Black & White MFP Production Copy, Print, Scan SecureMFP Eco Friendly
ECO Scan April'11
Transcript of ECO Scan April'11
-
7/31/2019 ECO Scan April'11
1/13
ECOSCAN - April 2011
ECOSCAN April 2011Monthly Report on Indian and Global Economic Scenario
This issu
1. Executive Summary2. Business Outlook
3. Global Economic Scenario
Real GDP growth rate YoY %
CPI Inflation
Industrial Production Growth rates
4. India EconomyPerformance Indicators
GDP Growth rate
Inflation WPI YoY %
IIP growth rate
RBI Key Ratios
5. External Sector
Foreign trade
Exports
Imports
FDI
INR exchange Rate
6. Infrastructure
7. Commodities
Crude Oil, Natural Gas
Sugar
Steel
8. Sector Update
Automobiles & Insurance
Fertilizers & Tea
-
7/31/2019 ECO Scan April'11
2/13
1. Executive Summary
World Economy Highlights
Galloping crude oil prices
The Brent crude price surged from
an average of US$ 75 a barre
during May-September 2010 to US$
123 a barrel by April 2011. Since
February 2011, oil prices have
come under further pressure on
account of apprehensions aboutsupply disruptions due to politica
developments in the Middle East
and North African (MENA) region.
Euro edging over dollar
The euro held near a 17-month
high against the dollar as markets
waited for the European Centra
Bank to reinforce higher rate
expectations, with a hint of a June
hike needed to boost the currency
further.
U.S. showing signs of weakness in
economic recovery
The U.S. dollar hit a three-year low
against major currencies and Wal
Street stocks fell as much as 1.0
percent after a batch o
disappointing U.S. economic data
for April -- including a surprise
slowdown in the services sector
and less hiring by the private
sector. U.S. services sector, whichgrew at its slowest pace sinceAugust 2010, according to the
Institute for Supply Management
Pesticide Endosulfan to Be Banned
Worldwide
Representatives from 127
governments have agreed to add
Endosulfan to the United Nations
list of persistent organic pollutants
to be eliminated worldwide.
A slowdown in growth in 2011-12 is expected with World real GDP growth is
forecast to be about 4 percent in 2011 and 2012, down modestly from 5 percentin 2010. Global commodity and fuel prices are rising; putting pressure on growth
worldwide and with several economies pegging their growth for the current year at
lower levels, India will be following this trend prevalent all over the world. The
Indian economy is estimated to grow by nearly 8 per cent during 2011-12. The auto
sector appears for moderation after growing at a scorching pace of 26 percent
(inclusive of cars, bikes and commercial vehicles) in the last two years. The society
of Indian Automobile manufacturers (SIAM) too expects industry growth to settle
around a much lower 12-15 percent in 2011-12.
With average crude prices in the range of $118 a barrel, a heavily oil import-
dependent country like India has little option other than seeing inflation andcurrent account deficit as the major issues this financial year. RBI had raised key
rates eight times since March 2010 to tame inflation. Last month, RBI had raised
the repo rate to 7.25% and reverse repo rate to 6.25%. Higher interest rates may
affect the pace of economic activity. The impact of rising interest rates is felt first
by the commercial vehicles sector. However the strong growth in the services
sector, robust hiring outlook and rising incomes may continue to support consumer
demand. With overall inflation hovering above 8% since January 2010, the
monetary tightening is a right measure but is definitely going to impact the
industrial production of country. The country's six key infrastructure industries
grew 7.4% in March, rising from 6.8% in the previous month. The six core sector
industries grew 5.9 per cent in financial year 2010-11 as against 5.5 per cent in
financial year 2009-10.
Exports in the current 2011-12 fiscal year are expected to cross $300 billion and
could touch $500 billion by 2014-15. However, FDI in India declined for the third
consecutive month in March, dipping by 11% yoy to $1.07 billion in the backdrop of
financial turmoil in Europe. Falling FDI trends in FDI inflows makes it imperative for
the country to fine-tune its policies to attract overseas investment. Rupee
remained weaker this month, pressured by choppy shares and rising import
payments.
