2016
ECONOMIC
INTELLIGENCE
BULLETIN
1st –15th JANUARY 2016
GOVERNMENT OF INDIA
DIRECTORATE GENERAL OF SUPPLIES &DISPOSALS
JEEVAN TARA BUILDING, 5 SANSAD MARG,
NEW DELHI - 110001
SUMMARY OF ECONOMIC INTELLIGENCE BULLETIN
Economic Intelligence Bulletin includes abstracts of important economic/commercial/ technical
development and reviews as reported in the issues of financial dailies. The Bulletin pertains to
the fortnight ending 15th January, 2016.
1. PRICE TREND
1.94
BASE METALS PLUNGE ON CHINA WORRY
Copper fell over 3 per cent on the London Metal Exchange (LME) after China’s
composite index slumped 7 per cent on 7th January.
Base metals have not recovered after China announced its currency devaluation in
August 2015 as the world’s largest consumer of industrial commodities began to slow
down. Nickel has plunged 22 per cent on the LME and zinc, copper and aluminium have
declined 19 per cent, 11 per cent and 6 per cent, respectively. On 7th January base metals
prices declined by up to 1 per cent on fresh turmoil in the Chinese market.
A plunge in the US in November has taken the global manufacturing primary
manufacturing index (PMI) to its lowest in over two years. Macquarie expects global
industrial output to grow 2.2 per cent over 2016, historically a level that results in
minimal metal demand growth.
Glencore has announced a 0.5 million tonne cut in zinc output and Malaysia has
imposed a three-month ban on bauxite mining. Freeport-McMoRan has announced a cut
of 45,000 tonnes of copper in its US operations. Imperial Metal, one of the largest copper
producers in Canada, has suspended operations.
The production cuts are, however, not enough to affect supply. Most metals are
forecast to remain in deficit in 2016, but analysts believe the price trends will continue
until 2018 or till actual supply concerns arise.
“We expect metal prices to remain under pressure, with a deeper and longer base
metals downturn,” said Kaustubh Chaubal, vice-president, Moody’s Investors Service.
(BUSINESS STANDARD 8TH JANUARY, 2016)
1.95
IRON ORE PRICE REBOUNDS AFTER HITTING 7-YEAR LOW
Iron ore prices bounced back after slumping to their lowest in seven years in
December, 2015 on bargain hunting by traders and small steel mills.
The benchmark 62 per cent Fe grade iron ore recovered to trade at $43.11 a
tonne, up 13 per cent from its low of $38.30 a tonne on December 11, 2015.
“There are huge stocks lying at various mines in India. In Odisha and Jharkhand
128 million tonnes of iron ore are waiting to be lifted by steel mills. Iron ore
consumption is likely to remain subdued, which will continue to suppress its price,” said
RK Sharma, secretary-general of the Federation of Indian Mineral Industries.
Before its price started declining, the 62 per cent Fe grade iron ore for delivery in
China had shot up to its lifetime high of $192 a tonne on February 17, 2011.
The rebound in iron ore prices has prompted government-owned NMDC to defer
price cuts anticipated earlier till January. In December, the benchmark iron ore lumps
quoted at Rs 2,100 a tonne. “A correction was due. But because of the global economic
slowdown, sustaining this price level looks difficult,” said Haresh Melwani, chief
executive officer, HL Nathurmal & Co, a Goa-based iron ore miner.
(BUSINESS STANDARD 8TH JANUARY, 2016)
1.96
GOLD, SILVER REBOUND ON GLOBAL CUES, BUYING BY JEWELLERS
After falling for two days, gold prices rebounded by Rs. 190 to Rs. 26250 per ten
grams at the bullion market on 14th January, tacking a firm trend overseas and
emergence of buying by jewellers at prevailing levels. Silver followed suit and recovered
by Rs. 625 to Rs. 34025 per kg on increased offtake by industrial units and coin makers.
