stable inflation is a necessary precondition for sustainable growth," he said. While Subbarao called the growth versus inflation debate an "over simplification", Singh drew on his own experience as RBI governor to stress monetary policy needed to evolve, saying a redefinition of policy goals he initiated in the 80s had proved to be relevant. Elaborating his thoughts, the PM said, "... macro-economic policy-making, targets and instruments, I think, is another area, where I feel fresh thinking is called for, and I sincerely hope governors of the future, particularly Dr Raghuram Rajan, will attempt to revisit some of these difficult areas." As slipping growth accentuated the government's political problems over the last year, thefinance ministry and the RBI have found themselves increasingly at odds as the ruling coalition looked to the central bank to reduce interest rates to provide a fillip to investment. Subbarao, who demits office on September 4, said the view that governments are for growth and central banks are for price stability is a simplification and while he has said so earlier as well, it was significant that he chose to make the point again in the presence of the PM at Saturday's function.http://economictimes.indiatimes.com/news/economy/policy/prime-minister-manmohan-singh-d-subbarao-spar-over-rbis-policies/articleshow/21888275.cms

NOW BLAME THE "GOVERNANCE"..?????

PM freed country of shackles in 1991 only to bring them back in 2014By Bibek Debroy, ET Bureau | 17 Aug, 2013, 10.40AM IST

Carpe diem - seize the day! That was Horace. By any indicator, the economy was healthier in 2004 - 8 to 9% growth, with speculation about it creeping up to double digits and overtaking the Chinese figure. India was one of the bricks in BRIC, not Indonesia. We needed growth for poverty reduction. Debate over poverty lines notwithstanding, if head count ratios are lower in 2011-12, growth is responsible. We needed growth to generate government revenue, revenue being required for social sector expenditure. But growth wasn't guaranteed. It needed nurturing. By 2004, because of earlier reforms, manufacturing was freed of licensing. Private investment and consumption expenditure thrived, courtesy low fiscal deficits and interest rates. Road and telecom connectivity improved. Banking and civil aviation were liberalized. Health and education indicators began to improve and there was VAT, a stepping stone for GST. The agenda should have been clear, further liberalization and reforms. No reforms are zero sum. That's a myth. Liberalization hurts some segments, even if there are net overall gains. That's precisely the reason one reforms when the going is good. One seizes the day. If not, the night eventually seizes you. Those reforms aren't about FDI in pensions, insurance, civil aviation and retail alone, or Chapter V-B of the Industrial Disputes Act. Even with a "socialist" agenda, there was plenty to do - agriculture, service sectors, efficiency of government expenditure, decentralization, non-manufacturing industry, judicial systems, non-telecom infrastructure. PM is primus inter pares. He is much more than that. PMO is not quite a Project Management Office. Coalitions are a fact of life, as are state governments headed by political parties not part of the ruling Delhi dispensation. With a PM willing to govern, these can be handled, as can inevitable tussles between various government ministries and departments. But MMS was made of milder stuff. Exhibiting traditional traits of a risk-averse bureaucrat, he desired to out-source governance. This wasn't just NAC, which pre-empted elements of governance. Even when there was no such preemption, MMS outsourced to GoMs and e-GoMs, commissions and committees. Cabinet lost its clout, apart from the kitchen cabinet part. It is impossible to govern such a federal country if the PM cannot pick up the phone and talk to a CM. (Relations with a neighbour have been jeopardized on such an apparently trivial issue.) Did the so-called dream team of 1991 not know basic economics? As a pre-eminent member of the dream team, even if his economic views are more malleable than most, did MMS require a Bhagwati to lecture him on what is no more than common sense? What went wrong? In the barrage of comparisons between NDA and UPA, people tend to club UPA-I and UPA-II together. There's an inherent problem there. All said and done, UPA-I did nothing significant in reforming. There was RTI and MGNREGS, both driven by NAC. But for most of UPA-I, till 2008, there was legacy of high growth. The external environment was benign. Costs of inclusion, such as they were, could be handled. It went horribly wrong thereafter. Yes, there was the whammy of global slowdown. But there was the greater whammy of 2009 elections.We don't do much - the economy seems to chug along. We don't do much (the MGNREGS story was misread) - people vote us back. Why bother to rock the boat? 
Unfortunately, the boat was already in choppy waters and had developed multiple leaks. There were procedural issues, land, forest and environmental clearances. Following the lead set by PM, bureaucrats turned risk-averse. 
Privatization amounted to privatization of public assets. There was increasing state intervention in multiple sectors. Pre-emption by government crowded out resources for private investments and consumption. Presumably, dream team members didn't immediately realize how serious it was. Consequently, successive pronouncements on how good growth and inflation numbers were soon going to be - became objects of ridicule. Indeed, government became an object of ridicule. Meanwhile, an increasingly young and urban India poured its angst out onto the streets. The trigger may have been corruption and sexual offences. But underlying this was expectation of high growth, jobs, low inflation. All these took a hit. By any indicator, the economy is back to 1991 crisis levels. There's the IMF, as a back-up or packup plan. The nightmare team has pushed the clock back by 12 years. In this mess, as primus inter pares, primary culpability is with MMS. He is a silent man. But he has a lot to be silent about and a lot to answer for. There is no longer a P.V. Narasimha Rao to provide direction and leadership. Though one job has been preserved, in general, there is neither growth, nor jobs. The minor flurry over the last 6 months cannot swiftly undo damage of 10 years. What will be the MMS legacy? As a general principle of an individual's development, you build on your strengths. Contrary to what is suggested, you don't try to plug your weaknesses. That's a no-brainer. The MMS legacy should have been in economics. That's what he knows about. But that's what he ignored and failed to tap and build. Therefore, posterity will remember him as someone who, goaded by PVNR, freed the shackles in 1991 and brought them back in 2014. The wheel has come full circle and the sense of deja vu is inevitable. Meanwhile, MMS has set his heart on foreign policy (interpreted mostly as a non-policy vis-avis Pakistan) and what a mess there has been with all our neighbours, more than one volunteering to undertake excursions (or is it incursions?) into Indian territory. Pakistan, Sri Lanka, Bangladesh, Nepal, Bhutan, China - the list is long. The crisis isn't economic alone. Perhaps one should have the complete Horace quote. "Don't ask what end the gods have granted to me or you...While we speak, envious time will have fled: seize the day, trusting as little as possible in the next." One decade of MMS time has fled and there is little to envy him for. The gods did grant him an opportunity. But he chose to squander it. (The author is onsulting Editor, ET)http://economictimes.indiatimes.com/opinion/comments-analysis/pm-freed-country-of-shackles-in-1991-only-to-bring-them-back-in-2014/articleshow/21875467.cms?curpg=2

