FDI inflow up by 12% to $1.65 bn in July

New Delhi: Foreign Direct Investment (FDI) into India grew by 12 percent year-on-year to USD 1.65 billion in July, highest since April.

In July 2012, the country had received FDI worth USD 1.47 billion.

In April, the first month of the current financial year, the inflows stood at USD 2.32 billion, according to the data of the Department of Industrial Policy and Promotion (DIPP).

During the April-July period, FDI has grown by 20 percent to USD 7.05 billion, from USD 5.90 billion in the same period last fiscal, the data said.

The sectors that received large inflows during the first four months of the 2013-14 fiscal include services (USD 1.02 billion), pharmaceuticals (USD 1 billion), automobile industry (USD 637 million) and construction (USD 359 million).

The maximum FDI during the period came from Singapore (USD 2.21 billion), followed by Mauritius (USD 1.85 billion), the Netherlands (USD 520 million), Germany (USD 518 million), and the US (USD 371 million).

A DIPP official said that the recent steps announced by the government would further help in attracting FDI inflows and improving the investment environment.

The government has liberalised FDI policy in as many as 12 sectors which include telecom, tea and petroleum and natural gas.

FDI inflows in 2012-13 aggregated USD 22.42 billion, a decline from USD 36.50 billion in 2011-12.

India is estimated to require about USD 1 trillion between 2012-13 and 2016-17, the 12th Five Year Plan period, to fund infrastructure growth covering sectors such as ports, airports and highways.

Overall, an increase in FDI will help support the rupee, which depreciated to a record low of 68.8 against the US dollar on August 28. It has strengthened since then to 63 level.

Gold falls below $1,300 as Fed stimulus decision looms

 
Singapore: Gold extended losses into a third session on Wednesday, falling over 1 percent to trade below USD 1,300 an ounce, with investors expecting the US Federal Reserve to announce a reduction in its bullion-friendly stimulus measures.

The Fed is expected to begin its long retreat from ultra-easy monetary policy by announcing a small reduction to its USD 85 billion monthly bond purchases following a two-day policy meeting that ends on Wednesday. Many expect a USD 10 billion cut.

Spot gold had fallen 1.2 percent to USD 1,293.69 an ounce by 0217 GMT, bringing the year's losses to 23 percent. It had earlier dropped to USD 1,291.34 - its lowest since August 8.

"It all dependent now on the FOMC," said a precious metals trader in Hong Kong, referring to the Federal Open Market Committee. "It depends on what the language is going to be on their stimulus and what sort of tapering they pursue."

"Gold is still technically under pressure and will probably struggle to go above USD 1,350 again."

Traders said prices would find their next support level at USD 1,270- USD 1,280 an ounce.

Gold, often seen as a hedge against inflation and a slowing economy, benefited when central banks around the world launched stimulus measures to support their economies. The metal hit an all-time high of about $1,920 an ounce in 2011.

But this year several analysts have cut their forecasts for gold prices in anticipation of the US central bank curbing its stimulus measures. Goldman Sachs expects prices to drop to USD 1,050 by the end of next year.

PHYSICAL DEMAND

Due to the volatility in prices, physical demand has failed to pick up rapidly in key consumers India and China. Expectations that prices could fall further once the Fed announces a cut in stimulus have also restrained purchases.

Shanghai gold futures fell 2 percent on Wednesday.

Top gold consumer India increased its import duty on gold jewellery to 15 percent from 10 percent, setting it higher than the duty on raw gold in a move to protect the domestic jewellery industry.

The Indian central bank and finance ministry have taken several steps this year to curb bullion imports in an effort to reduce the country's record trade deficit.

Silver and palladium dropped about 1.6 percent, while platinum fell nearly 1 percent.

We need to look beyond gloom & doom: Mukesh Ambani

Mumbai: Sounding confident that the economy will overcome the current crisis, Reliance industry chairman Mukesh Ambani on Tuesday said there is a need to look beyond the gloom and doom.

"India should look beyond the gloom and doom," Ambani said at the Giants International 41st anniversary celebrations and awards function here tonight.

He was addressing as the chief guest at the function.

Stating that India needs a positive and inclusive mindset, Ambani expressed confidence that despite all the negativity India will become a major power.

"I have realised that by focusing on obstacles, you don't reach your goals. Instead focus on your goals to overcome obstacles," he said.

After going through a financial turmoil for almost a year, greenshoots have appeared in the economy of late, giving a hope of recovery.

After contracting for two straight months, industrial production entered the positive zone in July, recording a growth of 2.6 per cent on account of improved performance of manufacturing and power sectors.

The IIP data revealed that out of the 22 industry groups in the manufacturing sector, as many as 11 posted positive growth rates in July.

Besides, snapping a nine-month streak of decline, domestic passenger car sales also grew by 15.37 per cent to 1,33,486 units in August this year, compared to 1,15,705 units in the same month last year.

BSE Sensex edges higher; IT stocks lead

The BSE Sensex rose on Tuesday, led by gains in technology stocks including Tata Consultancy Services which rose tracking weakness in the rupee and as recent underperformance of the sector made short-term valuations attractive.
Tata Consultancy Services Ltd (TCS.NS) provisionally rose 2.2 percent, Infosys Ltd (INFY.NS) gained 0.8 percent, while Wipro Ltd (WIPR.NS) surged 4.9 percent.
The Sensex rose 0.34 percent, while the broader Nifty ended 0.18 percent higher after slipping below its 200-day moving average for a brief period earlier in the day.

