Nik's Diary
The Indian market opened
in the red mirroring negative opening trades in the SGX Nifty and most of the
Asian markets as $85 billion of US spending cuts are set to begin. Also, a
decade-low Indian GDP of 4.5% in 3QFY2013, reported after market hours yesterday,
is expected to put pressure on Indian markets today. The US market showed a
relatively lackluster performance over the course of the trading day on
Thursday, as traders seemed somewhat reluctant to make any significant moves.
The choppy trading on Wall Street came on the heels of the release of a mixed
batch of US economic data, with traders weighing weaker-than expected GDP data
at 0.1% against upbeat reports on jobless claims which dropped to 344,000
(against 366,000 last week) in the week ended February 23, 2013; and
Chicago-area business barometer rising to 56.8 in Feb’13 from 55.6 in Jan’13.
The European markets ended in positive territory on Thursday, on the back of
better than expected economic data from the US. Meanwhile, Indian markets fell
sharply on Thursday as the Union Budget proposed a 10% surcharge on individuals
with `1cr income and slapped an added surcharge on local companies with taxable
income of over `10cr. Also, bigger-than-expected outlay in the Budget for
FY2014 continues to stoke fears of inflation and a tight monetary policy.
… But GDP growth at
4.5% in 3QFY2013 makes a case for more reforms
Hit by poor performance
of farm, mining and manufacturing sector, economic growth in the
October-December period of the current financial year slipped to 4.5 percent --
decade's lowest quarterly growth. Concerned over the low growth, Finance
Minister P Chidambaram Thursday said efforts are being made to achieve higher
growth and hoped that GDP will grow by over 6 percent in the next financial
year. The GDP had grown by 6 percent in the October-December period of
last fiscal. The economic growth in the first nine months of this fiscal
(April-December) stood at 5.1 percent, lower than 6.6 percent in the year-ago
period. The economy had grown by 5.5 percent and 5.3 percent in the first
quarter and the second quarter, respectively, of 2012-13. "The first
half is 5.4. The second half must be below 5 if the prediction is 5 percent for
the annual growth," Chidambaram said. "The growth rate for the
next year, I am as confident as my Chief Economic Advisor advises me to be
confident. I am as confident as the advice given by the Prime Minister Economic
Advisory Council," he said. The Economic Survey of 2012-13 tabled in
Parliament yesterday has predicted a growth rate of 6.1-6.7 percent for the
next fiscal. During October-December quarter of 2012-13, manufacturing
sector grew marginally by 2.5 percent, against 0.7 percent growth in the same
period of 2011-12, according to data released by the Central Statistical
Organisation (CSO) today. Farm sector output expanded by just 1.1 percent
in the October-December period this fiscal, against 4.1 percent in the same
quarter last fiscal. Mining and quarrying sector, however, showed some
improvement and contracted by 1.4 percent during the quarter, as against a
decline in output by 2.6 percent in the third quarter of 2011-12. Trade,
hotels, transport and communications segment also witnessed lower pace of
growth at 5.1 percent in the quarter against 6.9 percent in the same quarter in
year ago. The growth rate of electricity, gas and water supply also dipped
to 4.5 percent in the third quarter, from 7.7 percent witnessed in the same
quarter of 2011-12. Construction sector expanded by 5.8 percent in Q3 of 2012-13,
as against 6.9 percent in the year-ago period. Growth rate of services
sector, including insurance and real estate, stood at 7.9 percent in the third
quarter, against 11.4 percent in same quarter last fiscal. According to
the CSO data, during April-December period of this fiscal manufacturing sector
grew by just 1.2 percent against 3.6 percent in the same period last
fiscal. In the first nine months of the current fiscal, mining and
quarrying marginally recovered to a growth of 0.1 percent from a contraction in
the output by 2.8 percent. The farm and allied sectors growth declined to
1.7 percent in the nine month period under review cent compared to 4.3 percent
a year ago. Electricity, gas and water supply segment growth plunged to
4.7 percent in the nine month of the current fiscal compared 7.6 percent in the
same period in 2011-12. Referring to fiscal deficit, the Finance Minister
said that 4.8 percent target for 2013-14 is unlikely to be
breached. "I have said the 5.3 percent is the red line that cannot be
breached. Likewise 4.8 is the red line for this year that cannot be
breached," he said. Commenting the GDP figures, Ficci said the
numbers puts forth the persisting gloomy situation in the
economy. "Though some initial signs of optimism were indicated in the
declining inflation numbers and a mild upturn was seen in exports, current GDP
data has once again come as a mood dampener. It reaffirms the fact that we
might just record a growth of 5 percent this financial year," Ficci
President Naina Lal Kidwai said in a statement. Assocham President
Rajkumar Dhoot said that the figures reflect that the downslide of the Indian
economy is yet to see the bottom and hence recovery remains elusive."Given
the nature of policy proposals contained in the Union Budget for 2013-14, it
seems that revival is going to be a long drawn process unlike in the case of
2009," he said. Source: Zeenews
MM hikes utility
vehicle prices by over 2% with immediate effect
Super
rich cars such as Aston Martin and Lamborghini and sports utility
