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Edition #251 Powered by iStations The Information Team, Symbiosis Institute of Management
Studies

2 FEB 2015, MONDAY

Markets & Economy

RBIs net forex forward

January factory growth slips as new orders rise more slowly
in up to 1-year down by
Growth in factory activity slipped in January from December's two-year high as new orders rose at
a weaker rate despite factories keeping price increases to a minimum, a business survey showed
$6.5 bn in December
on Monday. Cooling growth and inflation could give the Reserve Bank of India reason to cut interest
The RBI's net forward dollar book fell
rates again in the coming months but any move may depend on the government's annual budget
by $6.49 bn in up to one-year maturity
due on Feb. 28. The HSBC Manufacturing Purchasing Managers' Index (PMI), compiled by Markit,
in Dec, compared with a net addition of
fell to a three-month low of 52.9 in January from December's two-year high of 54.5. It has been
$3.12 bn in the previous month,
above the 50 level, which denotes growth, since November 2013 but missed poll expectations for a
according to Reuters calculations
smaller drop in January, to 53.5. Source:- Economic Times
based on data from the central bank's
website. The central bank likely sold
Case for further interest rate cut tomorrow
dollars in the forwards in Dec to contain
Despite the RBI having reduced its prime lending rate, the repo, on Jan 15, there is a case for a
a volatile INR, which moved in 61.77further cut of 25 basis points when it announces the last monetary policy review of financial year
63.89 band, while it may have also
2014-15 on Tuesday. While the fundamentals were improving for some time, the rate cut in January
matured some of its forward dollar
was also to shrink the arbitrage window which was attracting hot money in Indian debt. This time,
purchases which could have led to an
RBI can cut rates to reflect the improved fundamentals and to further shrink the arbitrage window.
overall fall in the forwards position on
Most banks have not reduced their lending rates after RBI's cut. They are waiting for the policy
month, dealers said. The RBI's net
announcement. A large part of carry trade money has been coming into debt. In this financial year
forward outstanding position up to one
so far, nearly $29 bn has been invested by FII in Indian debt. The country doesn't need that kind of
year was $32.81 billion as of Dec-end
hot money - the moment the attractiveness of carry trade in the form of shrinking arbitrage reduces
compared with $39.31 bn in Nov
to an unviable level, FIIs will start withdrawing the money. Source:- Business Standard
according to the calculation. The total
Mutual funds pump over Rs 33,000 cr in Indian debt markets
short position in the up to one-year
Mutual funds have pumped over Rs 33,000 crore in debt markets in January on hopes that fixed
forwards market was $4.28 bn as of
income securities will continue to benefit from improvement in economic prospects and the
Dec-end, higher than $2.28 bn in Nov
government's reform initiatives. Besides, mutual funds (MFs) invested a net amount of Rs 270
and the total long position was $37.09
crore in equity markets last month. Industry experts attributed the inflows during the month in debt
bn versus $41.58 bn. The aggregate
to the new government's intent on introducing economic reforms and improved fundamentals of the
short positions in forwards for above
domestic economy. Besides, easing inflation and narrowing current account deficit were factors that
oneGovt
year stood
at $25.97
billion, the
drove investments. As per data released by the capital markets regulator the Sebi, mutual funds
to push
for more
RBIretail
data showed.
invested a net sum of Rs 33,572 crore in the debt markets in January. Source:-Financial
participation in
Source:- Economic Times
Express
disinvestments
To increase retail participation in PSU
stake sales, the Department of
MAT revision likely in Budget
Disinvestment is contemplating an
In a move aimed at giving a push to its Make in India programme, the government could introduce
aggressive strategy to encourage more
in the coming Union Budget a differential minimum alternate tax (MAT) rate for certain segments of
people to open demat accounts and
domestic manufacturing.According to those privy to the development, the Budget makers are
reduce the time taken for the same.
looking to give an impetus to Indian manufacturers, particularly the micro, small and medium
"We will meet Sebi to see if the time
enterprises (MSMEs), special economic zones (SEZs) and those in the infrastructure sector. The
frame for opening of demat account
government had introduced MAT to ensure no profit-earning company used exemptions and
can be reduced. It will help new retail
incentives to avoid tax liability. The current rate for MAT is 18.5 per cent; the effective rate goes up
investors to apply in the upcoming PSU
to 20 per cent after including surchange and cess. The rate for corporation tax, 30 per cent at
disinvestments," a govt official said. At
present, nearly touches 33 per cent with cess and surcharge. Source:- Economic Times
present, it takes at least 3-5 days for a
RBI ups forex intervention in spot market
person to have an operational demat
Given that inflation has mostly been under control in the past few months, the Reserve Bank of
account, which is a must to buy,
India (RBI) is now seen intervening more in the currency market's spot segment than in 2014.
transfer or sell shares or other
The central bank had been more active in the forward segment in 2014, with inflation remaining
securities held in the electronic format.
high during the first half of the year - any liquidity infusion through intervention in the spot
There are over 2.30 crore demat
market would have led to further price increase.The changed strategy has helped RBI maintain
Arunin Jaitley
likely
avoid GAAR for at
FII inflows at 6-month high of Rs 33,688 crore
accounts
the country.
"One to
of the
liquidity in the system at a comfortable level, at a time when a squeeze in spending by the
suggestions that we are looking
an
in January
leastataisyear
government for meeting its fiscal deficit target is keeping things tight.According to treasury officials
aggressive
strategy
for creating
Overseas investors pumped in a staggering Rs 33,688 crore in capital
Finance minister
Arun Jaitley
is likely to defer implementation of
at state-run banks, the amount of dollar purchases from the forward market continues to be high
awareness
markets last month, making it the highest investment in six months owing
the dreadedamong
GAAR retail
by at investors
least a yearto so that tax officers and the
but the spot-forward ratio has seen a change in recent months. Source:-Financial Express
participate
in better
PSU equipped
stake sale,"
thesophisticated tool aimed at
to easing inflation and rate cut by RBI. FIIs bought shares worth Rs
industry are
for the
official
added.tax
Source:Live Mint
12,919 crore in January, while
they bought
debt worth
Rs 20,769 crore,
preventing
avoidance.
As per the original plan, GAAR,
Symbiosis
Institute
of Management
taking the total investment
to Rs 33,688 crore, latest data with Central
formulated by the UPA government, was to come into effect from
Studies
Depository Services Ltd (CDSL) showed.This is the highest investment
financial year 2013-14, but was deferred by two years, acceding
since July when overseas investors had poured in Rs 36,046
to industry demands.The government doesnt want the rules to be
crore.These investors got re-christened as FPIs or Foreign Portfolio
implemented aggressively as transfer pricing rules were applied
Investors last year under a new regulatory regime that promises to make
in many cases. Extending GAARs implementation to FY17,
it easier for them to invest in India. Source:- Business Standard
sources said, would help both the tax department and businesses