Globally, gold rose to 0.2% to $ 1095.39 an ounce in Singapore. Besides,
emergence of jewellers and retailers buying and depreciating rupee against dollar that
made imports costlier supported the upside in the precious metal prices, traders said.
(FINANCIAL EXPRESS 15TH JANUARY, 2016)
1.97
OIL PRICES HOVER AT 12-YEAR LOWS AS IRAN SUPPLY LOOMS
Oil prices steadied on 14th January, but remained near 12- year lows on the
prospect of Iran unleashing its oil on an over supplied market and with few signs of
improving demand in a fragile global economy.
Brent Crude, the global benchmark, traded at $30.78 a barrel, up 47 cents day on
day, at 1331 GMT. It fells earlier to $29.73, the weakest since February 2004.
West Texas Intermediate (WTI) was up 40 cents at $30.88 a barrel. Iran had said
its exports would rise by 1 million barrels a day within six months of sanctions being
lifted.
The price fall intensifies the squeeze on working capital and makes effective cash
management all the more important,” said Lance Kawaguchi, managing director and
global sector head for energy and resources at HSBC.
(FINANCIAL EXPRESS 15TH JANUARY, 2016)
1.98
PETROL PRICE CUT BY 32 PAISE/LITRE, DIESEL BY 85 PAISE A LITRE
Petrol price was on 15th January cut by 32 paise a litre and diesel’s by 85 paise a
litre, the fourth reduction in rates in six weeks on the back of softening global oil prices.
Petrol in Delhi will cost Rs 59.03 per litre with effect from midnight tonight as
against Rs 59.35 per litre currently. A litre of diesel will cost Rs 44.18 as opposed to Rs
45.03 presently, said Indian Oil Corp (IOC), the nation’s biggest fuel retailer.
This is the fourth reduction in rates since December 1.
(HTTP://WWW.FINANCIALEXPRESS.COM/ARTICLE
/ECONOMY/PETROL-PRICE-DOWN-BY-32PAISELITRE-DIESEL-BY-RS-85-A-LITRE/194965/)
(HTTP://WWW.MONEYCONTROL.COM/NEWS/ECON
OMY/PETROL-PRICE-CUT-BY-32PLITRE-DIESELBY-85P-_5025901.HTML)
2.
FISCAL POLICY
2.195 RBI FIXES 9.45% BASE RATE FOR NBFC-MFIS FROM 1ST JANUARY
In line with falling lending rates, the Reserve Bank of India on 31st December
fixed base rate or the minimum lending rate at 9.45% for NBFC Micro Finance
Institutions (MFIs). The new base rate is effective quarter beginning January 1, RBI said
in a statement. RBI had last year said it will advise the average of the base rates of the
five largest commercial banks on the last working day of every quarter, for the purpose
of arriving at the interest rates to be charged by an NBFC-MFI to its borrowers in the
ensuing quarter.
(FINANCIAL EXPRESS 1ST JANUARY, 2016)
2.196 EXTERNAL DEBT UP 1.7% ON COMMERCIAL LOANS
India's external debt rose 1.7% to $483.2 billion at the end of September from the
level in March due to long-term liabilities, especially commercial borrowings and nonresident Indian deposits. The increase would have been higher than $8 billion if not for
valuation gains from the appreciation of the dollar against the rupee and most major
currencies, estimated at $5.7 billion.
"Excluding the valuation effect, the increase in debt would have been higher by
$13.7 billion at end-September 2015 over the end-March 2015 level," the finance
ministry said in a report. Sequentially, external debt declined by $291 million from the
level at the end of June.
Foreign exchange reserves provided cover for 72.5% of the country's external
debt compared with 71.9% in March.
The share of commercial borrowings in India's external debt was the highest at
37.7%, followed by NRI deposits (25.2%) and multilateral debt (11%).
Long-term debt, which accounted for 82.2% of total external debt in September,
was placed at $397.1 bn, an increase of 1.9% from March. Short-term external debt
increased 0.7% to $86.1 billion.