vehicles like Mahindra's XUV 500, Scorpio and Toyota Innova have become more
expensive after the Budget announced a hike in customs and
excise duties. Finance minister P Chidambaram increased excise duty on
sports utility vehicles to 30% from 27%. "Space occupied' was the reason
to tax SUVs," Anand Mahindra tweeted. "And
yet, larger, more luxurious sedans are exempt. Neither an equitable nor an
inclusive rule..." "The 3% increase in excise duty for SUVs came as a
surprise. It will certainly have a dampening effect on the industry. While
the tax in itself is a concern, what I am perplexed about is the criterion for
ground clearance. I fail to understand why a higher ground clearance is a
demerit!" says Pawan Goenka, president, automotive and farm equipment sector
at Mahindra & Mahindra. This excise hike applies to all vehicles that
carry 1500cc engines (both petrol and diesel), are over 4 m in length and have
a ground clearance of 170 mm. It may include variants of sedans like Maruti
SX4 (petrol) and Honda Civic. SUV prices could increase by Rs 20,000 to
Rs 60,000. "Instead of giving sops to the auto industry to boost
growth, the Budget has increased rates," says Kasturilal Wasan, dealer for
Toyota, Ford and Tata Motor vehicles. The SUV segment has been the bright spot
in the auto industry, which is in the throes of a slowdown. Superbikes and
top cars were not spared either. Import duty on fullybuilt cars went up to 100%
from 75% and motorcycles above 800 cc to 75% from 60%. The Porsche
911 will see prices go up by Rs 28.75 lakh
to Rs 72.25 lakh, if the duty hike is passed on to customers. The Harley
Davidson FXD, which retails in the Rs 10 lakh-Rs 12 lakh range, will see prices
go up by Rs 1.5 lakh to Rs 1.75 lakh. "The Budget is negative for the
auto sector," says Michael Perschke, head, Audi India. "Over the past two years, absolute
duties have gone up by over 67%," adds Pavan Shetty, head, Lamborghini
India. The swanky Aston Martin may see a price increase of Rs 45 lakh to
Rs 1 crore. "As per the WTO agreement, customs duty was expected to
progressively come down from 80% to 60%. Instead, it has gone up to 100%. This
is a blow for us," says Sharad Kachalia, a Rolls Royce dealer in Mumbai. Source: Economic Times
Cairn
India plugs a Sri Lankan well
Against
the backdrop of Sri Lanka going for a second licensing round to auction more
blocks, the fourth well drilled in Sri Lanka’s Mannar basin by Cairn Lanka, a
fully owned subsidiary of Cairn India, has been plugged and abandoned as a dry
hole. “The well was plugged and abandoned and the rig is being
demobilised. The Petroleum Resourced Development Secretariat (PRDS) is being
notified,” said Cairn India in a statement. It further noted that they
encountered multiple thick high quality reservoir sands, which were not
hydrocarbon bearing. Cairn Lanka entered into the second phase of oil
exploration in the Mannar basin with the drilling of the fourth well on
February 2, three months before the scheduled date due to the early
availability of a rig. In a recent Interview with Daily Mirror, Cairn
India and Cairn Lanka Director Sunil Bharati speaking of the possibilities
lying beyond the second phase said that there were several paths Cairn Lanka
could take in going forward. “Depending on the results of the second
phase, there could be two or three different paths available to us, as
envisaged in the Petroleum Resources Agreement. Either we can choose to proceed
to the third phase, which will again require drilling a commitment well and
have a time period of one to two years, or not to enter the third phase but
enter into an appraisal phase followed by a development phase.” “If we opt
to enter the development stage, we will have to do a detailed appraisal to
establish the volume of oil or gas available in the block, which will take one
to two years. Only then will we know whether the block is commercially viable,”
he said. He further added that both paths had timelines clearly defined in
the PRA Cairn Lanka had entered into with the Sri Lankan government, with six months
to one year extension periods. The statement released by Cairn India
yesterday noted that the data, along with the results of the prior two
discoveries, were being integrated to fully understand the future block
potential. In October 2011, Cairn Lanka announced that it had discovered
natural gas deposits in Dorado, an exploratory well located in the SL
2007-01-001 block in the Mannar basin. This was followed by a further
announcement in November that the firm had discovered gas deposits with hydrocarbon
potential in the second exploratory well, Barracuda. A third well was also
drilled and subsequently abandoned as a dry hole.Meanwhile, Sri Lanka is
currently preparing to launch a second licensing round to auction more blocks
in the Mannar and Cauvery basins amidst interest expressed by oil majors in the
world. Source:
dailylink
CCI
approves United Spirits – Diageo deal
United
Spirits has
rallied 6% to Rs 1,943 in opening deals after Competition Commission of India
(CCI) has approved UK major Diageo Plc's proposed majority stake purchase in
the company. Under the deal, Diageo would acquire up to 53.4% stake in
Vijay Mallya-led United Spirits, one of the largest spirits firm, within five
years. “Approving the deal, CCI in an order dated February 26 said the
proposed combination is not likely to have an appreciable adverse effect on
competition in India,” the PTI report suggests. The stock opened at Rs
1,885 and touched high of Rs 1,999 on BSE. A combined 528,551 shares have
changed hands on the counter on BSE and NSE. Source: Business Standard
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