Agricultural growth was above trend last year, following a good monsoon. The
sugar production of India is estimated to rise to 24.5 million tonnes in the 2010-11sugar year. Tea production in March saw an upswing of around 16 per cent to
56.73 million kg compared with 49 million kg produced during the same period last
year. IFFCO has increased the DAP and Urea prices and other companies are also
expected to increase the prices soon.
Looking macro economically, in many emerging and developing economies, output
is already above pre-crisis trends, which is clearly reflected in their stock market
indices. It suggests that recovery is complete and expansion is under way. However
in order to look for sustainable growth inflationary pressures need to be tackled
effectively.
-
7/31/2019 ECO Scan April'11
3/13
sdfdfdsd
3. Global Economic Scenario
Brazils CNI industry group has reduced 2011-12 GDPgrowth projections from 4.5% to 3.5%
Q1 2011 Russia GDP growth rate has slowed down to1.3% against 2.8% in Q4 2010.
Q1 GDP results for EU stood at 2.2 percent yoy withgermany at 4.5% yoy Q1 GDP growth rate.
IMF has pegged down the growth rate of India for 2011-12 to 8% while chinas growth rate is expected to be at
9.5% for 2010-11.
China's industrial production grew steadily at 14.4
percent year on year in the first quarter of FY 2011-12.
While the expansion of Chinas manufacturing activities
moderated in April under the influence of tightening
policies.
German industrial production rose for a third time in
March as construction surged. Industrial Output inMarch increased 0.7% from February while economists
had a forecast of 0.5%.
In Brazil March was the third consecutive month of
rising industrial output to 0.3%, afterJanuary's increase
of 0.3%, and February's 2%.
Russian industrial production rose an annual 5.3
percent compared to 8.2% in 2010
Consumer price inflation in China reached an all time of
5.4% in the month of March, highest level since 2008.
Inflation in Brazil could top 6.3% by year end which is
well over central banks target of 4.5% according to
economists.
Developed economies have also shown inflationary
pressures in March 2011.
Prices levels in Russia rose 0.2 percent in the seven days
through May 3, the fastest pace since the week ended
March 14.
-
7/31/2019 ECO Scan April'11
4/13
4. India Econom Performance Indicators
GDP Growth
Finance Minister Pranab Mukherjee projected Indias
economic growth at 8 per cent for the current fiscal, lower
than the budgetary estimate of 9 per cent, due to
measures taken to rein in high inflation.
8% growth forecast is based on the assumptions that
there would be a normal monsoon and oil prices would
remain around $110 per barrel during the year
Industrial Production
Manufacturing output advanced 0.7 percent in March, its
fourth consecutive month of strong expansion;
The rate of capacity utilization for total industry rose 0.5
percentage point to 77.4 percent, which is 3.0 percentage
points below its average from 1972 to 2010.
With increased RBI rates, declining growth rates in
industrial production is predicted
Inflation
WPI increased sharply by 3.4 per cent in the month of
March to 8.98%.
80 per cent of the increase in WPI was due to fuel, power
group and non-food manufactured products.
Overall inflation has been above the 8 per cent mark since
January, 2010.
-
7/31/2019 ECO Scan April'11
5/13
Ke Interest Rates & Credit Growth
Cash Reserve Ratio 6.0 %
Repo Rate 7.25%
Reverse Repo Rate 6.25%
PLR 12.25 %
SLR 24 %
US Federal Fund Rate 0.1 %
1 Month LIBOR 0.21 %
3 months LIBOR 0.27 %
Containing inflation would take precedence over growth is the foremost criteria of the RBI Governo
D.Subbarao.
Home, auto and other loans are set to become costlier with the Reserve Bank of India hiking key short-term
rates to contain inflation,
The increase in the savings bank rate to 4 per cent from 3.5 per cent now has become a relief for small savers
Credit extended by banks to various sector. Credit growth to agriculture decelerated to 10.6 per cent during 2010-11 from 22.9 per cent in the previou
year.
Credit to industry, led by infrastructure, metals, food processing, rubber, plastic and their products an
engineering grew by 23.6 per cent in 2010-11 as compared with 24.4 per cent in the previous year.
Credit to the services sector, led by NBFCs, professional services, transport operators and tourism, hotels an
restaurants, grew by 23.9 per cent during 2010-11 as compared with 12.5 per cent in the previous year.