(THE ECONOMIC TIMES 1ST JANUARY, 2016)
2.197 FISCAL DEFICIT TOUCHES 87% OF BE IN APR-NOV
The fiscal deficit for the first eight months of FY16 stood at Rs. 4.83 lakh crore,
or 87 percent of the full year target of Rs. 5.56 lakh crore, much lower than 98.9 percent
seen in the corresponding period in the last year, data released by the ministry of finance
showed.
The government’s capital spending during the eight months till November
accounted for 65.8 percent of what has been estimated in the budget for the financial
year, much higher than 53.2 percent seen in the corresponding period last year,
suggesting a healthy fiscal deficit.
In the current financial year, the finance ministry is expecting an up to five- seven
percent shortfall in tax revenue collection, with a Rs. 50000 crore lower revenue
compared to Rs. 14.5 lakh crore budgeted for the on account of lower than estimated
revenue from direct taxes.
(BUSINESS STANDARD 8TH JANUARY, 2016)
2.198 FPIS PULL OUT $570 M FROM INDIAN EQUITIES SO FAR IN JAN
Worried by sharp devaluation in the Chinese currency and concerned over its
future economic growth, foreign funds have trimmed their exposure to India and
emerging markets (EMs) equities so far this month. FPIs(Foreign Portfolio Investments)
have sold equities worth $570 million in the Indian markets so far in January, Bloomberg
data showed.
The sell-off by FPIs was triggered by poor December Caixin Purchasing
Managers Index (PMI) data of China which was released on January 4. Shanghai markets
have lost more than 16% since then. The fall in the Chinese markets has impacted other
Asian markets. Hang Seng (Hong Kong) has lost 9.03% since the beginning of the year,
while South Korea’s Kospi has declined 2.3%. The Sensex has so far declined nearly 5%
during the month.
The outflows witnessed by the Indian markets have been relatively lower
compared to other Asian markets. During the month so far, FPIs have pulled out $750
million from the South Korean equity markets, while Taiwan has witnessed a sell-off to
the tune of $1.5 billion, data showed.
Foreign inflows in the Indian debt markets continue to outperform that of equity
markets. At a time when FPIs are offloading their exposure to Indian equities, debt
markets continue to attract inflows. The debt segment has witnessed inflows of $417.6
million so far in January.
The calendar year 2015 was the worst one since 2011 in terms of FPI inflows.
Foreign funds net purchased cash equities worth $3.27 billion in 2015, Bloomberg data
showed.
(FINANCIAL EXPRESS 14TH JANUARY, 2016)
2.199 FIPB CLEARS RS. 6050 CR FDI PROPOSALS, CADILA GETS NOD
The government approved five foreign investment proposals involving inflow of
Rs. 6050 crore, including a Rs. 5000 crore plan of Cadila Healthcare for fresh equity
infusion. Cadlia will infuse equity through issue of shares to QIBs through qualified
institutional placement for expansion.
(THE ECONOMIC TIMES 15TH JANUARY, 2016)
3.
IMPORT AND EXPORT POLICY
3.84
JEWELLERY EXPORTS MAY DECLINE TO SIX-YEAR LOW
India’s jewellery exports are likely to decline 10 per cent in 2015-16 to a six-year
low due to weak demand in the US and the European Union.
Jewellery exports declined 13 per cent in April-November 2015 to $21.45 billion
from $24.70 billion in the corresponding period a year ago.
Praveen Shankar Pandya, chairman of the Gems and Jewellery Export Promotion
Council (GJEPC), had forecast a 25 per cent decline in exports this season. “But, the
season has been much better,” he said.
Indian importers of rough diamonds have cut purchases to reduce inventory. The
GJEPC estimates India’s rough diamond imports to have declined 27.15 per cent to $8.65
billion during April-November 2015 from $11.87 billion in the corresponding period a
year ago.
