Dear Reader

Industrial production jumped sharply in the month of July 2013 underpinned by improvement in manufacturing

and electricity sector output. The manufacturing turn around is encouraging but we must note that one swallow

does not make a summer and we will need a confirmation of trend before we can conclusively infer a positive

undertone in the data.

Chandrajit Banerjee

(Director-General, CII)

INDICATORS

In this issue Market Global News Industry News Policy Developments

Index of Industrial Production (IIP) entered into the positive zone in July 2013, recording a growth of 2.6 per

cent on account of improved performance of manufacturing and power sectors. The cumulative IIP growth in the

first four months (April-July 2013) stands at 0.2 per cent. Meanwhile IIP for June 2013 was revised upwards to a

decline of 1.78 per cent from a provisional 2.2 per cent dip in production.

In August 2013, exports were valued at US$26.1 billion, up a robust 12.97 per cent as compared with same period

last year. This is the highest monthly increase this fiscal and augurs well for the future economic prospects..

Imports contracted by 0.68 per cent in August 2013, lower than a decline of 6.2 per cent in July 2013, mirroring

the subdued domestic demand in the economy. As exports rose and imports fell during the month, the trade deficit

narrowed to US$10.91 billion in August from a deficit of US$12.27 billion in July.

Foreign Exchange Reserves as on 30 August 2013 stood at US$275.5 billion, a steady drop from US$278.8

billion as on 16 August 2013.

The Call Money Rates as on between 26th Aug and 8th Sept 2013 traded in the range of 9.07-10.27 per cent.

FORTNIGHTLY NEWSLETTER 26 Aug– 8 Sept 2013

POLICY DEVELOPMENTS

BANKING INDICATORS

Rs. Billion

Indicators Outstanding as on

23 Aug 2013

% Variation over

Fortnight Year

Total Bank Credit 55,294.8 0.4 17.1

Food Credit 1,023.0 7.2 5.7

Non Food Credit 54,271.7 0.5 17.3

Aggregate Deposit 71,130.3 0.1 13.0

Broad Money (M3) 87,742.2 0.1 12.2

Credit Deposit Ratio 78.0

Source: RBI

On the basis of assessment of current market conditions, RBI has decided to open a forex swap window to

meet the entire daily dollar requirements of three public sector oil marketing companies (IOC, HPCL and

BPCL). Under the swap facility, Reserve Bank will undertake sell/buy USD‐INR forex swaps for fixed

tenor with the oil marketing companies through a designated bank. The swap facility gets operationalized

with immediate effect and will remain in place until further notice.

The RBI has been receiving requests from banks to consider a special concessional window for swapping

foreign currency non‐resident (banks) {FCNR (B)} deposits that will be mobilised as per the recent

relaxations permitted by the RBI. It has been decided accordingly to offer such a window to the banks to

swap the fresh FCNR (B) dollar funds, mobilised for a minimum tenor of three years and over at a fixed

rate of 3.5 per cent per annum for the tenor oft he deposit.

The Land Acquisition, Rehabilitation and Resettlement Bill, 2012 was passed by the Rajya Sabha on 4

September 2013.

Exchange Rate Movements

80.0

85.0

90.0

95.0

62.0

64.0

66.0

68.0

70.02

6-A

ug

28

-Au

g

30

-Au

g

01

-Se

p

03

-Se

p

05

-Se

p

USD EURO (RHS)-400

-398

-396

-394

-392

-390

-388

-386

26

-Au

g

27

-Au

g

28

-Au

g

29

-Au

g

30

-Au

g

31

-Au

g

01

-Se

p

02

-Se

p

03

-Se

p

04

-Se

p

05

-Se

p

EQUITY MARKETS

Global stock markets posted a relatively stable

performance on the back of pick-up in economic

growths in the major advanced economies.

Indian stock markets gained sharply on the back

of sharp positive movements across most of the sub

-sectors. This was attributable to the positive global

clues on the back of improved economic

performance posted by most of the advanced

economies in the second quarter.

Global Stock

Indices

Closing Value

as on 06 Sep-

tember, 2013

Fortnightly

Change (%)

NYSE: DJIA 14,922.5 -0.6

FTSE 100 6,547.3 0.9

Nikkei 225 13,860.8 1.5

Straits Times 3,048.3 -1.3

KOSPI 1,955.3 4.6

Source: Yahoo Finance

Indian Equity

Indices

Closing Value

as on 06 Sep-

tember, 2013

Fortnightly

Change (%)

BSE SENSEX 19,270.1 4.1

BSE 500 6,908.1 3.3

S&P CNX

NIFTY 5680.4 3.8

S&P CNX 500 4319.4 3.2

Source: NSE, BSE

Net Institutional Activity

Equity Debt

Fortnightly FII (US$ Million) -511.75 -299.7

Year -to-date FII (US$ Million) 11,718.3 -4,506.9

Source: SEBI

COMMODITY MARKETS

NYMEX West Texas Intermediate Crude

Oil on 06 September 2013 was trading at

US$108.9 per barrel.