5500 may come under threat!!!!

Market is going through tectonic shift; 5500 may come under threat
By ECONOMICTIMES.COM | 16 Aug, 2013, 01.24PM IST
NEW DELHI: After rallying for four-days,Indian markets came under intense selling pressure on the last trading day of the week weighed down by the weakness in currency. Levels of 5500 on the Nifty, which is still considered a strong support for the index, may come under threat if rupee continues to depreciate against the dollar, say analysts. "The view is very clear that level of 5500 still hold a strong support for the Nifty. In past we have seen many times, markets bouncing back from this level; however the intensity of the bounce is getting lower and lower," saidAshwani Gujral of ashwanigujral.com."There is a tectonic shift that is happening in the markets because of the weakness in rupee. Chances are rupee should head lower towards 64 and that should lead to a breaking of this 5500 to 6100 zone on the downside," he added.Gujral is of the view that the more the government/RBI try's to fight the rupee, chances are it will go lower and lower. So this is a fairly difficult situation and chances are that 5500 may not hold for a long time, he added.Most analysts are of the view that it will take some time for the rupee to reverse and we could enter a lower range which is 4800 to about 5500 on the Nifty in the days to come andSensex should be able to find support around 18000 levels.So what is causing all the panic in markets?Rupee is one factor which is causing trader community to turn cautious on markets and the other could be fresh worries on rollback of $85 billion U.S. monetary stimulus earlier than expected.The rupee could not manage to hold onto gains and slipped to hit its fresh record low of 62.03 against the dollar on concerns that recent measure announced by the Reserve Bank of India may prove insufficient and on worries.Overnight, US stocks corrected sharply after upbeat U.S. jobs claims data and rising consumer prices suggest a winding back of the Fed's $85 billion a month bond buying could start as soon as next month."US Fed is preparing for a tapering off the current bond buyback programme and all that means is that is not good news for emerging markets, particularly with large current account deficit which includes India of course," said Sanjeev Prasad, Kotak Institutional Equities in an interview with ET Now.So where is the market headed from here, if US tapers its bond buying programe?According to experts, markets will certainly face some bit of more selling pressure and key support level on benchmark indices may come under threat.Today's fall of 500 points (intraday) could be the beginning of bear phase and generally a bad Friday leads to a bad Monday so all this people should keep in mind, added Gujral."It will be extremely difficult to pin point the market direction because we have not trended in a particular direction. Yes there is some sectoral rotation is happening within the 5500-6000 rage," said Manish Sonthalia, VP & Fund Manager, Motilal Oswal Asset Management-PMS in an interview with ET Now."Level of 5500 on the Nifty seems to be a floor as of now unless and until we saw massive exodus of dollars on the back of US tapering," he added.Sonthalia is of the view that the level US Fed's tapering of bond buying programe remains a worry for the month of September also, because yields on US treasury are starting to move up and there could be a big movement of foreign currency out of the country.Where can one invest?In times like these, when bears have an upper hand in the market; analysts see some value in FMCG, IT, capital goods and autos where 'alpha' can be generated."For the near term -- maybe over next one month or one quarter, India would continue to underperform," said Manishi Raychaudhuri, MD & HoR, BNP Paribas Securities in an interview with ET Now. "Having said that for an investor who has a genuinely long term outlook, there are a few companies even in the domestic cyclical space which are appearing attractive as a consequence of this decline," he added. Raychaudhuri is of the view that private sector banks, such as HDFC, HDFC Bank,ICICI Bank which are down about 15 per cent look attractive. There are some front line engineering companies like L&T that is down about 20% can be bought.Investors can focus on quality names which now looks attractive after recent correction in markets. IT services, pharmaceuticals, consumer staples have been relatively steady.Mahindra & Mahindra for example which is likely to benefit from the support to rural consumption that is coming through but is down about 15 per cent, added Raychaudhuri.