Imports of polished diamonds plunged 62 per cent to $18.52 billion during the
period from $48.78 billion in the comparable period a year ago.
(BUSINESS STANDARD 6TH JANUARY, 2016)
3.85
EXPORTERS UNLIKELY TO BENEFIT FROM DUTY EXEMPTION
Indian exporters are unlikely to benefit from the government’s decision to exempt
iron pellets from export duty because of falling prices in global markets.
Pellet exports used to attract five per cent duty before the exemption was
announced on 5th January.
The benchmark variety of pellets with 65 per cent Fe is hovering around $57 after
hitting a high of $180.2 in February 2012. Prices have recovered after falling to their
December low of $54.4 but experts see the recovery as temporary.
“The exemption in export duty on pellets came at a time when Chinese steel mills
face huge stockpiling. Since iron ore exports are not happening from India, shipment of
pellets looks impossible. The exemption may not benefit Indian pellet mills at all,” said
RK Sharma, secretary-general of the Federation of Indian Mineral Industries.
Indian miners produce a huge quantity of low grade ore with iron content as low
as 35 per cent, which steel mills avoid lifting. The government levied a 30 per cent of
export duty on iron ore to discourage its exports and the shipment of pellets was
promoted. Later, a five per cent of export duty was levied on pellets as well.
Private players have invested Rs 1,000 crore to set up 80 million tonnes of pellet
production capacity. These mills are operating at 50 per cent capacity because of weak
demand locally and overseas.
(BUSINESS STANDARD 7TH JANUARY, 2016)
3.86
INDIA'S EXPORTS MAY DIP 13% TO $270 BILLION IN 2015-16
India’s exports are expected to decline about 13 per cent to $270 billion in the
current financial year due to global demand slowdown and fall in crude oil prices, a top
official said.
The country's merchandise exports had aggregated $310.5 billion last fiscal.
According to an official, Commerce Secretary Rita Teaotia in her presentation
during an interaction with the industry chambers including CII and FICCI stated that it
would be difficult for India's exports to exceed $270 billion.
In 2008-09, the country's outbound shipments were less than $270 billion,
according to exporters body Federation of Indian Export Organisations (FIEO). It was
around $ 210 billion in 2008-09.
Teaotia has also stated that imports during the fiscal would stand around $ 390
billion. So the trade deficit would aggregate at $120-125 billion in 2015-16.
During April-November this fiscal, exports declined by 18.46 per cent to $174.3
billion. Imports were $261.8 billion and trade deficit was $87.5 billion.
(FINANCIAL EXPRESS 8TH JANUARY, 2016)
3.87
INDIA'S 2015 IRAN OIL IMPORTS FALL BY A QUARTER – TRADE
India's oil imports from Iran fell by about a quarter in 2015 as refiners slowed
purchases early in the year to keep imports within the limits of sanctions, preliminary
tanker arrival data obtained by Reuters shows.
Western sanctions against Iran's controversial nuclear programme limit the Gulf
country's oil exports to 1-1.1 million barrels per day (bpd), with buyers such as India
curbing annual purchases to 220,000 bpd.
The annual decline came as imports in December surged nearly 70 percent from
the previous month to 233,100 barrels per day (bpd), but were still down by a third from
a year ago, according to the data and a report compiled by Thomson Reuters Oil
Research and Forecasts.
India, Iran's biggest oil client after China, shipped in 208,300 bpd of oil and
condensate in calendar 2015 compared with 276,800 bpd in 2014, the data showed.
New Delhi's imports of oil from Iran are expected to rise in the next fiscal year,
beginning in April, when western sanctions are expected to be eased against Tehran.
Tehran was India's seventh-biggest supplier of oil in the 2014/15 fiscal year,
down from the No. 2 spot before sanctions. A drop in purchases of Iranian oil helped
boost exports to India by rival producers Saudi Arabia and Iraq.