New York spot price for Gold have

moderated sharply and was trading at

US$1,370.2 per ounce as on 06 September

2013.

Commodity Spot

Indices

Closing Value as

on 07 September

2013

Fortnightly

Change

(%)

MCX AGRI 2536.5 1.2

MCX METAL 5208.1 -0.8

MCX ENERGY 4913.6 5.7

MCX COMDEX 4417.3 2.2

Source: MCX, NCDEX

INDUSTRY NEWS

Agriculture

In the wake of the increased requirement of

food grains for implementation of the proposed

Food Security Act, procurement operations will

be further extended and more farmers will get the

benefits of minimum support prices (MSP)

operations. Food grain requirement for the

implementation of the bill is estimated 614.3

lakh tonnes as against the existing requirement of

563.7 lakh tonnes for Targeted Public

Distribution System.

Coal

The Government periodically reviews and

monitors the progress of development of coal

blocks as well as associated end use plants

through the mechanism of ‘Review Committee’

earlier and ‘Inter-Ministerial Group (IMG)’ now

which has been constituted on 21.06.2012 in

pursuance of the announcement made by the

Finance Minister in the budget speech for the

year 2012-13. In case of unsatisfactory progress

on the part of allocattees, appropriate action is

taken including de-allocation of the block. On

the basis of review made by the Review

Committee, 20 coal blocks were de-allocated

due to unsatisfactory progress and 5 coal blocks

surrendered by the allocatees were de-allocated.

BSE Indices

Closing Value

as on 23

August, 2013

Fortnightl

y Change

(%)

AUTO INDEX 10,416.32 1.6

BANKEX 11,333.44 5.0

BSE CAPITAL

GOODS 7,443.02 2.9

BSE CONSUMER

DURABLE 5,713.41 -0.5

BSE FMCG 6,490.67 3.1

BSE

HEALTHCARE 9,148.59 3.3

BSE MID CAP 5,451.01 1.7

BSE SMALL CAP 5,343.81 1.8

BSE TECK INDEX 4,413.69 3.9

METAL INDEX 8,148.09 4.2

OIL & GAS INDEX 8,572.54 4.7

Source: BSE

CNX Segment

Indices

Closing Value as

on 23 August,

2013

Fortnightl

y Change

(%)

CNX NIFTY

Junior 10,776.8 1.5

CNX MIDCAP 6,767.55 1.9

BANK NIFTY 9,961.4 5.2

CNX IT 8,216.5 4.1

CNX Realty 155.2 -0.2

CNX

Infrastructure 2,037.15 3.1

Source: NSE

GLOBAL NEWS

US

Non-farm payrolls (NFP) increased by 169K in

August 2013, lower than market expectations of

an increase of 180K. Meanwhile, total job

addition for July was revised lower from 162K

to 104KK, while that for June was revised from

188K to 172K. With the latest print and the

revisions, the monthly average for 2013 stood at

180K compared to 178K/ month average in the

corresponding period last year.

Euro Zone

Real GDP in Euro zone (EZ) posted a growth of

0.3 per cent on q-o-q basis in Q2 2013, marking

its first expansion since Q3 2011. In y-o-y terms

though, GDP contracted 0.5 per cent, slower

than a contraction of 1.0 per cent in Q1 2013.The

major contributors to EZ's Q2 GDP q-o-q growth

were private consumption expenditure (PCE),

government consumption and exports, while

inventories and imports contributed negatively to

GDP growth.

As expected, the European Central Bank (ECB)

decided to keep the key policy rate unchanged at

0.50 per cent, in its meeting held on September

5, broadly in line with market expectation.

Accordingly, the ECB left the interest rate on its

deposit facility and marginal lending facility

unchanged at 0.0 per cent and 1.0 per cent

respectively. Besides, the ECB President re-

assured the market that the monetary policy will

remain accommodative for as long as necessary.

Copyright © 2013 by Confederation of Indian Industry (CII), All rights reserved.

No part of this publication may be reproduced, stored in, or introduced into a retrieval system, or transmitted in any form or by any

means (electronic, mechanical, photocopying, recording or otherwise), without the prior written permission of the copyright owner. CII

has made every effort to ensure the accuracy of information presented in this document. However, neither CII nor any of its office bear-

ers or analysts or employees can be held responsible for any financial consequences arising out of the use of information provided herein.

CII Economy Update is a fortnightly report published by Confederation of Indian Industry (CII). Reach us at: ecoresearch@cii.in

The Mantosh Sondhi Centre

23, Institutional Area, Lodi Road, New Delhi – 110 003 (India)

T:+91-11-24629994-7 • F: +91-11-24626149 • E: ecoresearch@cii.in • W: www.cii.in

Reach us via our Membership Helpline: 00-91-11-435 46244 / 00-91-99104 46244

CII Helpline Toll free No: 1800-103-1244

DISCLAIMER