http://economictimes.indiatimes.com/markets/analysis/market-is-going-through-tectonic-shift-5500-may-come-under-threat/articleshow/21857342.cms?curpg=2

Bloodbath on Dalal Street....!!!!!!

SI Reporter  |  Mumbai  August 16, 2013 Last Updated at 16:09 ISTBloodbath on Dalal Street; Investors lose Rs 2.2 lakh cr
Sensex tanks 769 points, biggest fall in four yearsThe Bombay Stocks Exchange S&P BSE Sensex plunged by over 750 points, or 4%, its biggest fall in four years, to end at 18,598 on fear that the roll-back of US stimulus could spark selling pressure by the overseas investors in the equity space.The stock markets were also under heavy pressure after the rupee touched a lifetime low of 62.01 against the dollar in morning deals.It was the Sensex’s biggest single-day fall since July 2009. Across market, around 1,583 stocks fell and just 729 rose. Investor wealth worth Rs 221,268 lakh crore was eroded in today's fall. The four BSE sectoral indices - consumer durables, realty, metal and bankex plunged more than 5% each, while capital goods, oil and gas, power and fast moving consumer goods (FMCG) were down between 4-5%.Bharat Heavy Electrical Limited (BHEL), YES Bank, Reliance Communications, Titan Industries, Jaiprakash Associates, BF Utilities, Ruchi Soya Industries and Punj Lloyd tanked over 10% each.Markets fell sharply on continuing concerns over the depreciating rupee and tapering of the monetary stimulus by US Fed, says Dipen Shah, Head of Private Client Group Research, Kotak Securities.BHEL tanked nearly 11% to Rs 106, its lowest level since October 2005, on concerns of slowdown in economy may drag their net profit growth further. Axis Bank lost 8% at Rs 1,055 after MSCI said it would exclude the stock from its standard and large cap indices with effect from 2 September, 2013. The broad-based National Stock Exchange index Nifty dipped below the levels of 5,550, losing 234 points, or 4%, to close at 5,507.85.TOP FIVE FALLS17,605, 21 January 2008: The Sensex saw its highest ever loss of 1,408 points at the end of the session on Monday.  The Sensex recovered to close at 17,605.40 after it tumbled to the day's low of 16,963.96, on high volatility as investors panicked following weak global cues amid fears of the US recession.8,701, 24 October 2008: The Sensex lost 10.96% of its value (1070.63 points) in intra-day trade, closing at 8,701.07, for its first close below the 9,000 mark since 14 June 2006, after RBI lowered its GDP growth forecasts on global economic concerns. The loss was the 2nd highest in terms of total points, and the 3rd highest percentage-wise, for a one day period in the index's history.14,810, 17 March 2008 - The Sensex dropped by 951.03 points on the global credit crisis and distress, to fall below the 15,000 mark, closing at 14,810.The month ended with the Sensex shedding 726.85 points on 31 March 2008, after heavy selling in blue-chip stocks on global economic fears.16,678, 3 March 2008 - The Sensex lost 901 points on concerns emanating from growing credit losses in the US. This was the first of four one-day falls of greater than 700 points during the month.16,730, 22 January 2008 - The Sensex lost 875 points on high volatility as investors panicked following weak global cues amid fears of a recession in the US.