(FINANCIAL EXPRESS 8TH JANUARY, 2016)
3.88
MINISTRY TO PROPOSE INCREASING PEAK CUSTOMS DUTY ON STEEL
TO 25%
Going ahead with industry’s persisting demand for reining in the rising imports at
predatory prices, the steel ministry will propose for hiking the peak customs duty on the
alloy to 25% in the Budget for next fiscal from 15% now. If implemented, this would be
two successive increases in the limit in as many years, though will remain within the
upper ceiling of 40% allowed by WTO.
The finance ministry had raised the peak custom duty for steel to 15% from 10%
earlier in the last Budget for the same purpose. But, far from restricting the burgeoning
imports, it failed to make much impact. Galloping imports from China, Japan, South
Korea and Russia among others is hurting domestic steel industry. The EBITDA of the
domestic firms have declined by over 40% in a year.
Being sympathetic to the steel industry’s current tough time, steel ministry had
suggested a gamut of trade actions since the last Budget and the finance ministry has, in
fact, obliged to a lot of them including raising the import duty twice in June and in
August by 2.5% each, imposing safeguard duty on select products and even levying antidumping duty on certain grade of stainless steel imports between $180 and $316 per
tonne.
(FINANCIAL EXPRESS 12TH JANUARY, 2016)
3.89
STEEL IMPORTS FALL FOR SECOND MONTH IN DEC
Indian steel imports fell for a second month after the government imposed taxes
and anti-dumping duties on some products to protect local mills from cheaper overseas
supplies.
Inbound shipments dropped 1.4 per cent to 941,000 tonnes in December from a
year ago, according to provisional data from the steel ministry. For the nine months
through December, imports climbed 29 per cent to 8.39 million tonnes.
India's latest measures include a 20 per cent import tax on hot-rolled coils for 200
days imposed in September, and anti- dumping duties on cold-rolled flat products of
stainless steel for five years.
Steel output declined 1.4 per cent to 7.62 million tonnes in December from a year
earlier, while consumption climbed 1.2 per cent to 6.93 million tonnes, according to the
ministry. For the April-December period, production fell 1.4 percent to 68.04 million
tonnes, while demand rose 4.7 per cent to 59.08 million tonnes.
(BUSINESS STANDARD 13TH JANUARY, 2016)
3.90
COAL IMPORTS FALL 7% ON STATE COS’LOWER DEMAND
India's coal imports declined almost 7 per cent during the April-December period
as power plants stocked up adequately on the fuel with improved domestic supplies.
Imports by state and central sector thermal power companies fell 40 per cent,
although the purchases from overseas by private companies increased 5 per cent from the
year-earlier period.
The nation imported 124 million tonnes of coal during the nine-month period
compared with 132 million tonnes a year earlier. NTPC was the largest importer among
state-owned utilities, bringing in about 7 million tonnes of coal compared with 12 million
tonnes previously. Public sector companies imported 19.88 million tonnes of coal, while
in the corresponding period a year earlier, the volume was 33.2 million tonnes.
The private sector's coal imports increased to almost 104 million tonnes from 99
million tonnes. Most private plants do not have confirmed supply contracts with Coal
India or are located near ports and can buy imported coal, which is cheaper than domestic
supplies.
Coal India has boosted production and increased supplies to power companies.
According to Central Electricity Authority data, power plants in India had 31 million
tonnes of coal on December 31, more than double the level of 13 million tonnes a year
earlier.
(THE ECONOMIC TIMES 15TH JANUARY, 2016)
4.
MISCELLANEOUS
4.243 CORE SECTOR OUTPUT CONTRACTS 1.3% IN NOVEMBER
The combined output of eight crucial infrastructure sectors contracted by 1.3% in
November, pulled down by a steep fall in steel production.
Data released by the ministry of Commerce and Industry on 31st December
showed the eight core industries — coal, crude oil, natural gas, refinery products,
fertilisers, steel, cement and electricity grew by a cumulative 2% in the months leading
up to November in the current FY16.