Personal loans grew significantly by 17.0 per cent during 2010-11 as compared with 4.1 per cent during th
previous year, with all its components barring credit card outstanding exhibiting high growth.
-
7/31/2019 ECO Scan April'11
6/13
5. External Sector
Exports during March, 2011 were valued at US $ 29.13 Billion
which was 43.8 per cent higher in Dollar terms than March,
2010..
Exports in the current 2011-12 fiscal year are expected to
cross $300 billion and could touch $500 billion by 2014-15.
Imports during March, 2011 were valued at US $ 34.74 Billion
representing a growth of 17.2 per cent in Dollar terms than
March, 2010
FDI in India declined for the third consecutive month in March, dipping by 11% yoy to $1.07 billion in the backdrop of
financial turmoil in Europe.
During the fiscal 2010-11, the inflows declined by 25 per cent to $19.43 billion. The FDI during the fiscal 2009-10 was
$25.83 billion and $27.83 Billion in 2008-09.
Falling FDI trends in FDI inflows makes it imperative for the country to fine-tune its policies to attract overseas investment.
-
7/31/2019 ECO Scan April'11
7/13
India's foreign direct investment (FDI) has recorded a sharp decline in FY-11.
India is the lone South East Asian country to witness a decline in FDI flows.
Inflows into the metals, petroleum and natural gas and chemicals sectors increased in FY-11
Inflows into the housing and real estate as well as construction activities that include road and highwayshave halved, while that received by the telecom sector has fallen by 45 per cent. Significantly
Rupee Reference Rates
6. Infrastructure
Rupee Reference Rates
The Indian Rupee exchange rate for April, 2011
averaged 44.30 INR to USD.
That's 61.3 basis points lower than the March,
2011 rate of 44.91, and 14 basis
points lower than the April, 2010 rate of 44.44.
Experts feel in the near term rupee is expected
to remain stronger although fundamentals areweak on higher crude oil trade gap.
Broad weakness in the US dollar is supporting
rupee appreciation. Also hike of 50 basis points
in key rates by the central bank will help the
rupee to appreciate.
India: Infrastructure Growth
The country's six key infrastructure industries
grew 7.4% in March, rising from 6.8% in the
previous month.
The six infrastructure industries account for
26.7% of overall industrial growth.
The six core sector industries grew 5.9 per cent
in financial year 2010-11 as against 5.5 per cent
in financial year 2009-10.
Numbers will help the IIP stabilize but not make it
grow.
-
7/31/2019 ECO Scan April'11
8/13
7. Commodities
Henry Hub Natural Gas Index
Ukraine has opened up talks with 3 Western energy
Giants; Exxon Mobile, Chevron and Shell to prospect forshale-Gas.
Henry hub price rose a token 2 cents per million Btu
(MMBtu) (0.5 percent) to $4.35 per MMBtu on April 27
Crude Oil Index
Oil imports during March, 2011 were valued at US $
9438.6 million which was 8.2 per cent higher than oil
imports corresponding period last year
ONGC is in discussions to buy oil sands reserves in
Canada and it may also increase its investments in
Kazakhstan to help offset declining production.
Baltic Dry Index
Baltic Dry Index, has plummeted close to fifty percent
in the last six months
The demand for dry-bulk shipping has fallen.
Oversupply of ships has continued to damage a fragile
recovery.
-
7/31/2019 ECO Scan April'11
9/13
Commodities : SUGAR
The sugar production of India -- the world's second largest producer after Brazil -- is
estimated to rise to 24.5 million tonne in the 2010-11 sugar year.
Sugar prices may trade higher for short term on account of improved buying at lower
levels.
China is expected to increase its sugar imports in the second half of the year. This is
likely to provide support to the prices.
Increase in stock limits and reintroduction of 60% import duty on Sugar may favour the
prices. Prices may gain by Rs. 100-150 per qtl in the coming weeks.
The medium term prices would depend on the permissible Sugar exports by India and
the final estimates of Sugar output. Prices are expected to trade in the range of Rs.
2600 Rs. 2900 per qtl levels. (Courtesy: Angel Commodities).
The Food Ministry has issued export orders for nearly 92,000 tonne of sugar to mills of
the total quantity of five lakh tonne that the government has allowed for outbound
shipment.