Raghuram Rajan effect: Fears of FII capitulation receding, says Deutsche Bank

 
Deutsche bank says fears of foreign institutional investors capitulation are receding as they have bought shares worth $1 billion over the past eight sessions following governor Raghuram Rajan's recent announcements.
"Recent announcements over the FCNR-B, supportive trade data and easing investment facilitation in debt markets have resulted in imparting long needed and much sought after credibility over both - the financing of the CAD and the actual CAD," says Deutsche bank in a report.
The bank adds since the global financial crisis, bouts of sharp currency depreciation in India have generally been followed by periods of strong FII inflows into equities. Deutsche advises investors to focus on global recovery plays, Indian rupee depreciation beneficiaries like Hindalco Industries , Tata Consultancy Services and rural plays like ITC Ltd and HDFC Bank.
FIIs bought shares worth $1 bn following Rajan's announcements
(PTI)
Foreign Institutional Investors (FIIs) have bought shares worth USD 1 billion in the past eight trading sessions following RBI governor Raghuram Rajan's recent announcements, a Deutsche Bank report said.
According to the global financial services major, FIIs have recouped around 25 per cent of the outflows seen over the June-August period, when the country witnessed its sharpest bout of FII outflows since the global financial crisis.
Between June and August 2013, India saw FII outflows of USD 4 billion, leading to fears of a possible capitulation by FII's, the Deutsche Bank report said.
"Following incoming governor Raghuram Rajan's announcements on assuaging currency markets and particularly after the news flow over the FCNR-B swap announcements, we have seen the rupee partially recovering its losses and FII's emerging as net buyers of close to USD 1 billion over the past 8 trading sessions," Deutsche Bank said.
As per the report, investor sentiments were boosted following the recent announcements over the FCNR-B, supportive trade data and easing investment facilitation in debt markets.
These measures have resulted in imparting "long needed and much sought after credibility over both - the financing of the CAD and the actual CAD," Deutsche

More of same from RBI’s Raghuram Rajan? No 'gamechanger', says Stanchart

The Reserve Bank of India’s (RBI’s) monetary policy meeting on 20 September, helmed by new Governor Raghuram Rajan, will provide a first glimpse of his approach to tackling India’s growth-inflation dynamics and external vulnerabilities. Raghuram Rajan's priority of stabilising the Indian rupee, as stated on 4 September, seems to have been effective so far; both local and global developments have supported the Indian rupee recently. The market is also keenly awaiting his statement in order to assess the framework in which monetary policy will be formulated. In this context, Raghuram Rajan's strong emphasis on monetary stability – “to sustain confidence in the value of the country’s money” – will weigh on the market. In our view, monetary stability encompasses the twin objectives of containing inflation and arresting the slide in the Indian rupee (INR).
Despite the recent Indian rupee correction, Raghuram Rajan's task will not be easy: he has been in office for only two weeks, market expectations are unreasonably high, a key FOMC meeting takes place on 17-18 September, and WPI inflation ticked up in August. Market expectations range from a partial reversal of liquidity-tightening measures at one extreme to a repo rate hike to contain inflation risks at the other. Specifically, the market will be watching closely for any announcement of a timeline or preconditions that could lead to a reversal of the liquidity-tightening measures initiated in July.
In our view, the recent Indian rupee correction means further measures to stabilise the currency are likely to be deferred. Instead, the Raghuram Rajan might reiterate that measures announced on 4 September have succeeded in anchoring exchange-rate expectations, and that US dollar (USD) inflows in the next few months should ensure smooth funding of a narrower current account deficit.
A complete reversal of liquidity-tightening measures on 20 September looks unlikely to us. While the Indian rupee's 7.6% appreciation from 3-16 September is encouraging, the RBI might prefer to wait longer for confirmation of sustained currency stability – a factor that has been emphasised as a key determinant of such a reversal.
However, in order to

Advance tax payout of Top 100 companies sees muted growth in Q2

The advance tax collections from the top 100 corporates from the financial capital showed a muted growth for the September quarter, with the outgoes increasing by only up to 8 per cent.

Advance tax payments is a system of staggered payment of taxes by the companies.

"For the top-100 companies, the advance tax payments have increased by 7-8 per cent," a senior official said.

Cumulatively for the first two quarters till now, the advance tax collections from the Mumbai zone, which contributes over a third of the income tax collections nationally, have grown 11 per cent, the official said.

Leading the pack in the financial capital was Mukesh Ambani-led Reliance Industries, which paid Rs 1,670 crore against the Rs 1,534 crore in the same period year ago, the official said.

Insurance giant Life Insurance Corporation paid Rs 1,624 crore against the Rs 1,307 crore paid in the same period last year, the official said.

Tata Consultancy Services, the country's largest software exporter, paid Rs 1,030 crore against Rs 810 crore in the same period last year, the official said.

Generally, a company's payout is considered as a barometer of the company's performance during the quarter. The payouts for September quarter come with grim news on the economic front wherein the quarterly growth had slipped to a four year low of 4.4 per cent for the June quarter.

The state-run banks led by the largest lender State Bank of India (which paid Rs 1,120 crore, down from Rs 1,820 crore last year) were a disappointment due to issues over asset quality deterioration and treasury losses, the official said.

The Deposit Insurance and Credit Guarantee Corporation's payout also dipped to Rs 797 crore from the year ago figure of Rs 974 crore, the official said.

Dena Bank's payout plummeted to Rs 50 crore from the year ago's Rs 185 crore, while for Central Bank of India, the payout dipped to Rs 200 crore as against the Rs 268 crore in the year ago period, the official said.