While core sector growth had stood steady at 3.2% for the last two months, the
fall in November figures were brought on by continued and accelerating decline in crude
oil, natural gas and steel output.
Following global cues, steel production crashed by 8.5% in November as
compared to a year back in 2014. Fall in steel production had been slowly easing until
October.
Crude oil and natural gas witnessed the same trend, decreasing by 3.3% and 3.9%
over November, 20014. While Oil production has cumulatively declined by 0.4% in the
current fiscal year, natural gas has gone down by 2.3% in the same period.
However, refinery products have registered a turnaround, growing at 2.5% as
compared to the 4.4 % drop in the previous month.
(BUSINESS STANDARD 1ST JANUARY, 2016)
4.244 RETAIL INFLATION FOR FARM, RURAL WORKERS UP IN NOV
Retail inflation for farm labourers and rural workers in November rose to 4.92%
and 5.02% respectively, due to increase in price of food items. The corresponding figures
were 4.43% and 4.66% in October. “Point-to-point rate of inflation based on consumer
price index-agricultural labourers and CPI-rural labourers increased from 4.43% and 4.66
in October 2015 to 4.92% and 5.02% in November 2015,” a labour ministry press release
said.
According to the statement, food inflation under CPI-AL and CPI-RL came in at
4.79% and 5.15%, respectively, in November 2015.
(THE ECONOMIC TIMES 5TH JANUARY, 2016)
4.245 MANUFACTURING PMI SLIPS TO 28-MONTH LOW IN DECEMBER
India’s manufacturing activity shrank for the first time in two years in December
as business conditions deteriorated on account of Chennai floods besides the persistently
muted domestic demand, a private survey showed on 4th January.
Snapping the 25-month growth sequence, the Nikkei India Manufacturing
Purchasing Managers’ Index (PMI), compiled by Markit, fell to a 28-month low in
December to 49.1 points from 50.3 in the previous month. The rate of contraction was
the sharpest in seven years.
Meanwhile, China’s lower than expected PMI for manufacturing at 48.2 points in
December led to a sharp fall in Indian markets and depreciation of rupee against the
greenback on 4th January. The rupee weakened 0.72 per cent against the dollar to close at
66.62 a dollar, its sharpest fall in nine weeks. The benchmark BSE Sensex slumped 2.05
per cent to close at 25,623 points, the biggest single-day percentage loss since September
22.
India’s economy expanded by 7.2 per cent in the first half of the current financial
year prompting the government to cut the growth forecast to 7-7.5 per cent for the full
year against 7.6-8 per cent estimated earlier.
The manufacturing sector posted a robust 9.3 per cent growth in the second
quarter against 7.2 per cent in the previous three months, signalling improving
efficiencies of companies rather than the actual improvement in output. Consumer goods
was the only category to see improving business conditions in December as production
and new orders rose.
(BUSINESS STANDARD 5TH JANUARY, 2016)
4.246 ECONOMY IS NOT DOING GOOD, REFORMS HAVE SLOWED DOWN: CII
The economy is not doing as good as it was expected and the pace of reforms has
slowed down, industry body Confederation of Indian Industry’s (CII) President Sumit
Mazumder said on 5th January.
“It (the economy) should have done a lot better. It can do a lot better. A reform
like the Goods and Services Tax (GST) would give the whole industry such a
psychological boost that you would see a rapid pack of pick up in the economy,” the
Mazumder told PTI in an interview.
Asked whether there was a slowdown in the reforms over the last few months,
Mazumder said: “There is a slowdown but the reforms are still going through. So, it is
not as if the reforms have totally stopped.”
He said the “pace of reforms will pick up once Parliament knows how to
function.
Sharing the wish list for the Budget, Mazumder said a major thrust is required by
the government to stimulate rural demand and boost infrastructure development.
He also urged that the phased corporate tax reduction to 25 per cent from the
prevailing 34 per cent be done in tandem with removal of allowances.