-
7/31/2019 ECO Scan April'11
10/13
Commodities : Steel
Brussels World crude steel production for the 64
countries reporting to World steel association
(worldsteel) was 129 million metric tons (mmt) in
March 2011.This is 7% higher than March 2010.
Chinas crude steel production for March 2011 was
59.4 mmt, up 9.0% compared to March 2010.
Japans crude steel production figure of 27.7 mmt
was 4.4% higher than the same period in 2010.
South Korea produced 5.8 mmt of crude steel inMarch 2011, 14.4% more than March 2010.
India produced 6.35 MT tonnes of steel in March
2011 as against 5.845 MT in the same month last
year
An additional 30 million tonnes of steel-making capacity is expected to be commissioned in the next two years in the
country, even as the steel ministry is working on a new National Steel Policy that seeks to factor in a higher-than-
expected growth in steel demand and consumption in five years
-
7/31/2019 ECO Scan April'11
11/13
Steel Authority of (SAIL) has decided to expand its crude steel output capacity from the existing 12.84 million
mt to 21.4 million mt per annum by the year 2012-2013.
Rashtriya Ispat Nigam (RINL) will be expanding its existing capacity of 2.9 million mt of crude steel production
to 6.3 million mt per annum by December 2011.
National Minerals Development Corporation (NMDC) is setting up a 3 million mt per annum integrated steel
plant at Nagarnar, Chhattisgarh
8. Sector U date : Automobile & Insurance
Automobile
Insurance
Insurance GWP
- Rs Crore
APRIL-MARCH% Change
Y-O-Y2010-11 2009-10
Private 17566.92 14341.39 22.49%
Public 25001.60 20642.69 21.12%
The BSE Auto Index is trading in the red with the index
down over 2% on the back of recently announced RBI
Monetary Policy.
Governor D. Subbarao has announced a steep 50 basis
points hike in key short term rates.
The increased interest rates will impact the sales and make
the auto loans dearer.
Year-on-year volumes of commercial vehicles grew by 30
per cent in 2010-11 respectively.
HDFC Life is looking to break-even bythe end of the current financial year. HDFC Life said the embedded value of its business stood at Rs 4,120 crore as of March 31.
United India Insurance Company is targeting a business of Rs 8,000 crore in the fiscal year 2011-12 focusing on micro,
small and medium enterprises (MSME) segment and rural market.
Religare Enterprises is in talks with two foreign insurers for a joint venture to offer general insurance services in India,
and plans to more than quadruple its asset management business in two years.
-
7/31/2019 ECO Scan April'11
12/13
Sector U date : Fertiliser & Tea
Fertilisers
Fertilizer Production
(000 tons)Mar 2011 Mar 2010
%
Change
Y-O-YUrea 1823.2 1628.27 11.94%
DAP 220.3 273.0 -19.30%
10-26-26 74.9 113.3 -33.89%
12-32-16 79.5 60.7 30.97%
14-35-14 69.2 0.4
20-20-0 168.1 227.5 -26.11%
15-15-15 33.7 41.7 -19.8%
28-28-0 1.7 44.0 -96.14
Total Complexes
(excluding DAP)2470.6 2388.87 3.42%
Tea
The benchmark price has been increased to
$612 per tonne for DAP and $420 per tonne for
MOP to ensure uninterrupted availability ofpotash and diammonium phosphate.
CCEA has given freedom to fertiliser companies
to raise retail prices of DAP by up to Rs. 600
per tonne from the existing rate of Rs. 10 750
per tonne.
The government reimburses subsidy on these
DAP to fertiliser companies based on the
benchmark price
The Union finance ministry has cleared two
foreign direct investment proposals from the
Darjeeling tea industry,
The first FDI approval since 1974 for the
branded brew sector in the hills
Tea production in March saw an upswing of
around 16 per cent to 56.73 million kg
compared with 49 million kg produced
during the same period last year.
Exports, however, fell to 11.9 million kg from
23.49 million kg last year.
-
7/31/2019 ECO Scan April'11
13/13
ECOSCAN April11
.
Disclaimer: The information contained herein is obtained from Bloomberg, News articles and various research reports.