Top biggest falls in Sensex history
Date	S&P BSE-Sensex	Change	CNX Nifty	Change
21/01/2008	17605.35	-1408.35	5208.80	-496.50
24/10/2008	8701.07	-1070.63	2584.00	-359.15
17/03/2008	14809.49	-951.03	4503.10	-242.70
03/03/2008	16677.88	-900.84	4953.00	-270.50
22/01/2008	16729.94	-875.41	4899.30	-309.50
06/07/2009	14043.40	-869.65	4165.70	-258.55
11/02/2008	16630.91	-833.98	4857.00	-263.35
18/05/2006	11391.43	-826.38	3388.90	-246.20
10/10/2008	10527.85	-800.51	3279.95	-233.70
13/03/2008	15357.35	-770.63	4623.60	-248.40
17/12/2007	19261.35	-769.48	5777.00	-270.70
16/08/2013	18598.18	-769.41	5507.85	-234.45

http://www.business-standard.com/article/markets/bloodbath-on-dalal-street-investors-lose-rs-2-2-lakh-cr-113081600506_1.html

Indian equities ..INVEST FOR LONG TERM...!!

It's right time to pick Indian equities for long term: Report

Boston Company Asset Management says the country appears poised for a rebound Increasing investments in infrastructure, favourable demographics and progress in economic reforms could help Indian equities get higher returns over the long term, an investment management firm said today. "The country appears poised for a rebound. Considering the government's agenda for reform, Indian equities have become increasingly attractive for the long-term investor," Boston CompanyAsset Management said in a report here. India's large young population, which should support long-term consumer demand and overall economic expansion, its expertise in business services, software and generic-pharma development make it a global outsourcing centre, it said. The country's diversified, liquid equity market provides more opportunity for overseas investors to buy local stocks, the firm maintained. "Most importantly, India boasts of a large working-age population that will drive expansion through personal consumption. Unlike China and many developed nations, India is not grappling with an ageing population that will need substantial societal support." Other potential drivers that could help Asia's third-largest economy to expand are urbanisation, which could significantly boost housing and transportation, improving rural wages, cooperation among parties in the coalition government to pass reforms and potential trade agreements to improve exports, the report noted. However, factors that could drive the country's growth have been overshadowed by investor concerns over negative issues such as a fragmented government, widening current account and fiscal deficit, power shortage, poor roads and deteriorating margins in many business sectors, it said.http://www.business-standard.com/article/markets/it-s-right-time-to-pick-indian-equities-for-long-term-report-113081500885_1.html

NIFTY-CONSUMPTION & EXPORTS FAVOURED

Consumption, export-led sectors made Nifty resilient: Crisil
However, the report says the index does not reflect the current state of the economy and convey the worsening macro-economic situationDespite a slowing economy, the CNX Nifty index is showing resilience due to the weightage of consumption and export-oriented sectors, which have performed well in the past five years, Crisil said in a report today. "The changing dominance and outperformance by a few sectors such as consumer staples, consumer discretionary, private sector financials and export-oriented sectors such as IT and pharma in the CNX Nifty is driving the index to January 2008 levels," the rating agency said. The CNX Nifty closed at 5,742.30 on Wednesday. The country's gross domestic product growth fell from sub-9% in FY08 to a decade-low of 5% in the fiscal year ended March 31. The index does not reflect the current state of the economy and convey the worsening macro-economic situation, the report said.Consumption and export-oriented sectors now command a 65% weightage on the Nifty compared with 29% in 2008 due to strong financial performance and increase in valuation over the past five years, it said. In this period, the aggregate PAT of the companies in these sectors has grown at a CAGR of 21.9%, Crisil said. According to Crisil, the weightage of any company or sector in the index is determined by the relative free-float market capitalisation of the constituents.In January 2008, investment-linked sectors such as materials, industrials, energy, utilities and telecom dominated the index with a weightage of 66%.http://www.business-standard.com/article/markets/consumption-export-led-sectors-made-nifty-resilient-crisil-113081500872_1.html