“We would like to see him (FM) take some initiatives where demand gets
stimulation because that is a major concern right now. We would like to see continuation
of investments that are being made by the government right now and by the PSUs.”
He said that however, the fiscal deficit have to be maintained, and should not be
sacrificed and one of the ways to do it would be through disinvestment. “We want to see
a lot more impetus on infrastructure and construction," Mazumder said.
(BUSINESS STANDARD 6TH JANUARY, 2016)
4.247 INDIA'S LUXURY MARKET TO CROSS $18.3 BN BY 2016: ASSOCHAM
Increasing brand awareness among the youth and higher purchasing power
beyond big cities is likely to boost India's luxury market around 20% to $18.3 billion this
year, says a study. The current size of the country's luxury market $4.7 billion, says a
Assocham study. "The factors that have fuelled the luxury industry's growth are the rise
in disposable income, brand awareness among the youth and purchasing power of the
upper class in Tier II & III cities in India," Assocham Secretary General D S Rawat said.
(BUSINESS STANDARD 6TH JANUARY, 2016)
4.248 SERVICES GROWTH HITS 10-MONTH HIGH IN DECEMBER
India's services sector activity touched a ten-month high in December driven by a
significant rise in new business orders but the overall health of the economy remains
fragile amid a weak manufacturing sector, a survey showed on 6th January.
The Nikkei Business Activity index climbed to a ten-month high of 53.6 in
December from 50.1 in November, thanks to a solid rise in incoming new work.
In the first contraction in over two years, manufacturing sector output dipped in
December to a 28-month low as new orders fell sharply and production took a big hit
from heavy rains in Chennai.
The survey noted that even as service providers sentiment improved in December,
the degree of confidence was the second-weakest. Business sentiment was restricted by
worries regarding the consequences of natural disasters, it added.
(FINANCIAL EXPRESS 7TH JANUARY, 2016)
(http://www.openingbell.in/services-pmi-climbs-to10-month-high-in-dec-sentiments-turn-positive/)
4.249 RUPEE CLOSES LOWER BY 18 PAISE VS DOLLAR
The rupee fell towards a three week low as concerns over China’s deepening
economic slowdown quelled demand for riskier assets.
The Indian currency ended lower by 18 paise to 66.81 against the US currency on
fresh dollar demand from banks and importers in view of foreign capital outflows amidst
fall in equity market.
The rupee resumed sharply lower at 66.90 per dollar against last closing level of
66.63 per dollar at the Interbank Foreign Exchange (Forex) market and dropped further
to 66.9250 per dollar on initial dollar demand.
However, it trimmed losses on mild selling of dollars by banks and recovered to
66.70 per dollar before ending at 66.81 per dollar, still showing a loss of 18 paise or 0.27
per cent.
It moved in a range of 66.9250 and 66.70 per dollar during the day.
(FINANCIAL EXPRESS 12TH JANUARY, 2016)
4.250 INDUSTRIAL OUTPUT CONTRACTS 3.2% IN NOV
Industrial output fell 3.2 per cent in November, contracting by the sharpest
margin in the past four years, government data released on 12th January showed.
The Index of Industrial Production (IIP) dipped for the first time in the past 13
months in November, after registering a five-year high rise of 9.8 per cent in October.
Economists had warned then to treat it as a statistical aberration since the expansion was
on a low base.
Notwithstanding this contraction, the cumulative industrial growth for AprilNovember 2015 over the corresponding period of the previous year stands at 3.9 per cent,
compared with the 2.5 per cent growth registered in the same period in 2014-15.
Among the sub-sectors, manufacturing, which constitutes three-fourths of the
Index, fell 4.4 per cent in November after a staggering growth of 10.6 per cent in
October.
However, over the entire April-November period of FY16, the sector grew at 3.9
per cent, up from 1.5 per cent in the year-ago period. Seventeen out of the top 22
products within the manufacturing sector showed negative growth, up from five in the
previous month. This implies a complete reversal from October when the same number
of products exhibited positive growth.