Finance

Operations
Centre to pump in Rs 1.5 lakh cr in four
new steel plants
The Centre said it will pump Rs 1,50k cr for building four new
steel plants of 20-24 mn tn combined capacity in collaboration
with the govts in 4 states. "We have decided to build four new
steel plants and four dedicated mining companies to feed these
plants in four states partnering the respective state governments.
We aim for six mn tn capacity for each plant," Union Steel and
Mines Minister Narendra Singh Tomar said. Based on investment
of Rs 6k cr for each mn tn of steel and associated cost for mining,
the total investment will be in excess of Rs 1,50k cr.
Source:- Economic Times
DSK to launch Benelli superbikes priced
up to Rs 14 lakh
Pune-based DSK Motowheels will start selling five superbikes
from its Italian partner Benelli's stables from March with prices
ranging between Rs 3.5 lakh and Rs 14 lakh.The company, which
had entered into an agreement with Benelli last October to bring
the Italian superbikes into the country, will roll out the bikes
initially in eight cities. "Deliveries of Benelli superbikes will begin
from second week of March. All the five models from the range
would be available for sale across eight cities," DSK Motowheels
Chairman Shirish Kulkarni told PTI. The bikes, which come with
engines ranging between 300 cc and 1,130 cc, would be priced
between Rs 3.5 lakh and Rs 14 lakh, he added.

Make In India: Suzuki to set up 3 Guj plants to

cater to Maruti
Japan's Suzuki group plans to set up three plants in Gujarat's Hansalpur,
which will exclusively supply to Maruti Suzuki India Limited. Gujarat CM
Anandiben Patel today laid the foundation stone for Suzuki's Gujarat
vehicle manufacturing plant. According to Suzuki, the 'state-of-the-art'
facility will be set up in line with PM Narendra Modi-led NDA govt's 'Make
in India' initiative. Suzuki Group will set up three plants with a total annual
capacity of 750k vehicles. The first plant is scheduled to start production
in mid-2017. It is being set up at an investment of about Rs 3,000 crore,
and will have an annual capacity of 250k units.
Source:- Live Mint
Rashtriya Ispat Nigam Ltd proposes synergy
with NMDC for marketing steel products
Steelmaker RINL, said it in talks with PSU major NMDC for
marketingsteel products through its strong marketing network. RINL CMD
P Madhusudan said NMDC is going to commission a new steel plant and
the idea is that RINL will undertake the marketing as it has a strong
network for it across the country. "NMDC going to commission a new
steel plant. The idea is that they need not open out their own marketing
offices. We already have our marketing network across the country. This
is for marketing steel products. We are looking at the synergy that can be
brought between both the companies," Madhusudan told reporters on the
sidelines of National Cost Convention - 2015, organised by Institute of
Cost Accountants of India. Source:- Business Standard