Among product categories, furniture continued to witness high growth at 102 per
cent. Electrical machinery and apparatus on the other hand, fell by the largest margin at
46.5 per cent. Cable, rubber insulated, conductor, aluminium, passenger cars, and
stainless/alloy steel contributed most to the contraction in the index.
(BUSINESS STANDARD 13TH JANUARY, 2016)
4.251 DECEMBER RETAIL INFLATION UP 5.61%
Consumer Price Index-based (CPI) inflation for December rose to 5.61 per cent,
against 5.41 per cent in November and 4.28 per cent in December last year, official data
showed on 12th January.
The December retail inflation headline figure was the highest in 15 months and
the highest since the Central Statistics Office (CSO) started releasing data according to
the new base year, from January 2015. The previous high under the new series was seen
in November.
The rise in monthly CPI inflation came on the back of increasing food prices,
especially pulses, which rose 46 per cent year on year. According to data released by
CSO, food inflation rose 6.4 per cent in December, compared with 6.07 per cent rise in
November and 3.96 per cent in December last year. Analysts polled by Reuters had
predicted December retail inflation at 5.6 per cent year-on-year, while those polled by
Bloomberg had forecast the inflation at 5.30 per cent.
Among the sub-groups, the prices of pulses, which have a weight of almost 3 per
cent on the CPI, rose 38.47 per cent for rural areas and nearly 61 per cent for urban areas
in November.
(BUSINESS STANDARD 13TH JANUARY, 2016)
4.252 WHOLESALE PRICES FALL FOR 14TH CONSECUTIVE MONTH
Wholesale prices in India fell for the 14th straight month in December, mainly on
account of a global crash in crude oil, though the pace of decline eased substantially from
a few months ago.
The Wholesale Price Index (WPI) fell 0.73% from a year ago, data released on
14 January showed, compared with 1.99% decline in November and 0.5% fall in the
corresponding month of the previous year.
th
The government also revised the October WPI inflation upwards to -3.7% from 3.81% due to revisions in prices of fish, onions and crude.
Industry body FICCI said the deflationary trend indicates weak demand. “we
hope that the central bank will respond to the situation appropriately and take steps that
would aid the process of industrial recovery,” it said.
Industrial Production unexpectedly contracted 3.2% in November, though most
experts reckon it to be a one-off fall.
Wholesale food prices gained 8.17% year on year in December, compared with a
provisional 5.20% gain in November- presenting the only worry in inflation numbers.
Wholesale fuel prices dropped 9.15% from a year ago and could fall further
following recent declines. Prices of manufactured goods declined 1.36% year on year.
“Food inflation, which remained comfortable in FY16, has started increasing;
India recorded highest food inflation in last 17 months in December 2015,”said Devendra
Pant, chief economist at India Ratings & Research.
(THE ECONOMIC TIMES 15TH JANUARY, 2016)
(HTTP://TIMESOFINDIA.INDIATIMES.COM/
BUSINESS/INDIA-BUSINESS/WPI-DIPS14TH-TIME-IN-ROW-FOOD-PRICESUP/ARTICLESHOW/50583835.CMS)
4.253 CAI ESTIMATES COTTON OUTPUT AT 357 LAKH BALES
The total cotton output in the country is estimated to be 357 lakh bales of 170 kg
each for the 2015-16 season. This is the December estimate made by the Cotton
Association of India (CAI).
The projected balance sheet drawn by the CAI estimates total cotton supply for
2015-16 at 449.65 lakh bales, while the domestic consumption is estimated at 315 lakh
bales, thus leaving surplus of 134.65 lakh bales.
The arrivals of cotton during the ongoing 2015-16 crop year are estimated to be
lower than those upto the same period last year.
(FINANCIAL EXPRESS 15TH JANUARY, 2016)